CBO Director Warns US Fiscal Path Is 'Not Sustainable' ; Projects Additional $1.4T Deficit Swell Under Trump Agenda

The Congressional Budget Office raised its 10-year deficit estimate by $1.4 trillion, citing Trump's 2025 reconciliation act, higher tariffs and lower immigration.

• Annual deficits are projected to remain historically large, totaling $23.1 trillion from 2026 to 2035 and reaching 6.7% of GDP by 2036.

• The 2025 tax law is the single largest driver, adding $4.7 trillion to deficits over the decade, partially offset by roughly $3 trillion in tariff revenue.

• Federal debt held by the public is projected to rise to 120% of GDP by 2036, surpassing the post-World War II record by 2030.

• Interest costs are expected to double over the next decade, climbing from $1 trillion in 2026 to $2.1 trillion in 2036 as debt and rates rise.

• Economic growth is projected to strengthen in 2026 but slow to 1.8% thereafter, falling short of the administration’s 3% growth target despite productivity gains from artificial intelligence.

The federal government is barreling toward a decade of historically large budget deficits, according to a new report from the (arguably partisan) Congressional Budget Office (CBO), which said on Wednesday in a new report that recent tax and immigration policies have sharply worsened the long-term outlook. 

The CBO increased its estimate of cumulative deficits for the 2026-35 period by $1.4 trillion, citing President Donald Trump’s 2025 tax law and the cost of stepped-up immigration enforcement. The agency now projects total deficits of $23.1 trillion over the decade, underscoring what it called an “unsustainable fiscal path.”

At the center of the revision is last summer’s tax package, which extended the 2017 tax cuts and added new breaks. The CBO estimates the law will increase deficits by $4.7 trillion over 10 years. Immigration enforcement actions are expected to add another $500 billion. Those costs, the agency said, will more than offset revenue gains from higher tariffs, even as import duties rise to levels not seen since the mid-20th century. The CBO estimates tariff revenue will reduce deficits by about $3 trillion over the period.

Since its last long-term outlook in January 2025, the agency said three developments have materially altered its baseline projections: enactment of the 2025 reconciliation act, a sharp rise in tariffs, and lower immigration. Together, those changes have pushed projected deficits for the coming decade $1.4 trillion higher, to a cumulative $23.1 trillion from 2026 through 2035.

“The budget projections continue to indicate that the fiscal trajectory is not sustainable,” CBO Director Phillip Swagel said in prepared remarks accompanying the report.

For fiscal 2026, the deficit is projected at $1.9 trillion, or 5.8% of gross domestic product, roughly unchanged as a share of the economy from 2025. By 2036, the annual deficit is expected to widen to $3.1 trillion, or 6.7% of GDP - levels the agency described as “historically unusual,” particularly with unemployment projected to remain below 5%.

The latest outlook reflects the effects of President Donald Trump’s 2025 tax law, which extended the 2017 tax cuts and added new provisions. The CBO estimates the reconciliation act will raise deficits by $4.7 trillion over the 2026–35 period, once higher debt-service costs and macroeconomic effects are included. Higher tariffs are projected to reduce deficits by about $3 trillion, while lower immigration adds roughly $500 billion.

Revenues are projected to remain broadly stable as a share of the economy, rising modestly from 17.5% of GDP in 2026 to 17.8% in 2036. Outlays, however, are expected to climb from 23.3% to 24.4% of GDP as spending on Social Security, Medicare and interest costs grows faster than economic output.

Debt held by the public is projected to rise from 99% of GDP at the end of 2025 to 120% by 2036. Under current law, the CBO expects debt to surpass the previous postwar record of 106% of GDP—set in 1946—by 2030. Over a 30-year horizon, debt climbs to an estimated 175% of GDP. The Social Security Old-Age and Survivors Insurance Trust Fund is now projected to be exhausted in 2032, a year earlier than previously forecast.

Rising debt feeds directly into higher interest costs. Net interest outlays are projected to double over the next decade, increasing from $1 trillion in 2026 to $2.1 trillion in 2036 and rising from 3.3% to 4.6% of GDP.

Those projections undercut the administration’s stated goal of reducing the deficit toward 3% of GDP by the end of Mr. Trump’s term, a target repeatedly cited by Treasury Secretary Scott Bessent. The CBO now expects deficits of 5.8% of GDP in 2026 and about 6% in 2028.

On the economic front, the agency projects stronger real GDP growth in 2026, as the pro-growth elements of the tax law outweigh the drag from tariffs and reduced immigration. Growth is then expected to slow to 1.8% from 2027 onward, reflecting offsetting forces: stronger incentives to work and invest on one hand, and larger deficits and slower labor-force growth on the other.

The outlook also incorporates a modest boost from generative artificial intelligence, which the CBO estimates will add roughly 10 basis points a year to productivity growth, raising nonfarm business output by about 1% by 2036.

Even so, the growth dividend is not enough to materially improve the fiscal picture. While stronger growth lifts revenues, it also pushes up interest rates, and the latter effect dominates. “That result highlights how the nation’s large stock of debt influences the way that changes in the economy stemming from legislation affect the federal budget,” Mr. Swagel said.

The forecast also assumes the Federal Reserve cuts its benchmark rate by 25 basis points in 2026, with the yield on 10-year Treasury bonds rising gradually to about 4.3% by late 2027 and then stabilizing. Upward pressure from growing federal debt is expected to be offset by slower labor-force growth.

Federal Reserve Chair Jerome Powell has echoed the CBO’s warning in recent remarks, saying that while today’s debt level is manageable, the long-term path is not. “We’re running a very large deficit at essentially full employment,” Mr. Powell said last month. “The fiscal picture needs to be addressed - and it’s not really being addressed.”

On the other hand...

Perhaps CBO is just talking shit because they're #resistance?

According to some economists, CBO might be understating the deficit-reducing potential of tariffs by assuming sharper declines in import volumes than recent experience suggests. Economist Andrew Rechenberg and analyses by the Coalition for a Prosperous America point to tariff revenues collected since 2018 that remained resilient even as trade patterns shifted. In many cases, imports were rerouted through alternative supply chains rather than eliminated, while demand proved more inelastic than expected in categories such as intermediate goods and energy inputs. Under those conditions, sustained tariff enforcement - particularly with limited exemptions - could generate revenues above baseline projections.

Other analysts contend that the CBO’s long-term outlook may be overly cautious in its assessment of how tax certainty and trade policy interact with domestic investment. Permanent tax provisions and trade barriers that favor domestic production, they argue, can reinforce incentives for reshoring and capital formation in ways that are difficult to fully capture in baseline projections. Former CBO Director Douglas Elmendorf has previously acknowledged that long-run investment and productivity responses to permanent policy changes are inherently uncertain and may unfold gradually, suggesting that modest but persistent gains in domestic output could meaningfully improve fiscal outcomes over time.

Meanwhile, some economists question whether higher projected deficits will translate as directly into rising interest costs as the CBO assumes. They point to continued global demand for U.S. Treasurys, demographic forces that suppress real interest rates, and the dollar’s role as the world’s primary reserve currency as factors that weaken the link between debt levels and borrowing costs. From this perspective, fiscal sustainability is less about historical deficit benchmarks and more about market tolerance - specifically whether rising debt triggers inflation expectations or capital flight - conditions that, thus far, have not materialized.

Tyler Durden Wed, 02/11/2026 - 10:45

WTI Slides On Biggest Crude Build In A Year, Production Rebound; But...

Oil prices continued their recent rally this morning as traders hiked its risk premium as Israeli PM Netanyahu arrived in Washington to pressure President Trump to take a hard line in talks with Iran, even as the API report overnight showed a huge rise in US inventories last week.

"Oil trades firmer, with Brent back above USD 69 as Middle East tensions sustain a modest risk premium. The US signaled it is considering seizing tankers carrying Iranian oil, while President Trump threatened to deploy another aircraft carrier should nuclear talks with Iran fail," Saxo Bank noted.

The threats of violence in the Persian Gulf - a region that supplies about a fifth of the world's daily oil consumption - comes even as signs supply remains well ahead of demand.

"While rhetoric remains belligerent at times, there are no signs, at least for now, of escalation, and the U.S. President believes that Iran will ultimately want to strike a deal on its nuclear missile programme," PVM Oil Associates analyst Tamas Varga said in a note.

If API's huge build is confirmed by the official data, the battle between geopolitical risk premia and over-supply gets harder (but admittedly this is very much affected by the freezing storms).

Expect another volatile week of EIA data with “significant winter freeze noise,” Macquarie energy strategist Walt Chancellor said referring to last month’s storm.

API

• Crude +13.4mm

• Cushing

• Gasoline +3.3mm

• Distillates -2.0mm

DOE

• Crude +8.53mm (-400k exp) - biggest build since Jan 2025

• Cushing +1.07mm

• Gasoline +1.16mm

• Distillates -2.70mm

The official data confirmed a large crude build (largest since Jan 2025), but smaller than feared from API. Gasoline stocks rose for the 13th straight week while Distillates saw stocks fall for the second week...

Source: Bloomberg

This build pushed total crude stocks up to their highest since June...

Source: Bloomberg

Stockpiles at Cushing, Oklahoma, rose to 25.1 million barrels, the highest level since April 2025. The weekly build is the largest in almost a month, and the first increase on inventories since the week ending Jan. 16. 

US Crude production rebounded as expected from its winter storm plunge...

Source: Bloomberg

Crude prices started giving some back before the inventory data as stocks tumbled following the 'good' jobs news. However, WTI remains higher on the day (back near its highest since January)...

Source: Bloomberg

Finally, in its monthly Short-Term Energy Outlook released Tuesday, The EIA again warned global inventories will rise this year and next on high output from OPEC+ and producers in the Americas.

"Despite near-term tightness from disruptions, we assess that strong global oil production growth will continue to outpace oil consumption over our forecast, driving our assessment that global oil inventories will increase. We expect this trend to continue in both 2026 and 2027. We forecast that global oil inventory builds will average 3.1 million b/d in 2026, compared with an average build of 2.7 million b/d in 2025, before decreasing to average of 2.7 million b/d in 2027," the agency said.

In the wider market, OPEC left its supply-demand expectations for the oil market largely unchanged in its monthly report, but highlighted that global oil demand for the wider group's crude will drop by 400,000 bpd in the second quarter compared to the first.

Tyler Durden Wed, 02/11/2026 - 10:35

Bibi Seeks US Muscular Action On Iran In Seventh Meeting With Trump

"I am now leaving for the United States for my seventh trip to meet with President Trump since he was elected for a second term," Prime Minister Benjamin Netanyahu said prior to his departure to Washington. "This, of course, does not include his unforgettable visit to Israel and his speech in the Knesset." (Seven since Trump took office again!)

He and President Trump are expected to begin their meeting at the White House, focused on Iran negotiations and the possibility of military action, by late-morning (11 eastern). Netanyahu's 'welcome' in D.C. last night raised some eyebrows, given an entire major freeway into the beltway area was shut down for security reasons...

They are literally shutting down highways for Netanyahu’s arrival in DC

pic.twitter.com/94YbO5Cy2t

— Drew Hernandez (@DrewHLive) February 11, 2026

Before leaving Israel, Netanyahu told reporters that Iran is the "first and foremost" issue he will raise with Trump. He was originally scheduled to travel to the US for a February 18 meeting, but Israel asked to move it up after the US-Iran talks in Oman.

"I will present the president with our views regarding the essential principles of the negotiations – principles that, in our eyes, are vital not only for Israel but for anyone in the world who desires peace and security in the Middle East," the Israeli leader previewed.

Israel is pressing the US to require that any agreement with Iran include zero nuclear enrichment and limits on its ballistic missile program. Iranian officials have rejected those terms, signaling they would block any deal. On Tuesday, Trump indicated that Iran's missiles should be part of the agreement. 

But if Tehran were to agree with this it would essentially be self-destructing, as it would have no deterrent and be defenseless against any future Israeli attack - or any other enemy aggression for that matter.

One Israeli source told CNN that Tel Aviv is "worried about Iran’s progress in restoring its ballistic missile stockpiles and capabilities to its status before the 12-Day War."

Iranian leaders are meanwhile fully aware of what Netanyahu's D.C. trip represents, and the timing:

Tehran, which resumed talks with Washington last week in Oman, warned Monday of "destructive influences" on diplomacy ahead of the Israeli premier’s visit.

On Wednesday, Iranian president Masoud Pezeshkian said his country would "not yield to excessive demands" on its nuclear program, though he said the country is not seeking an atomic weapon.

Just after Netanyahu's arrival Tuesday evening, he met with US Middle East envoy Steve Witkoff and White House senior adviser Jared Kushner to discuss "regional issues". He was also briefed on how Oman-mediated talks are going, ahead of the proposed second round expected next week.

Tuesday evening meeting at Blair House, via GPO/JNS

President Trump is still threatening to send a second carrier group to the Central Command (CENTCOM) area, which would be a clear signal he intends major military action. He could still order some kind of limited action, also as Congress is once again missing in action on reigning in war powers.

Tyler Durden Wed, 02/11/2026 - 09:25

'Across-The-Board' Strong Jobs Report... But Take It "With A Grain Of Salt"

Via Academy Securities' Peter Tchir,

There is almost nothing to nitpick about this report (though we do have some caveats).

Big beat on jobs 130k vs 65k expected. Private jobs crushed it, adding 172k (yes, public sector jobs shrank).

Downward revision for prior 2 reports was “only” -17k.

The benchmark revisions were -862k.

A big number but -825k was baked in, so kind of a rounding error at this stage on “old” data.

Unemployment rate dropped to 4.3%.

Not only did the household survey add 528k jobs, but we got this drop even while labor participation INCREASED to 62.5% - a very healthy shift in unemployment.

The birth/death model showed job losses of 69k.

Since I do think birth/death had an outsized influence on the revisions it is good to see a negative number here. It gives me more confidence in the print.

What is there to complain about?

• NSA (not seasonally adjusted) had a drop of 2,649,000 jobs.

  • We have been complaining (for years) that the seasonal adjustments have a lot of issues and this year’s might be worse than usual in that respect

  • We still add a lot of jobs in winter and take them away in summer, because that is how the weather worked (slowing in the Northeast), but we no longer believe that is accurate as so much construction has moved to the South.

  • It adds back a lot of jobs that were added for the holidays. It is unclear how many jobs were really added for the holidays. It does not help that the government shutdown(s) has made the data even less reliable than usual.

• In 2025 the largest downward revision was in February where they took away 167k from the prior 2 reports.

These two factors are why I will take this payroll data with a “grain of salt”.

The market has immediately priced in a more hawkish Fed with rate-cut expectations tumbling.

Tyler Durden Wed, 02/11/2026 - 09:12

AI 'Disruption' Fears Go Global: France's Dassault Crashes Most On Record After 'Weak Guide'

Dassault Systemes, which Nvidia has recently described as being at the epicenter of the "next frontier of artificial intelligence," suffered its largest intraday decline on record in Paris trading after issuing weaker-than-expected guidance. The miss reinforced the latest market narrative that some software firms are vulnerable to AI-driven disruption, a fear that has crushed software stocks in recent weeks.

Paris-based Dassault reported unaudited estimated financial results for the fourth quarter and guidance for the new year.

The focus among traders was on the company's guidance for 2026 sales growth of 3% to 5%, well below the 5.9% consensus among Wall Street analysts tracked by Bloomberg. The downgraded outlook was attributed to a softening automotive sector and shrinking life sciences activity.

Dassault also disclosed its annual run rate for the first time, a financial metric used in the software industry, but said growth was about 6% since the fourth quarter of 2023.

"In a software industry that has been accelerating to subscription/ recurring revenues, this is likely to be seen as underwhelming," Jefferies analyst Charles Brennan wrote in a note.

UBS analyst Michael Briest flagged in a note what he characterized as a "weak finish and a weak guide" for the software company.

Briest wrote:

How did the results compare vs expectations?

A: Q4 revenues of €1,682m (cons. €1,750m) grew by 1.2% c/c (guidance 1-8%) and just 0.6% organically to €1,682m, with a weak Auto sector in Europe called out. Within this, total Software was flat at €1,523m (guidance 1-8%) with licences down 7% y/y to €358m and at the lower-end of guidance for (13)-9%, while recurring software grew by just 3% to €1,165m (guidance: +5-8%) with subscription up just 4% (guidance 8-12%) and support 2%. Q4 cloud revenues grew by 9% (Q3 25: +8%) but were up 38% for 3DX as Life Sciences fell by 4% y/y with Medidata impacted by lower study volumes. For the year, Medidata reported 1% growth in Direct Enterprise sales (70% of the total) - and would have been +6% excl. Moderna - but CRO volumes (30% of the total) fell by 5%. Q4's EBIT of €622m/37.0% was 5% below cons. of €652m/37.3% and light of guidance for 37.2-38.0%.

What were the most noteworthy areas in the results?

A: While Asia grew by 6% and the Americas 3%, Europe declined by 5% y/y in Q4. Life Sciences fell by 4% y/y (Q3: -3%). Mainstream 3D grew by 1% (Q3: +4%) despite "good growth" at Solidworks as CentricPLM weighed. 3DExperience revenues fell by 3% y/y (Q3: +16%). FCF for the year grew by 2% to €1,380m but would have been 5% excl. French tax effects albeit overall taxes paid were €32m lower y/y and DSOs rose to 117 vs 109 last year. Contract liabilities movements were also a slight outflow in the year we note. Headcount was down 0.2% y/y at 25,967. In a new KPI, ARR grew 6% y/y to €4,497 in Q4.

Has the company's outlook/guidance changed?

A: 2026 guidance is introduced for 3-5% c/c growth to €6,410m revenues at the high-end (VA cons. +5.8% to €6,561m) and assumes a $1.18 FX rate. This includes Software at 3-5% (cons. +5.5% c/c) and licences at (1)-2% (FY25: -6%). A margin of 32.2-32.6% is expected vs cons. at 32.7% and FY25's 32.0%. EPS should grow just 3-6% c/c to €1.30-1.34 (cons. €1.37). For Q1, total sales are expected to grow 1-5% to €1,541m at the high end (cons. €1,590m), with total software growing 1-5% (Q1 25: +5%), including licences at 0-8% y/y (Q1 25: -10%). Guidance is for a Q1 margin of 29.2-30.7% (cons. 31.9%). DS talks of "aligning the organisation to focus" on execution and a CMD is planned in November. Having set a goal to grow at least 7%pa from 2024-29, the guidance means DS now needs to grow 8.2-8.9% in 2027-29.

Via the UBS analyst: Figure 1: Dassault Q4 25 results summary (€m)

Shares in Paris posted their steepest decline on record, plunging 22%. The bull market peaked in 2021, and the liquidation phase has been ongoing since 2024. The next technical level to watch is the 76.4% Fibonacci retracement, around 15 euros. 

Traders are sorting "AI winners vs. losers," pressuring companies seen as highly exposed, including peers such as Autodesk and Synopsys.

Dassault creates "virtual twins" using Nvidia models of complex machines, a field increasingly threatened by other AI "world models" that help systems navigate the physical world.

Software valuations have crashed.

But as we note in recent trading sessions:

• Software Pops, Financials Flop As 'Bad' Data Sparks Bond Bid, Rate-Cut Hopes

• 'Off The Charts': Retail Is Buying-The-Dip In Software Stocks Like Never Before

Our Market Ear technicians say:

• Everybody Hates Software — And That's the Setup 

"Our vision is built on decades of industrial and scientific knowledge and know-how, and we are now building the capabilities to turn that vision into reality," CEO Pascal Daloz said in a statement, adding, "True transformation takes time, for our customers and for ourselves."

Tyler Durden Wed, 02/11/2026 - 09:00

Electricity Demand Is Surging, The Grid Isn't Ready: IEA

By Tsvetana Paraskova of OilPrice.com

• International Energy Agency says global electricity demand is growing at its fastest pace in 15 years, set to rise more than 3.5% annually through 2030.

• While renewables, nuclear, and natural gas are expanding rapidly, grid infrastructure is becoming the key bottleneck, with over 2,500 GW of power and load projects stuck in connection queues worldwide.

• Grid investment must rise about 50% above current levels to keep pace, with BloombergNEF and Goldman Sachs warning that persistent grid constraints could trigger power shortages and even undermine the U.S. position in the global AI race

Global electricity demand is rising at the fastest pace in 15 years and will continue to do so at least until the end of the decade as AI infrastructure, advanced manufacturing, and electrification have ushered in The Age of Electricity, the International Energy Agency (IEA) says.

Global power demand is expected to grow by more than 3.5% per year on average through the end of the decade, the agency said in its new Electricity 2026 report.

Renewables, nuclear, and natural gas are the big winners of the electricity demand boom, but the rise in all these power-generating sources would not mean anything if they struggle to connect to the grid.

Power Demand Surge

Global electricity demand increased by 3% annually in 2025, following growth of 4.4% in 2024, the IEA said in the report.

Between 2026 and 2030, the annual average growth rate would be 3.6%, driven by higher consumption from industry, electric vehicles (EVs), air conditioning, and data centers, according to the agency.

While emerging economies, including China, India, and the Southeast Asian region, will drive 80% of the additional power demand by 2030, advanced economies see growth in electricity demand after 15 years of stagnation, the IEA said. Artificial intelligence, data centers, and advanced manufacturing support the return to growth in power demand in advanced economies.

U.S. electricity demand rose by 2.1% in 2025 and is expected to grow by nearly 2% annually through 2030. The rapid expansion of data centers will drive half of the increase, the agency noted.

EU demand is forecast to increase by around 2% per year through 2030, and many other advanced economies – such as Australia, Canada, Japan, and South Korea – are also expected to see faster electricity demand growth through 2030.

Grid Investment Lagging Behind Power Generation Boom

As demand grows, developers of new capacity, especially renewables and natural gas, face constraints in connecting to the grids. Regional and country-specific trends are not the same, but the need for rapid and efficient expansion of grids is a pressing global issue. Without increased system flexibility and rapid grid expansion, the Age of Electricity could roll out slower than expected.

Today, global investments in grids are about $400 billion per year. If the world is to meet the expected growth in power demand through 2030, it would need to boost annual grid investment by about 50% from $400 billion, according to the IEA.

The Age of Electricity will also need “a significant scaling up of grid-related supply chains,” the IEA said.

Currently, more than 2,500 gigawatts (GW) worth of projects – renewables, storage, and projects with large loads such as data centers – are stalled in connection queues worldwide.

A total of 1,600 GW of queued projects could be integrated in the near term through grid-enhancing technologies and regulatory reforms that enable more flexible grid connections and usage, the agency reckons.

But increased flexibility and grid expansion need more investment than the current spending.

Last year, grid investment was on track to top $470 billion for the first time, up by 16% from 2024, a December analysis from BloombergNEF found.

The U.S. accounted for a quarter of global grid spending with the highest investment level in 2025, at $115 billion. China and the EU/UK followed as other major contributors, each with around 20% of the global sum, according to the report.

However, rising equipment costs compounded by high inflation have started to affect overall spending figures, BNEF said, adding that increased spending “will not fully eliminate ongoing grid-infrastructure bottlenecks, meaning delays to new generation and demand connections are likely to continue in the coming years.”

“We’ve seen that even with increased investment, there are significant barriers to meeting the needs of new generation and power demand on time,” Peter Wall, Head of Grids Research at BloombergNEF, said.

“With data centers and industrial electrification driving sharp increases in power demand, investors need to factor in how essential timely grid expansion is for not only connecting new demand but also connecting all of the generation we will need to ensure a secure and reliable supply to this demand after over a decade of stagnation.”

Additional grid investment is hampered by supply chain and labor constraints, BloombergNEF notes.

In the U.S. specifically, the aging grid infrastructure in key regional U.S. markets cannot cope with all requests, with grid investments lagging behind soaring power demand.

At the current rate of interconnection requests and grid capacity, the U.S. could face a power crunch by 2030, Samantha Dart, Goldman Sachs’ co-head of global commodities research, said at a conference last month.

“We aren’t adding enough capacity,” Dart said in January at the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami.

Nearly all power grids in the U.S. may lack critical spare capacity by the end of the decade. If the issue with grid constraints remains unaddressed, China could pull ahead of the U.S. in the AI race, Dart noted.

Tyler Durden Wed, 02/11/2026 - 08:40

Futures Rise Ahead Of Today's Delayed Jobs Report

  

US equity futures are flat ahead of today's delayed January payrolls (full preview here) with the market now expecting a weaker print after the Retail Sales miss and weaker high-frequency data. As of 8:00am ET, S&P and Nasdaq 100 futures are both up 0.1%. Pre-market, Mag7 names are mostly lower; Discretionary, Energy, Industrials and Materials are all higher pointing to a potential broad-based cyclical rally while TMT is muted; AI ex-Mag7 is seeing a bid. JPMorgan’s trading desk expects the delayed January data to give a small boost to stocks — something much-needed amid the indiscriminate selling of those on the wrong side of AI. International markets are mixed with trends similar – Japan closed, KOSPI strong up 100bps, HSI not far behind up 30bps. Europe more flat to down with CAC down 13bps and DAX off 24bps. Australia leads the downside off 172bps. 10 TSY yields are at lows 4.13%, while the USD is weaker for the 4th consecutive session, the DXY down below $97 to $96.58 and Bitcoin trades down to $67k. FT reports Ukraine planning presidential elections and a referendum on any peace deal, potentially by mid-May, under US pressure. Timing uncertain given Donbas, Zaporizhzhia and escalation risks. China CPI soft +0.2% vs. 0.4%. Commodities moving higher this morning led by silver but Comex copper back above $6 to $6.07 up 3%, crude quietly moving up with WTI at $65. Today’s macro data focus is on the NFP release but watch the drop in Mortgage Approvals given the strength of the recent Homebuilders bid. McDonald’s and Cisco are due to report.

In premarket trading, Mag 7 stocks are mixed (Nvidia +0.6%, Amazon +0.2%, Microsoft +0.2%, Alphabet +0.07%, Apple -0.04%, Meta -0.4%, Tesla -0.2%)

• Astera Labs (ALAB) falls 11% after the semiconductor manufacturing company reported its fourth-quarter results. It also announced that its chief financial officer would retire.
• Beta Technologies (BETA) climbs 18% after Amazon.com Inc. disclosed a stake in the electric-powered aircraft manufacturer.
• Centrus Energy (LEU) falls 8% after the uranium company’s fourth-quarter earnings per share fell short of analyst estimates, with Citi pointing to higher-than-expected capex spending.
• Cloudflare (NET) gains 14% after the software company’s fourth-quarter results beat expectations and it gave a bullish revenue forecast.
• Humana (HUM) falls 6% after forecasting full-year profit that fell short of Wall Street’s expectations, adding to investor concerns about the challenges facing the US health-insurance industry.
• Kraft Heinz (KHC) falls 6% after pausing work on its planned separation as new Chief Executive Officer Steve Cahillane works to improve results.
• Lattice Semiconductor (LSCC) rises 11% after the semiconductor device company gave a first-quarter revenue forecast that was much stronger than expected.
• Lyft (LYFT) falls 17% after issuing a disappointing forecast that missed Wall Street expectations, a sign that its global expansion and new product offerings are not performing as quickly and as well as anticipated.
• Mattel (MAT) slumps 26% after the toymaker’s 2026 adjusted earnings-per-share forecast missed the average analyst estimate, triggering a downgrade at JPMorgan.
• Moderna (MRNA) falls 10% after US regulators refused to review its novel mRNA flu vaccine, dealing a major blow to the company as it seeks to expand beyond its Covid shot.
• Rapid7 (RPD) falls 22% after the software company’s outlook was seen as disappointing. Analysts cited weakness in annual recurring revenue as a concern.
• Robinhood (HOOD) declines 7% after the fintech company reported net revenue for the fourth quarter that missed the average analyst estimate.
• Teradata (TDC) gains 15% after the database management company reported fourth-quarter results that beat expectations and gave an outlook for adjusted earnings that is stronger than expected.
• Vertiv Holdings (VRT) rises 13% after the power equipment company forecast adjusted earnings per share for the first quarter; the guidance beat the average analyst estimate.

 

January’s payrolls report (full preview here) is due after several Trump admin officials, including National Economic Council Director Kevin Hassett and Peter Navarro, recently warned that investors should expect lower jobs numbers going forward. Analysts are also anticipating an annual revision to the jobs count, which is expected to reveal a huge markdown in the year through March 2025, to the tune of 750-900K jobs. Bloomberg’s consensus is for 65k job additions in January vs 50k in December, with a crowd-sourced whisper number of 35k, while scenarios laid out by JPMorgan Market Intelligence suggest a sweet spot between 60k and 110k to boost stocks. With the job market in the midst of a “low-hire, low-fire” environment, expectations are low, which could act as a potential catalyst for equities.

JPMorgan strategists also note that the S&P 500 options market is underpricing payrolls compared to historical swings, with past moves nearly double what is currently being priced. Meanwhile, interest-rate traders are betting on two or three Fed rate cuts this year, becoming slightly more conservative than the dovish bets seen after Warsh’s nomination earlier in the month.

“We’re still in this sort of, not-really-hiring, not-really-firing mode. But we haven’t seen a clear breakout in either direction,” said Graham Secker, head of equity strategy at Pictet Wealth Management. “Everyone’s very aware of the kind of the K-shape dynamic within the US economy, and the US consumer in particular.”

For Nicolas Bickel, group head of investment private banking at Edmond de Rothschild, the jobs report and Friday’s inflation data will offer insight into the impact of January’s extreme weather. A strong jobs report would instill confidence in the consumer outlook and help fuel a broadening of the stock rally.

“I really like that rotation personally, because it’s for me the lifeblood of a bull market,” Bickel said. Investors “are just choosing another horse, and means that they have money to be invested, or are confident in the economy.”

The selloff in software stocks has been overblown, creating buying opportunities for investors, according to Nannette Hechler-Fayd’Herbe, head of investment strategy for EMEA at Lombard Odier.

“There have been a lot of concerns that AI might be disrupting software companies, but we have held the view that actually, it is empowering them, it is shortening the time for coding, it is enabling efficiencies of workflows,” she told Bloomberg TV. “For us it’s actually been an opportunity to take exposure.”

In other assets, Bitcoin fell to its lowest level since last Friday’s selloff, despite support from its largest holders, so-called whale wallets, in their biggest buying spree since November. The dollar also fell for a fourth straight day. In Europe, shares in software firms and wealth managers continued to slide on AI disruption fears.

In politics, House lawmakers are set to vote today on whether to reject some of Trump’s tariff policies, starting with a resolution opposing levies on Canada. Trump is expected to unveil plans to use government funding and Pentagon contracts to sustain coal-fired power plants.

A quick look at earnings: Out of the 326 S&P 500 companies that have reported so far in the earnings season, 78% have managed to beat analyst forecasts, while 17% have missed. T-Mobile, Shopify and Kraft Heinz are among companies expected to report before the market open. T-Mobile’s new CEO is likely to maintain a strategy of promoting aggressively to sustain industry-leading postpaid phone net additions and service growth, according to Bloomberg Intelligence. Earnings from Cisco and McDonald’s follow later.

Stocks in Europe are mixed, the Stoxx 600 is up 0.1%. The FTSE 100 outperforms peers, boosted by energy and materials stocks. European wealth managers tracked their US peers lower amid fears over the disruptive impact of a new AI tool designed to create tax strategies. St James’s Place Plc slumped 12% in London, while investment platforms such as AJ Bell Plc and IntegraFin Holdings Plc were sliding as well. Weak guidance by Dassault Systemes SE played into fears that the French software firm may be vulnerable to AI, sending the stock lower by the most in three decades. Here are some of the biggest movers on Wednesday:

• Ahold Delhaize shares gain as much as 9.9%, the most since 2020, as the Dutch retail store operator reported margin beats across the board.
• Siemens Energy shares rally as much as 6.5% to its highest intraday level on record after first-quarter earnings surpassed the average analyst estimate, driven by strong order growth in gas turbines.
• Heineken shares rise as much as 5.5%, the most in nearly a year, after the Dutch brewer exited 2025 with what analysts consider an uptick in momentum, boosted by a cost-saving program that sees it cut up to 6,000 jobs.
• Renishaw shares rise as much as 6.4%, the most in five months, as the engineering firm’s order book grows.
• B&M shares climb as much as 5.4% after Peel Hunt upgraded its recommendation on the discount retailer, arguing that the shares appear undervalued given the prospects for stronger sales and earnings.
• Gerresheimer shares plunge as much as 35%, hitting their lowest level since 2009, after the German maker of packaging for medicines and cosmetics delayed the publication of its 2025 earnings.
• Dassault Systemes shares sink as much as 22% the most on record, after the software company gave a weaker-than-expected sales growth guidance for 2026, on top of 4Q results that missed estimates.
• St James’s Place shares fall as much as 11%, the most in nearly two years, leading a drop in European wealth managers over worries that artificial intelligence will disrupt their businesses.
• Randstad shares fall as much as 9.3%, touching the lowest level since March 2020, after the staffing and HR services provider reported organic revenue for the fourth quarter that missed the average analyst estimate.
• Barratt Redrow shares fall as much as 8.4%, the most since July, as pressure increases on the UK homebuilder’s margins.

Earlier in the session, Asian equities climbed to a fresh record, led by technology shares, as investors continued to rotate away from US assets amid a weaker dollar. The MSCI Asia Pacific ex-Japan Index rose as much as 1.3%, set for a third straight daily gain. TSMC, Commonwealth Bank of Australia and Samsung Electronics were among the major contributors. Benchmarks in South Korea, Hong Kong and Australia advanced, while those in mainland China slipped. Japanese markets were shut for a holiday. The strength in Asia’s technology shares and weakness in the greenback continue to drive investors into the developing world. The 30-day correlation between the dollar and MSCI Asia is minus 0.5, around the most severe level since April, Bloomberg-compiled data show.  Bucking the trend, SK Hynix was among the major drags on the index following a report China’s CXMT plans to allocate a chunk of its DRAM capacity to produce superfast HBM3 chips that are used in AI. Samsung reversed earlier losses after a top executive said that the company is back at the top of the memory industry with its new HBM4 technology.  Taiwan’s benchmark Taiex index jumped 1.6% to an all-time high on its last trading day before Lunar New Year holiday. Tech optimism rose after TSMC’s solid January sales data showed a sign of sustained global AI spending. The island’s stock market will resume trading from Feb. 23. 

In FX, the yen has continued its climb against the dollar with USD/JPY briefly slipping below the 153 level. Accordingly the Bloomberg Dollar index is down 0.3%, also hampered by gains in NOK and AUD, with the latter bolstered by hawkish RBA remarks.

In rates, treasury yields are slightly lower on the day ahead of the rescheduled January employment report at 8:30am New York time. Overnight trading bands were narrow amid similarly muted price action European bonds, while S&P 500 futures hold small gain. US session also includes new-issue 10-year note auction for $42 billion, following good demand for 3-year notes Tuesday. US intermediate yields are richer by about 1bp with 10-year steady around 4.135% and curve spreads within 1bp of Tuesday’s close. German and UK peers are equally contained. For the 1pm auction, 10-year notes have when-issued yield near 4.142%, about 3bp richer than last month’s sale, a second and final reopening that stopped through by 0.7bp. IG dollar issuance slate empty so far. Eight names priced $11.3b Tuesday, led by Walt Disney Co. and pharmaceutical distributor Cencora’s multi—tranche trades. Issuers paid about 2bps in new issue concessions on deals that were 4.3 times covered

In commodities, metals prices are broadly firmer, with spot gold and silver up 1.4% and 6.2% respectively. Oil futures have continued to rise amid tensions in the Middle East. Bitcoin has extended this week’s declines, down 2.9%. Nickel has also been boosted by Indonesian output curbs.  Gold hovered above $5,000 an ounce. Bitcoin slid under $67,000, with last week’s reprieve proving short-lived and highlighting investors’ lack of confidence in a sustained recovery.

Today's calendar includes the nonfarm payrolls for January are due at 8.30 a.m., followed by Fed budget balance at 2 p.m. Fed’s Bowman (10:15am), Schmid (10:00am) and Hammack (4pm) are scheduled to speak at events.

Market Snapshot

• S&P 500 mini little changed
• Nasdaq 100 mini -0.2%
• Russell 2000 mini little changed
• Stoxx Europe 600 -0.2%
• DAX -0.3%
• CAC 40 -0.5%
• 10-year Treasury yield -1 basis point at 4.13%
• VIX +0.5 points at 18.26
• Bloomberg Dollar Index -0.3% at 1179.03
• euro +0.2% at $1.1917
• WTI crude +1.3% at $64.8/barrel

Top Overnight News

• Top White House officials have started trying to downplay a highly anticipated jobs report set for release on Wednesday, insisting that the US economy remains strong even if the data may ultimately show a fresh slowdown in hiring. WSJ  
• Negotiations between US Democrats and the White House are ongoing, but right now, a deal on a stopgap funding measure seems unlikely: Punchbowl 
• Iran wants to make a deal with the US, Donald Trump told Fox. On the Fed, the president reiterated his call for lower rates, saying employment numbers are “really good.” BBG
• House lawmakers are set to vote today on whether to reject some of Trump’s tariff policies, starting with a resolution opposing levies on Canada. BBG
• The White House revised its fact sheet on the US-India trade agreement to adjust language around agricultural goods, adding to confusion about the deal already raised by farmer groups. BBG
• Ukraine has begun planning presidential elections alongside a referendum on any peace deal with Russia, after the Trump administration pressed Kyiv to hold both votes by May 15 or risk losing proposed US security guarantees. FT
• China’s consumer inflation eased at the start of 2026 after reaching a near three-year high in December, as food prices declined. China’s PPI for Jan came in at -1.4% (vs. the Street -1.5% and down from -1.9% in Dec) while the CPI was +0.2% (down from +0.8% in Dec and below the Street’s +0.4% forecast). WSJ
• Euro-area wage growth is poised to pick up in the second half, ECB predictions showed, supporting officials’ view that interest rates can remain steady. BBG
• The Reserve Bank of Australia sees the country’s inflation rate as too high and will take all necessary measures to bring it under control, a top central bank official said. WSJ
• China’s latest call to curb Treasuries in its holdings is stoking fear that Trump’s unpredictable policies may encourage traditional lenders like Europe and Japan to follow in its footsteps. BBG

Trade/Tariffs

• China is reportedly considering probing wine from France; could consider launching anti-dumping duty to French wine, and potentially take counter measures against the EU if it adopt duties.
• China plans to extend import VAT breaks on cancer and rare disease drugs until the end of 2027.
• White House revised Fact Sheet on US-India trade deal with reference to pulses dropped and it changed the wording around India's proposed USD 500bln purchase from a firm "commitment" to an "intent".
• US House Speaker Johnson fails in an effort to block votes on measures to rescind Trump’s tariff policies, according to CNN's Manu Raju.
• US Treasury Secretary Bessent said US-China ties are stable but competitive, aiming for fair competition and de-risking, not decoupling, while he adds China must rebalance amid persistent USD 1tln trade imbalance.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded higher but with some of the gains in the region capped after the weak handover from the US and with the NFP report on the horizon, while participants also digested earnings and data in thinned conditions, with Japanese markets shut for a holiday. ASX 200 outperformed with the index led higher by the top-weighted financial sector after shares in Australia's largest lender and company by market cap, CBA, rallied following a 5% increase in H1 profits. Hang Seng and Shanghai Comp were kept afloat following the PBoC's liquidity operations and recent pledge to continue implementing an appropriately loose monetary policy in its quarterly implementation report. However, the upside was limited as participants also reflected on the mixed Chinese inflation data in which CPI printed softer-than-expected, while PPI was slightly better-than-feared but remained in deep deflationary territory.

Top Asian News

• Goldman Sachs revised its 2026 China PPI forecast to -0.5% Y/Y.
• ByteDance reportedly plans to produce 100k-300k units of AI chips this year, while it is developing the AI chip and is in talks with Samsung (005930 KS) to manufacture it, according to sources.
• Tencent Cloud (0700 HK) partners with Tesla (TSLA) to upgrade its cockpit experience.
• NetEase (9999 HK / NTES) Q4 (USD): EPS 1.58 (exp. 2.03), Revenue 3.90bln (exp. 4.10bln).

European Bourses (STOXX 600 -0.3%) opened mixed, but now display a mostly negative picture (ex-FTSE 100, buoyed by strength in oil/mining names).  Sectors hold a negative bias. Energy and Basic Resources are towards the top of the pile, whilst Tech lags. Movers today include; Siemens Energy (+5%, strong Q1 results), Dassault Systemes (-17%, poor results and weak outlook), Lufthansa (-4%, pilots threaten to strike). Elsewhere, some modest pressure was seen in Pernod Ricard (+0.5%) following reports that China could consider an anti-dumping duty on French wine.

Top European News

• EU's von der Leyen said the EU needs one large, deep and liquid capital market, adding that its currently too fragmented. Completing their own single market also means completing their own energy union, which is crucial when it comes to bringing prices down even further.

FX

• DXY is slightly lower this morning and trades towards the lower end of a 96.49-96.91 range. Focus for the day lies solely on the US NFP report in the afternoon. The delayed January jobs data is expected to show 70k nonfarm payrolls added in the month (vs a prev. 50k; with the range of forecasts between -10k to +108k); the unemployment rate is expected to remain steady at 4.4%. Recent labour metrics are painting a subdued picture for the labour market, and commentary via WH Economic Adviser Hassett also dampened expectations ahead of the report today. Following his remarks, Bloomberg’s NFP whisper number dropped to 37k (prev. 50k).
• JPY remains at the top of the pile, continuing to extend on the recent strength seen following PM Takaichi’s landslide victory. As mentioned in the coverage since the election, there are numerous factors helping buoy the JPY; a) BoJ potentially to normalise faster, b) less friction for Japanese officials to conduct intervention, c) hefty flows to Japanese equities, d) FinMin Katayama suggesting that surplus foreign reserves could help to fund the food tax suspension. USD/JPY briefly dipped below the 153.00 mark, and currently holds within a 152.79-154.51 band. The pair is now approaching the touted rate check/intervention lows seen late Jan (152.09).
• G10s are firmer against the USD to varying degrees. JPY outperforms (mentioned above), whilst the Aussie follows closely behind. AUD/USD has now breached above the 0.70 mark, to now trade at levels not seen since Feb’23. The pair currently trades around 0.7113, and further upside could see a test of the high from 2nd Feb 2023 at 0.7157. Recent strength comes amidst the continued strength in underlying metals prices, and after commentary from RBA’s Hauser. He noted that inflation is too high, which they can't let persist and will do what is needed to bring inflation back to the target band.
• Elsewhere, EUR is slightly firmer and trades around the 1.19 mark, and off recent highs which saw the single currency top 1.2000 in late January. A weak US jobs report could see another bid higher for EUR/USD, which may lead to ECB doves to push for an FX-led rate cut. No move was seen after the ECB Wage Tracker, where the 2026 annual estimate was increased to 2.388% (prev. 2.316%).
• The NOK continues to strengthen against the EUR in the aftermath of Tuesday’s hotter-than-expected Norwegian inflation data; a report which led some banks to push back calls for Spring cuts. EUR/NOK is currently at session lows, in a 11.2638-11.3300 range.

Fixed Income

• In brief, benchmarks are contained into today's NFP report (delayed due to the brief shutdown), which includes benchmark revisions. US labour data during the window has been on the softer side of things, with claims steady, continuing easing, ADP weak and Revelio posting job losses. Furthermore, Challenger cuts were the highest for January since 2009, and JOLTS were at the lowest since September 2020.
• USTs approach this, and then data and Fed speak afterwards, firmer by a tick or two in a thin 112-15 to 112-18 band; note, trade was quiet overnight with no cash trade due to Japan's market holiday. For the Fed, markets currently fully price a cut in June (-25.2bps implied), with around a 20% chance of one occurring earlier in March and c. 40% in April.
• EGBs in-fitting with the above, Bunds firmer but only marginally so in a 128.60-74 band. ECB speak this morning once again sticking to the script. Interestingly, the latest ECB wage tracker was hot across the board and factors in favour of those who think the next move will be a hike rather than a cut. Adding to the hawkish narrative from/affecting some global central banks in recent sessions, i.e. the RBA and Norges Bank.
• Gilts are contained in a 90.71-90 band. UK specifics are much quieter thus far vs the last few sessions, with a busy docket of data scheduled for next week. Much of the UK press is focused on Angela Rayner after it was revealed that a "Rayner for leader" site briefly went live in January; a Bloomberg write-up on the subject characterises the discussion/view of insiders neatly as "Buy Rayner and Sell Streeting".
• Germany sells EUR 750mln vs exp. EUR 1bln 2.90% 2056 and EUR 1.16bln vs exp. EUR 1.5bln 2.50% 2054 Bund.
• UK sells GBP 300mln 4.25% 2049 Gilt via Tender: b/c 4.32x, average yield 5.256%.
• China's Ministry of Finance issues CNY 14 bln of treasury bonds in Hong Kong.
• Australia sold AUD 700mln 3.75% April 2037 bonds, b/c 4.14, avg. yield 4.8342%.
• JPMorgan launches USD 1.5bln tender offer for EA bonds ahead of USD 20bln buyout financing; buyback includes USD 750mln each of 2031 and 2051 maturities, expiring March 11th.

Commodities

• Crude benchmarks have steadily moved higher as the European session gets underway, with traders digesting a report by Axios quoting President Trump saying that he might send a second carrier to strike Iran if talks fail, pushing aside the larger-than-expected US private inventory build. WTI and Brent rebounded from a trough of USD 63.65/bbl and USD 68.49/bbl respectively in the later hours of Tuesday's trading session, and oscillated in a tight c. USD 0.50/bbl range during the APAC session, with WTI nearing USD 65/bbl to the upside.
• Spot gold remains contained in a USD 4965-5086/oz band that has been formed so far this week, ahead of a busy week of tier-1 US data.
• Base metals have been steadily bidding higher with 3M LME Copper reaching USD 13.25k/t. The broad-based move seems to have been driven by nickel prices. Weda Bay, the world's largest nickel mine, has been told by Indonesian authorities to cut its output by 70% in an effort to boost global prices. Indeed, LME nickel futures prices did lift higher following the report, rising from USD 17.75k/t to USD 17.95k/t, but have since pared back slightly.
• Indian state-owned refiners are to consider buying more US and Venezuelan crude after the trade deal with the US, Bloomberg reported.
• SHFE is adjusting the automatic conversion standard for hedging position limits in silver futures. "...starting from the last trading day of February 2026, the hedging transaction position limits for all silver contracts that have not obtained hedging transaction position limits for the near-delivery month will be temporarily adjusted to 0 lots for both buy and sell hedging transactions in the near-delivery month (the month preceding the delivery month and the delivery month itself).".
• Russia to complete building two ice-class LNG tankers in 2026, according to IFX.
• World's biggest nickel mine in Indonesia, Weda Bay, has been told to slash output by 70% to 12mln tonnes, Bloomberg reported.
• Syria taps energy majors to explore for trillions of cubic meters of gas with the state oil chief noting that Chevron (CVX) , ConocoPhillips (COP) and TotalEnergies (TTE FP) and Eni (ENI IM) are interested in exploration, according to FT.
• US Private Energy Inventory Data (bbls): Crude +13.4mln (exp. +0.8mln), Distillates -2.0mln (exp. -1.3mln), Gasoline +3.3mln (exp. -0.4mln), Cushing +1.4mln.
• US issues Venezuela related license authorizing certain transactions necessary to ports and airport operations, also authorising certain activities involving Venezuelan-origin oil.
• Wells Fargo raises its 2026 gold target to USD 6,100-6,300/oz citing geopolitical risks, market volatility, and strong central-bank demand.

Central Banks

• ECB Wage Tracker: 2026 Annual 2.388% (prev. 2.316%).
• ECB’s Makhlouf said uncertainty means the ECB should take a meeting-by-meeting approach.
• RBA Deputy Governor Hauser said Australia's economy is not just 'dig it and ship it', many parts of the economy are doing quite well, adds inflation is too high which they can't let persist and will do what is needed to return it to the band.
• Westpac anticipates RBNZ hiking rates more quickly in 2027.

Geopolitics: Ukraine

• Russia's Kremlin said that the US has prohibited Russia and China from dealing with Venezuelan oil and are looking to discuss with the US about the restriction.
• Russia to complete building two ice-class LNG tankers in 2026, according to IFX.
• Ukrainian President Zelensky plans spring elections alongside a referendum on the peace deal after US push, according to FT.

Geopolitics: Middle East

• Iranian Supreme leader Khamenei's advisor says that Iranian negotiators have no authority to discuss missiles.
• Iran's Foreign Minister Araqchi said the date for the next round of US negotiations have not been set.
• Iranian Foreign Ministry said they are ready to negotiate on the percentage of uranium enrichment and the size of its enriched stockpile.
• Iran's President said that the country is not seeking nuclear weapons and are ready for any kind of verification.
• US President Trump said Iran wants to make a deal and it would be foolish if they didn't.

Geopolitics: Others

• Australia charges two Chinese nationals with foreign interference.
• Taiwan's President Lai said Indo-Pacific nations are raising defense budgets and Taiwan must do the same, while he thanks US for its support of Taiwan's defence.
• UK expands settlement visa for Hong Kongers following Jimmy Lai's sentence.

US Event Calendar

• 7:00 am: United States Feb 6 MBA Mortgage Applications, prior -8.9%
• 8:30 am: United States Jan Change in Nonfarm Payrolls, est. 65k, prior 50k
• 8:30 am: United States Jan Change in Manufact. Payrolls, est. -6.8k, prior -8k
• 8:30 am: United States Jan Unemployment Rate, est. 4.4%, prior 4.4%
• 2:00 pm: United States Jan Federal Budget Balance, est. -94.35b, prior -144.7b
• 10:00 am: United States Fed’s Schmid Speaks on Monetary Policy and Economic Outlook
• 10:15 am: United States Fed’s Bowman in Moderated Conversation
• 4:00 pm: United States Fed’s Hammack Speaks on Leadership at Ohio State University

DB's Jim Reid concludes the overnight wrap

The last 24 hours have seen a modest risk-off move in markets, with the S&P 500 (-0.33%) and STOXX 600 (-0.07%) both falling back. In part, that was thanks to a weak batch of US data, which added a little bit more doubt on the near-term growth outlook, and pushed Treasury yields down across the curve. So in turn, that cemented expectations the Fed would keep cutting rates under a new Chair this year, and the 10yr Treasury yield (-5.9bps) fell back to 4.14%. But matters also weren’t helped by ongoing concerns in the tech space, whilst fresh geopolitical risks around Iran have seen Brent crude oil move up to a 1-week high this morning of $69.17/bbl. To be fair, US equity futures are back up again this morning, with those on the S&P 500 up +0.29%, but so far the index has been unable to get back up to its record high from a couple of weeks ago.

That weak US data was the biggest market driver yesterday, with a succession of prints that all leant on the softer side. Most notably, retail sales were unchanged in December (vs. +0.4% expected), which added to the sense the economy had stumbled into year-end, particularly after last week’s data where job openings were at their weakest since 2020. Meanwhile, the dovish narrative got even more fuel from the latest Employment Cost Index for Q4, which came in at just +0.7%. That’s a measure of labour costs that’s closely followed by the Fed, and it was the weakest it’s been since the current inflation surge got going in Q2 2021. Moreover, with the data coming in a bit weaker than expected, the Atlanta Fed’s GDPNow estimate for Q4 also came down, now showing an annualised growth rate of +3.7%.

Collectively, those releases helped to validate the dovish arguments pushing for more rate cuts this year. So investors priced in more Fed easing in 2026, and there was even a growing sense that Powell might deliver another cut before departing as Chair if the data continued in that direction. For instance, the probability of a cut by the April FOMC (Powell’s last as Chair) was up to 47% by the close. And looking further out, the amount of cuts priced in by December was up +3.3bps on the day to 60bps. In turn, that brought Treasury yields down across the curve, with the 2yr yield (-3.3bps) closing at 3.45%, whilst the 10yr yield (-5.9bps) fell to 4.14%.

That dovish repricing came as Trump continued to call for lower rates, saying in an interview with Fox Business that the US “should have the lowest interest rates in the world”, and that interest rates should be 2 points lower right now. However, commentary from Fed officials was more cautious, with Cleveland Fed President Hammack saying that “we could be on hold for quite some time”, whilst Dallas Fed President Logan said that it would take “further material cooling” in the labour market for more rate cuts to be appropriate.

Over on the geopolitical side, we also had some fresh headlines on Iran yesterday which put upward pressure on oil prices. First, President Trump told Axios in an interview that he was “thinking” about sending a second aircraft carrier strike group to the Middle East, and said that “Either we will make a deal or we will have to do something very tough like last time”. Separately, the WSJ reported that Trump administration officials had considered whether to seize tankers transporting Iranian oil, but have held off because of concerns about retaliation and the oil market impact. So oil prices moved higher after those headlines, and this morning Brent crude is currently around a 1-week high of $69.17/bbl.

Looking forward, US data will stay in the spotlight today, as we’ll get the January jobs report that was delayed from last Friday because of the partial government shutdown. In terms of what to expect, our US economists see nonfarm payrolls coming in at +75k, with the unemployment rate staying at 4.4%. Remember as well that today’s report will include the annual benchmark revisions to payrolls, which could rewrite some of the trends over recent history. We already got the preliminary number in September, which said that payrolls were -911k lower as of March 2025. However, that number can be different from the preliminary release, and last year’s preliminary benchmark revision was -818k but the final number was a smaller -589k, so not as negative as first thought. For more details, click here for our US econ team’s preview and their subsequent webinar.

Ahead of that, US equities fell back, with the S&P 500 (-0.33%) initially on course for a new record before reversing course later in the session. That came amidst a turnaround in software stocks, which were up over 2% in early trading, before paring that back to close just +0.09% higher. That tech drag was seen more broadly, with the Mag 7 (-0.60%) falling back as every member except Tesla lost ground, whilst the small-cap Russell 2000 (-0.34%) performed in-line with large caps as investors grew more cautious ahead of today’s jobs report.
Earlier in Europe, markets had also put in a steady performance, with sovereign bonds rallying after the US data. So that meant yields on 10yr bunds (-3.2bps), OATs (-3.7bps) and BTPs (-3.8bps) all moved lower. And similarly, 10yr gilt yields (-2.1bps) were also subdued as the political uncertainty over Prime Minister Starmer’s position eased back again. Meanwhile for equities, it was a quiet day as well, with the STOXX 600 (-0.07%) modestly declining from its record high the previous day.

Staying on Europe, tomorrow will also see EU leaders gather for a meeting on how to strengthen the single market and reduce their  economic dependencies. They’ll also be joined by former ECB President Mario Draghi, who wrote a report on boosting EU competitiveness back in 2024. Our European economists have a preview of that summit (link here), where they also look at the progress so far in implementing Draghi’s recommendations.

Overnight in Asia, most equity markets have put in a decent performance, with gains for the KOSPI (+0.9%), the Hang Seng (+0.41%) and the Shanghai Comp (+0.20%), although the CSI 300 (-0.08%) is down slightly. Meanwhile in Japan, markets are closed for a public holiday, but futures on the Nikkei (+0.68%) are also pointing higher this morning, with those on the S&P 500 (+0.24%) rising as well. Otherwise, we also have the latest Chinese inflation data overnight, which showed that CPI decelerated by more than expected to +0.2% in January (vs. +0.4% expected). By contrast however, the PPI reading rose by more than expected, with a deflation rate of -1.4% (vs. -1.5% expected). So that’s actually the highest PPI reading in 18 months, even though it’s still in deflationary territory.

Looking at the day ahead, data releases include the US jobs report for January, and Italy’s industrial production for December. Central bank speakers include the Fed’s Schmid, Bowman and Hammack, along with the ECB’s Cipollone and Schnabel.

Tyler Durden Wed, 02/11/2026 - 08:29

MrBeast Buys Gen Z Bank Just Weeks After BitMine's $200M Bet

Authored by Brayden Lindrea via CoinTelegraph.com,

Beast Industries, the entertainment company founded by YouTuber Jimmy “MrBeast” Donaldson, is acquiring Step, a mobile banking app focused on teenagers and young adults, marking its most significant push into finance to date.

In a post to X on Monday, Donaldson said the motivation behind the acquisition was to equip young people with the tools and guidance needed to navigate personal finance from an early age.

Source: MrBeast

Beast Industries CEO Jeff Housenbold said, "Financial health is fundamental to overall wellbeing, yet too many people lack access to the tools and knowledge they need to build financial security.”

The acquisition cost was not disclosed.

The YouTube channel’s expansion into finance comes after it received a $200 million investment from Ethereum treasury firm BitMine Immersion Technologies in January and a separate trademark filing for “MrBeast Financial” in October.

That trademark filing mentioned "cryptocurrency exchange services,” “cryptocurrency payment processing,” and “cryptocurrency via decentralized exchanges.”

However, it isn’t clear whether that trademark filing is related to the Step acquisition.

Cointelegraph reached out to Beast Industries for comment, but didn’t receive an immediate response.

Step scales to 6.5 million users in 8 years

The Step app aims to help Gen Z users manage money, build credit, earn rewards, and deepen their financial literacy. Spending accounts are Federal Deposit Insurance Corporation-insured through Evolve Bank & Trust.

The banking app has scaled to 6.5 million users since launching in 2018 and has raised around $500 million from the likes of Steph Curry, Justin Timberlake, Will Smith and Charli D’Amelio.

The MrBeast YouTube channel has 466 million subscribers, the largest channel on the video-streaming platform.

Housenbold said the Step acquisition “positions us to meet our audiences where they are, with practical, technology-driven solutions that can transform their financial futures for the better."

At the time of the strategic $200 million BitMine investment, its chair, Tom Lee, said the company viewed the deal as a long-term bet on the creator economy, stating:

“MrBeast and Beast Industries, in our view, is the leading content creator of our generation, with a reach and engagement unmatched with GenZ, GenAlpha and Millennials.”

Lee said that BitMine’s corporate values were “strongly aligned” with Beast Industries, but didn’t mention anything about integrating crypto at the time.

Tyler Durden Wed, 02/11/2026 - 08:05

Germany's Decline Is A Warning Canada Should Heed Now

Authored by Gwyn Morgan via The Epoch Times,

Germany was postwar Europe’s greatest economic success story.

Today it is a cautionary tale.

Once the continent’s industrial engine, Germany has spent the past decade dismantling the foundations of its prosperity through energy and immigration policies driven more by ideology than evidence or good sense. The results have been rising costs, falling competitiveness, social disorder, and political backlash.

Canada should study this record closely—because we are pursuing many of the same policies.

Energy has played a leading role in Germany’s decline. Reliable, affordable power is the lifeblood of any advanced economy. In 2002, Germany’s 11 nuclear power plants supplied more than one-quarter of its electricity, with coal providing most of the remainder and natural gas filling in when needed. “Renewable” energy played only a minor role. The country had a stable, economically efficient grid that supported one of the world’s most productive industrial bases.

That balance was abandoned. Driven by an ideological campaign against nuclear power, successive governments committed to replacing reliable baseload electricity with intermittent wind and solar. The goal shifted from reducing emissions to shutting down all nuclear plants, at any cost. After Japan’s Fukushima disaster in 2011—caused by a tsunami, not reactor failures—Germany accelerated these closures. Within six months, eight nuclear plants were taken offline. The rest would eventually follow. Not even Vladimir Putin’s invasion of Ukraine would throw Germany’s anti-nuclear zealots off-track.

The consequences were predictable. Electricity demand rose as Germany pushed consumers and industry to electrify, but wind and solar output could not keep pace. Germany turned instead to imported natural gas, much of it from Russia, replacing energy independence with geopolitical vulnerability. Had Germany kept its nuclear plants operating, a PricewaterhouseCoopers study concluded, 94 percent of its power generation would now be emissions-free and electricity prices roughly 23 percent lower.

Instead, Germans now face some of the world’s highest electricity prices plus declining reliability. They even coined a new word, “Dunkelflaute,” to describe calm, dark periods when wind and solar produce no power at all. High energy costs have hollowed out German industry. Its world-leading chemicals sector has shrunk dramatically. Family-owned manufacturers—a pillar of German industry for centuries—are closing by the hundreds.

The damage is most visible in Germany’s auto sector, which once provided livelihoods for millions and anchored its export economy. Today it is in retreat. Production fell by 29 percent between 2017 and 2024. Chinese manufacturers—benefiting from scale, subsidies, and lower energy costs—are flooding European markets with affordable electric vehicles. German firms are losing market share and laying off workers in large numbers for the first time since the World War II.

This should sound uncomfortably familiar to Canadians. Canada is also driving up domestic energy costs while betting heavily on electrification and electric-vehicle manufacturing. We have fewer industrial buffers than Germany and higher transportation costs. If Europe’s industrial powerhouse cannot absorb these shocks, Canada’s position is even more precarious.

Germany’s second self-inflicted wound was mass immigration. During the Syrian civil war, Chancellor Angela Merkel opened her country’s borders, blithely declaring “Wir schaffen das” (“We can do this”). By the end of 2015, Germany had taken in 1.2 million refugees. Integration systems were overwhelmed while schools, housing, social services and policing struggled to cope. Despite these clear warning signs, Germany kept right on going, bringing in hundreds of thousands of migrants year after year from troubled Asian and African countries.

The fiscal cost has been staggering. In 2024 alone, Germany spent nearly 30 billion euros, or about C$48 billion, on refugees and asylum-seekers, not including costs associated with crime and security. Social cohesion frayed further. Public spaces required ever-heavier security. Terrorist attacks and sexual assaults rose. Political backlash followed.

Only now is Germany putting on the brakes, deporting tens of thousands of rejected asylum seekers or criminal migrants and cutting benefits.

The same government that once insisted open borders were a moral imperative now acknowledges limits.

Germany’s energy and immigration failures have a common cause: policymaking driven by moralistic certitude rather than empirical recognition of practical constraints. In both cases, dissent was dismissed, costs were minimized, warnings ignored, and course-corrections refused even after damage became impossible to deny.

Canada should take note. We are raising energy prices while maintaining immigration at near-record levels—including hundreds of thousands of barely-if-at-all vetted refugees—amid a housing shortage, stagnant productivity, and strained public services. Germany shows how quickly good intentions can morph into economic and social decline.

Canada still has time to change course. Whether we choose to learn the lesson is another matter.

*  *  *

Gwyn Morgan devoted three decades to building North America’s leading oil and gas company. He has served as a director of five global corporations, and was appointed a Member of the Order of Canada in 2011.

The original, full-length version of this article was recently published in C2C Journal.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Wed, 02/11/2026 - 06:30

French Wine, Spirits Exports Sink To 20-Year Low As Demand Sours

Trade wars, along with a generational shift away from wine, have pushed Bordeaux winemakers into turmoil, with French wine and spirits exports sinking to their lowest level in two decades.

"In volume, our exports have been in a slump and are at their lowest level in at least 20 years," Gabriel Picard, president of FEVS, the country's federation of wine and spirits exporters, told Bloomberg at the Wine Paris fair on Tuesday.

Gabriel Picard

Picard warned that wine sales have been sliding since 2022. In an earlier statement, he said, "Geopolitical tensions, trade conflicts, exchange-rate fluctuations, and the loss of consumer confidence have all weighed on our exports."

In a separate interview with Reuters at Wine Paris, he added, "There is a real decline in the U.S., and the volume correction may not have been sufficient."

He warned, "We may see another volume correction in 2026."

Wine Map Of France 

FEVS data show that exports in 2025 declined 8% in value to $17 billion compared with 2024. Volumes fell by about 3%.

The Wine Paris trade fair is a push by President Macron to search for solutions to the industry's crisis. The French government is paying winemakers in Bordeaux to rip up their vines to reduce oversupply.

Looking at markets, the Liv-ex Fine Wine 50, a benchmark index from Liv-ex that tracks daily price moves in Bordeaux First Growths, comprises 50 component wines and shows the bust underway since peaking in early 2023.

"Twenty years ago, people liked robust reds with a high alcohol content, but today they're looking for fresher, lighter wines, so producers in Bordeaux are returning to an old winemaking method to suit new tastes," Bernard Burtschy, a wine critic for Le Figaro, told The Times.

Tyler Durden Wed, 02/11/2026 - 05:45