Weekly Markets Monitor: The tail is wagging
16 February, 2026
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Highlights
- Global data last week delivered a mixed set of signals. Stronger headline job gains and sticky inflation in the US dampened prospects for near-term Fed easing, even as weak retail sales and sizeable downward payroll revisions signaled softer underlying momentum. Europe’s growth diverged with the UK stagnating and the Eurozone steady, while in Asia Japan’s real wages remained under pressure, China’s weak demand and property slump persisted, and India’s inflation climbed.
- Global stock markets finished the week mixed, as Treasury yields retreated, the US dollar softened, and oil prices edged lower.
- The strong headline Non-farm payrolls (NFP) number for January (+130k) arrived with fanfare but heavy baggage. The 2025 change in NFP jobs was revised down by 403k. Last January’s +143k, subject to strong seasonal factors was revised to -48k, boding ill for the latest figure. Yet, the unemployment rate remains low and despite weak retail sales and a lower CPI, the Fed members have barely blinked. The market still sees two cuts in 2026 as most likely, but the tails are starting to budge with a subtle rise in three and four-cuts expectations (C.O.T.W).
Chart of the week: The tail is wagging
Market expectations for Fed Funds rate by December 2026*
*Data as of 16 February 2026. Fed funds interest rate expectations, based on 30-day Fed Funds Futures prices.
Source: CME, World Gold Council
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