Macro View - February 25, 2026 (Morning)

 ## Macro Snapshot Markets are opening on a broadly positive note, buoyed by easing AI-related jitters and a more constructive tone on geopolitical risks, particularly the upcoming US-Iran talks in Geneva. The S&P 500 rallied 1.13% to $690.07 overnight, with the Nasdaq 100 leading gains at +1.59%, reflecting renewed investor appetite for tech and growth stocks amid anticipation of Nvidia’s earnings. The Dow Jones and Russell 2000 also posted solid gains, signaling broad-based risk-on sentiment. This optimism is tempered by ongoing concerns about tariff policy and inflation, as the US prepares to raise tariffs to 15% where deemed appropriate, injecting uncertainty into trade dynamics. On the rates front, Treasury yields showed mixed movements. The 20+ year Treasury ETF (TLT) edged up slightly (+0.07%), indicating some demand for longer-duration safe assets, while the 7-10 year (IEF) and 1-3 year (SHY) Treasuries declined modestly, suggesting some flattening in the curve. The dollar index (UUP) was relatively stable, up 0.18%, despite some currency volatility in Asia. Commodity markets saw gold prices slip nearly 1%, pressured by tariff jitters and a cautious risk environment, while oil prices declined slightly amid ongoing concerns about supply amid US-Iran tensions and OPEC+ output considerations. ## Overnight Global Markets - **Asia:** Asian equities advanced, with Japan’s Nikkei 225 rising 2.22% and South Korea hitting record highs. The region’s tech stocks gained on improved AI sentiment ahead of Nvidia’s earnings. The Australian market also rose 1.17%, supported by a surprise rate cut by the Thai central bank to bolster a fragile recovery. Currency moves included a weaker yen following dovish BOJ nominations and a stronger Australian dollar on inflation data and rate expectations. ## Economic Data Today - No major economic releases are scheduled for today, leaving markets to focus on corporate earnings and geopolitical developments. ## Fed & Central Banks Fed commentary remains cautious amid mixed economic signals. Recent remarks suggest the Fed is moving away from explicit forward guidance, with some speculation about the potential disappearance of the Fed’s dot plot, reflecting uncertainty about the path of future rate hikes. The Bank of Japan is maintaining its policy normalization path without changes, despite dovish nominations to its board. The ECB faces calls to remain vigilant despite recent inflation victories, with officials warning against complacency. The Thai central bank surprised markets with a rate cut to 1%, highlighting divergent monetary policy trends globally. ## Rates & Currencies Treasury yields showed nuanced moves overnight. The 20+ year Treasury ETF (TLT) gained 0.07%, indicating demand for longer maturities, while the 7-10 year (IEF) and 1-3 year (SHY) ETFs declined by 0.13% and 0.05%, respectively, pointing to some curve flattening. The US dollar index (UUP) was slightly stronger (+0.18%), but Asian currencies like the yen weakened amid BOJ board changes, and the Australian dollar strengthened on inflation data and rate cut expectations in the region. The dollar’s modest strength is supportive of the equity rally but keeps pressure on commodity prices. ## Commodities - Oil prices edged lower to $80.26 (-0.79%) amid ongoing uncertainty around US-Iran relations and potential OPEC+ supply increases. The market remains cautious ahead of the US-Iran talks in Geneva and the upcoming OPEC+ meeting, where a 137,000 bpd output increase is under consideration. - Gold declined nearly 1% to $476.63, pressured by tariff-related jitters and a slightly firmer dollar, though geopolitical risks provide some underlying support. - Silver and natural gas showed mixed moves, with silver up 1.63% and natural gas down 1.11%, reflecting commodity-specific supply-demand dynamics. ## Macro Risks to Watch - **US-Iran Negotiations:** The upcoming talks in Geneva are critical. A positive outcome could ease Middle East tensions and oil market volatility, while failure or escalation could drive risk aversion and commodity price spikes. - **Tariff Policy Uncertainty:** The US’s plan to raise tariffs to 15% where appropriate adds a layer of trade risk, potentially impacting global supply chains and corporate margins. - **AI Market Sentiment:** While recent easing in AI fears has supported equities, the looming Nvidia earnings and ongoing debate about AI’s disruptive potential create volatility risks in tech and growth sectors. ## Positioning Implications Traders should maintain a cautiously constructive stance, favoring cyclical and tech sectors poised to benefit from AI innovation and economic resilience. The broad market rally, led by the Nasdaq and small caps, suggests risk appetite is returning but remains vulnerable to geopolitical and trade policy shocks. Fixed income positioning may favor longer-duration Treasuries as a hedge against volatility, while currency moves warrant attention, especially in Asia-Pacific markets where central banks are diverging. Commodity traders should monitor US-Iran developments closely, as oil price swings could influence inflation expectations and risk sentiment. Overall, a balanced approach with vigilance on macro risks is advisable heading into today’s session.