Concerns that rising energy prices due to conflict in the Middle East will push up inflation has led the market to pare back expectations for further Fed and Bank of England (BoE) rate cuts and to price out the already slim chances of any further policy easing by the ECB. The re-pricing of BoE rate expectations helped lift sterling off lows yesterday of circa $1.3315 and £0.8790 against the dollar and euro respectively, though it is revisiting its lows against the US currency this morning while trading at around £0.8740 versus the euro. The single currency is heading further south against the dollar, currently trading at about $1.1630, which is not far off mid-January’s 2026 to date low of just under $1.16.
Yesterday’s Events
Oil and gas prices remain under pressure as Iran says the Strait of Hormuz is now “closed”. Brent crude has moved above $80 per barrel again, after briefly dipping back to just under $77 p/b yesterday, while European gas prices are up another 25% today after surging by 40% yesterday. If sustained, higher energy prices will push up headline inflation, which is particularly problematic for the Fed and BoE given inflation in the US and UK – at around 3% – is already running well above the 2% target (Euro area inflation is currently running slightly below target at 1.7%). Expectations for Fed and BoE rate cuts this year have been pared back as a result, to less than 50bps for the former and to just 25bps for the latter, with the next cuts in rates pushed out to late Q3 and beyond. The market has priced out any chance of an ECB rate cut this year, and indeed is now pricing in a small chance of a hike by year-2025.
The re-pricing of interest rate expectations has contributed to a sharp rise in government bond yields. UK and US 2-year yields are up around 12-13bps since last Friday’s close, while German 2-year yields are about 10bps higher. Yields further out the curve have also increased, with 10-year yields up about 12-14bps, essentially reversing last week’s decline in yields. Meanwhile, in equity markets, the S&P 500 (surprisingly) managed to end flat yesterday, erasing earlier losses, but the futures market points to a renewed decline at the open later today. The Euro Stoxx 600, in contrast, shed around 2.5% yesterday and it is down another 1% or so at the open this morning.
ECB Chief Economist Philip Lane says “the scale of the impact” of developments in the Middle East “depends on the breadth and duration of the conflict”, but acknowledges that “there would be a substantial spike in energy-driven inflation and a sharp drop in output if (the) conflict led to a persistent drop in energy supplies and disruptions in regional economic activity.”
The Days Ahead
For today, the focus for markets will remain very much on the situation in the Middle East and the impact on energy prices in particular. It is very quiet on the economic data front with a flash reading of Euro area inflation in February the only release of note.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
2 Mar 2026
Todays Talking Points 02.03.2026
Market Commentary
Oil prices have spiked higher following the US-Israel attacks on Iran over the weekend and the latter’s retaliatory actions across the region. Brent crude has jumped by around $7 per barrel – or almost 10% – from Friday’s close to just under $80 p/b, its highest level since mid-January 2025. The dollar is the main beneficiary so far in FX, gaining ground against the board including versus the Swiss franc and Japanese yen. EURUSD and GBPUSD are down around a cent and a cent and a half respectively from Friday’s closing levels, trading at about $1.17 and just below $1.3350 this morning. EURGBP is marginally firmer at about £0.8780
Yesterdays Events
Equity markets in Asia were mostly in the red overnight, with the Nikkei in Japan off almost 1.5%, while European stocks are down around 2.5% this morning. In government bond markets, Japanese 10-year yields are slightly lower, by 3-4bps, but perhaps somewhat surprisingly, equivalent US yields are a touch higher overnight, by 2-3bps (albeit following a sharpy decline of circa 15bps last week), while German and UK yields are marginally higher at the start of play today too.
Ahead of tomorrow’s flash Euro area inflation for February, German inflation came in a touch lower than expected last month at 2.0% according to data released on Friday, down from 2.1% in January. French and Spanish inflation were both higher than expected though at 1.1% and 2.5% respectively, up from 0.4% and 2.4% in January. The latest consensus forecast is for Euro area inflation to have remained at 1.7% last month.
The Days Ahead
Looking ahead, while clearly the focus for markets will be on developments in the Middle East, there are some important economic data due this week. As well as Euro area inflation, US releases include the latest ISM manufacturing and services surveys today and Wednesday respectively as well as retail sales and the key employment (non-farm payrolls) report on Friday. There are also a large number of ECB and Fed members due to speak over the course of the week.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 27.02.2026
Market Commentary
Sterling was on the back foot yesterday, shedding around half a percent against both the dollar and the euro (more than reversing Wednesday’s gains) amid a ‘risk off’ mood in markets and ahead of the result of the UK by-election in Gorton and Denton in Greater Manchester. Labour lost the latter convincingly, coming in a distant third behind the Greens, who took the seat, and Reform in second place, with the result likely to keep the pressure on PM and Labour leader Starmer ahead of local elections in May. The pound is trading at a new 2026 low against the euro of about £0.8760 this morning, and is back below $1.35 against the dollar. The euro is not much changed against the US currency versus yesterday morning’s levels, trading at around $1.1815, within the relatively narrow range of circa $1.1765 to $1.1835 that has prevailed this week to date.
Yesterdays Events
US equities reversed course yesterday, giving up most of Wednesday’s gains, with the Nasdaq leading the way (shedding more than 1%), while European stocks were largely unchanged on the day. Government bonds rallied with US and UK yields falling by 4-5bps across the curve and German yields around 2-3bps lower. The benchmark US 10-year yield is now back at 4%, its lowest level since late November last year.
Consumer confidence in the UK fell back in February according to the GfK measure, reversing its post-November budget gains. GfK notes that “unemployment has now reached its highest level in nearly five years, and this is increasing concerns about job security, particularly given the backdrop of weak wage growth.” Separately, business confidence was unchanged this month, after declining sharply in January, according to the Lloyd’s Business Barometer.
In remarks at the European Parliament yesterday, ECB President Christine Lagarde said economic activity in the Euro area “is expected to be supported by a resilient labour market, as well as investment in defence, infrastructure and digital technologies, while at the same time, the trade environment remains challenging owing to higher tariffs, a stronger euro and a persistently volatile global policy environment”. She notes that “wage growth remains elevated but has eased gradually and is expected to continue to moderate to around 3% in the medium term,” which in turn will help inflation “to stabilise at our 2% target.”
The latest Euro area economic data were somewhat underwhelming. The European Commission’s Economic Sentiment Indicator fell in February (albeit following a strong increase in January), largely reflecting a decline in sentiment in the services sector, and remained below its long-term average. Meanwhile, credit growth in the zone remained relatively modest in January, with the year-on-year increase in lending to households (dominated by lending for house purchase) unchanged at 3% but lending growth to non-financial corporations easing for a second month in a row, to 2.8% from 3% in December and 3.1% in November.
The Days Ahead
It’s a relatively quiet end to the week in terms of economic data. Producers prices (for January) and construction spending (for December) are scheduled in the US, while the ECB publishes its latest survey of short (1-year ahead) and medium (3-year ahead) inflation expectations.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 26.02.2026
Market Commentary
It remains fairly sedate in FX. Sterling did edge higher against the dollar and euro yesterday, getting up to around $1.3570 and below £0.8710 respectively at one stage, with the ‘risk -on’ mood in markets (evidenced by a further rise in equity markets) and some small paring back of expectations for a Bank of England rate cut next month supporting the currency. It has slipped this morning though (to about $1.3535 and £0.8720) ahead of the results of a key by-election taking place today in the Greater Manchester constituency of Gorton and Denton (which Labour is at risk of losing have won convincingly in the 2024 general election). Meanwhile, the euro has nudged back up above the $1.18 level this morning, trading at about $1.1810.
Yesterdays Events
Equity markets rallied again yesterday with US and European stocks gaining almost 1%. Asian markets are mixed overnight though, despite better than expected results from Nvidia after the US close, while European indices have opened marginally higher this morning. It was another uneventful day in government bond markets with yields little changed.
Headline and core CPI inflation in the Euro area were confirmed at 1.7% and 2.2% in January according to yesterday’s final reading, down from 2% and 2.3% in December. Within core, a decline in services inflation t0 3.2% (from 3.4%) more than offset an increase in goods inflation to 0.4% (from 0.3%).
ECB member Vujcic notes that, “although inflation is back at our medium-term target again, the overall economic and geopolitical environment leave no room for complacency,” adding that he will continue to monitor “evolving risks” to the outlook and decide on interest rates on a meeting-by- meeting basis.
The Days Ahead
For the day ahead, economic data due include money supply/credit growth and the European Commission’s Economic Sentiment Indicator in the Euro area, and the regular weekly jobless claims report in the US. ECB President Lagarde speaks at the European Parliament, while a few Fed officials are due on the wires during the course of the day.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
25 Feb 2026
Todays Talking Points 25.02.2026
Market Commentary
it was fairly quiet in FX markets yesterday with most of the main currency pairs trading in narrow ranges. Donald Trump’s State of the Union address overnight has had little impact, which perhaps should be taken as good news. The euro and sterling are marginally firmer against the dollar this morning, with the single currency trading just shy of $1.18 and the pound hovering north of $1.35. EURGBP is trading at about £0.8730, having briefly dipped to a low of just under £0.8710 in yesterday’s session.
Yesterdays Events
Government bond yields were little changed. Curve flattening was again in evidence with short-dated yields generally a touch higher and long-dated yields flat to marginally lower. In equity markets, US stocks reversed most of Monday’s losses, gaining around 1%, while European indices ended broadly flat on the day.
Bank of England Governor Andrew Bailey reiterates that “with inflation returning to target, there should be scope for some further easing in monetary policy”. However he cautions that “this does not mean that I expect to cut (rates) at any particular meeting…it means that I will go into the coming meetings asking whether a cut is justified.” The market is pricing in a circa 75% chance of a 25bps reduction in rates at next month’s meeting (March 19th).
Fed’s Goolsbee says he remains “optimistic that there can be more rate cuts this year…though that hinges on seeing actual progress on inflation that shows we are on a path back to the 2% target.” The latest PCE data, published last Friday, showed headline inflation still well above target in December at just under 3%.
Consumer confidence in the US ticked up in February, according to the Conference Board’s measure, having fallen quite sharply in January. It remains well below year-earlier levels though, with ‘affordability’ concerns remaining “at the top of consumers’ minds.”
The Days Ahead
It’s very light in terms of economic data today with a final reading of Euro area CPI inflation in January the only release of note – the flash reading showed headline inflation fell to 1.7% last month from 2.0% in December. A few Fed members are scheduled to speak during the course of the day.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
24 Feb 2026
Todays Talking Points 24.02.2026
Market Commentary
US and European equity markets were on the back foot yesterday amid the latest bout of tariff uncertainty and ongoing AI-related concerns, while government bonds rallied with yields ending lower on the day. In FX, the dollar regained some ground during the course of the session. EURUSD and GBPUSD are trading at around $1.1790 and $1.3485 respectively this morning, down from yesterday’s best levels of about $1.1835 and $1.3535. EURGBP is little changed once again as it continues to hover just below £0.8750.
Yesterday’s Events
In equity markets, the S&P 500 shed 1% while the Euro Stoxx 600 finished down around half a percent. The latter is also marginally lower again at the open this morning. Government bonds staged a decent rally amid the weakness in the stocks. This was concentrated mainly at the long end of the curve with US 10-year yields falling by around 5bps and equivalent German and UK yields about 3-4bps lower.
Fed Governor Waller – a noted ‘dove’ who dissented in favour of a 25bps rate cut at the central bank’s last monetary policy meeting – says that if upcoming data “support the idea” of a further improvement in the labour market (following January’s stronger than expected job gains of 130k), then it may be appropriate to keep policy on hold at the next meeting in March. The market continues to expect the next quarter-point cut in rates in July.
ECB President Christine Lagarde reiterates that the risks to the Euro area growth and inflation outlook remain ‘broadly balanced’, but says the central bank “has to be agile and determine whether something needs to be done” on interest rates on a meeting-by-meeting basis. Current market pricing continues to see a small chance of a cut in rates this year.
The Day Ahead
It is quiet on the economic data front today with consumer confidence and house prices in the US and the CBI’s latest retail sales survey in the UK. Members of the Bank of England MPC discuss the latest Monetary Policy Report at a meeting of the Treasury Committee, while a number of ECB and Fed officials are scheduled to speak during the course of the day.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
23 Feb 2026
Todays Talking Points 23.02.2026
Market Commentary
The dollar is under a little pressure this morning amid the latest instalment of the Trump tariff turmoil. Shortly after the Supreme Court on Friday struck down his IEEPA-imposed (mostly reciprocal) tariffs, the US President slapped a temporary (150 day) 10% tariff on all countries using alternative legislation, raising it to 15% in less than 24 hours. How the new levy interacts with the trade deals the US has agreed recently is unclear. Indeed, the EU has asked for “full clarity” from the US, noting that “the current situation is not conducive to delivering fair (and) balanced…trade and investment” as agreed between the two sides in the deal reached in August last year. The euro and sterling are trading at around $1.1815 and $1.3515 against the dollar respectively this morning (up from around $1.1750 and $1.3450 before the Supreme Court announcement), leaving EURGBP at just under £0.8750.
Yesterday’s Events
US government bond yields increased on the week as the market pared back expectations for Fed rate cuts – about 55bps is now priced in for this year versus 65bps previously – with 2- and 10-year yields rising by circa 8bps and 4bps respectively. In the UK, bond yields at the long end curve fell further with 10- and 30-year yields declining by another 7bps or so, while German yields were marginally higher in the 2-year area but marginally lower further out the curve. In equity markets, European and US stocks chalked up solid gains with the Euro Stoxx 600 and S&P 500 ahead by about 2% and 1% respectively. Asian stocks are mostly in the red overnight though, and European indices have opened lower this morning also.
Friday’s GDP report showed the US economy grew by 0.4% q-o-q (or 1.4% at an annualised rate) in Q4 2025, less than the consensus forecast of 0.7% (2.8%) and a moderation from 1.1% (4.4%) in Q3. Government spending made a negative contribution to growth in Q4, reflecting the impact of the government shutdown in October-early November, but this should reverse in the current quarter. On a y-o-y basis, GDP grew by 2.2% in the fourth quarter, while for 2025 as a whole growth averaged 2.2%, a slowdown from 2.8% in 2024.
Staying with the US, headline PCE inflation – the Fed’s target measure of inflation – came in slightly higher than forecast in December at 2.9%, up from 2.8% in November. Core inflation was also ahead of expectations at 3%, up from 2.8%, driven by an acceleration in core goods inflation to 2.0% from 1.2% in November, while core services inflation was unchanged from November at 3.3%.
Economic growth in the UK looks to have picked up in the opening months of 2026 judging by the last PMIs, have remained sluggish in the final quarter of 2025 (at just 0.1% q-o-q). The composite PMI remained well above the 50 expansion-contraction threshold in February, nudging up to 53.9 from 53.7 in January. The manufacturing index rose slightly to 52.0, above the 50 level for a second month in a row, while the services index slipped to 53.9 from January’s 54.0. Meanwhile, the PMIs for the Euro area showed the composite index rebounded in February, rising to 51.9, having fallen in each of the two previous months, consistent with ongoing economic growth in the zone.
The Days Ahead.
Looking to the week ahead, markets will obviously be watching for (and responding to) any further developments on the tariffs front. Economic data due include consumer confidence (Tuesday), weekly jobless claims (Thursday) and producer prices (Friday) in the US; the European Commission’s Economic Sentiment Indicator for the Euro area (Thursday); and both consumer and business confidence in the UK (Friday). Members of the Bank of England MPC discuss the latest Monetary Policy Report at a meeting of the Treasury Committee on Tuesday, while a number of ECB and Fed officials are scheduled to speak over the course of the week.
Dealer Comments
Todays Talking Points 03.03.2026
Market Commentary
Concerns that rising energy prices due to conflict in the Middle East will push up inflation has led the market to pare back expectations for further Fed and Bank of England (BoE) rate cuts and to price out the already slim chances of any further policy easing by the ECB. The re-pricing of BoE rate expectations helped lift sterling off lows yesterday of circa $1.3315 and £0.8790 against the dollar and euro respectively, though it is revisiting its lows against the US currency this morning while trading at around £0.8740 versus the euro. The single currency is heading further south against the dollar, currently trading at about $1.1630, which is not far off mid-January’s 2026 to date low of just under $1.16.
Yesterday’s Events
Oil and gas prices remain under pressure as Iran says the Strait of Hormuz is now “closed”. Brent crude has moved above $80 per barrel again, after briefly dipping back to just under $77 p/b yesterday, while European gas prices are up another 25% today after surging by 40% yesterday. If sustained, higher energy prices will push up headline inflation, which is particularly problematic for the Fed and BoE given inflation in the US and UK – at around 3% – is already running well above the 2% target (Euro area inflation is currently running slightly below target at 1.7%). Expectations for Fed and BoE rate cuts this year have been pared back as a result, to less than 50bps for the former and to just 25bps for the latter, with the next cuts in rates pushed out to late Q3 and beyond. The market has priced out any chance of an ECB rate cut this year, and indeed is now pricing in a small chance of a hike by year-2025.
The re-pricing of interest rate expectations has contributed to a sharp rise in government bond yields. UK and US 2-year yields are up around 12-13bps since last Friday’s close, while German 2-year yields are about 10bps higher. Yields further out the curve have also increased, with 10-year yields up about 12-14bps, essentially reversing last week’s decline in yields. Meanwhile, in equity markets, the S&P 500 (surprisingly) managed to end flat yesterday, erasing earlier losses, but the futures market points to a renewed decline at the open later today. The Euro Stoxx 600, in contrast, shed around 2.5% yesterday and it is down another 1% or so at the open this morning.
ECB Chief Economist Philip Lane says “the scale of the impact” of developments in the Middle East “depends on the breadth and duration of the conflict”, but acknowledges that “there would be a substantial spike in energy-driven inflation and a sharp drop in output if (the) conflict led to a persistent drop in energy supplies and disruptions in regional economic activity.”
The Days Ahead
For today, the focus for markets will remain very much on the situation in the Middle East and the impact on energy prices in particular. It is very quiet on the economic data front with a flash reading of Euro area inflation in February the only release of note.
2 Mar 2026
Todays Talking Points 02.03.2026
Market Commentary
Oil prices have spiked higher following the US-Israel attacks on Iran over the weekend and the latter’s retaliatory actions across the region. Brent crude has jumped by around $7 per barrel – or almost 10% – from Friday’s close to just under $80 p/b, its highest level since mid-January 2025. The dollar is the main beneficiary so far in FX, gaining ground against the board including versus the Swiss franc and Japanese yen. EURUSD and GBPUSD are down around a cent and a cent and a half respectively from Friday’s closing levels, trading at about $1.17 and just below $1.3350 this morning. EURGBP is marginally firmer at about £0.8780
Yesterdays Events
Equity markets in Asia were mostly in the red overnight, with the Nikkei in Japan off almost 1.5%, while European stocks are down around 2.5% this morning. In government bond markets, Japanese 10-year yields are slightly lower, by 3-4bps, but perhaps somewhat surprisingly, equivalent US yields are a touch higher overnight, by 2-3bps (albeit following a sharpy decline of circa 15bps last week), while German and UK yields are marginally higher at the start of play today too.
Ahead of tomorrow’s flash Euro area inflation for February, German inflation came in a touch lower than expected last month at 2.0% according to data released on Friday, down from 2.1% in January. French and Spanish inflation were both higher than expected though at 1.1% and 2.5% respectively, up from 0.4% and 2.4% in January. The latest consensus forecast is for Euro area inflation to have remained at 1.7% last month.
The Days Ahead
Looking ahead, while clearly the focus for markets will be on developments in the Middle East, there are some important economic data due this week. As well as Euro area inflation, US releases include the latest ISM manufacturing and services surveys today and Wednesday respectively as well as retail sales and the key employment (non-farm payrolls) report on Friday. There are also a large number of ECB and Fed members due to speak over the course of the week.
Todays Talking Points 27.02.2026
Market Commentary
Sterling was on the back foot yesterday, shedding around half a percent against both the dollar and the euro (more than reversing Wednesday’s gains) amid a ‘risk off’ mood in markets and ahead of the result of the UK by-election in Gorton and Denton in Greater Manchester. Labour lost the latter convincingly, coming in a distant third behind the Greens, who took the seat, and Reform in second place, with the result likely to keep the pressure on PM and Labour leader Starmer ahead of local elections in May. The pound is trading at a new 2026 low against the euro of about £0.8760 this morning, and is back below $1.35 against the dollar. The euro is not much changed against the US currency versus yesterday morning’s levels, trading at around $1.1815, within the relatively narrow range of circa $1.1765 to $1.1835 that has prevailed this week to date.
Yesterdays Events
US equities reversed course yesterday, giving up most of Wednesday’s gains, with the Nasdaq leading the way (shedding more than 1%), while European stocks were largely unchanged on the day. Government bonds rallied with US and UK yields falling by 4-5bps across the curve and German yields around 2-3bps lower. The benchmark US 10-year yield is now back at 4%, its lowest level since late November last year.
Consumer confidence in the UK fell back in February according to the GfK measure, reversing its post-November budget gains. GfK notes that “unemployment has now reached its highest level in nearly five years, and this is increasing concerns about job security, particularly given the backdrop of weak wage growth.” Separately, business confidence was unchanged this month, after declining sharply in January, according to the Lloyd’s Business Barometer.
In remarks at the European Parliament yesterday, ECB President Christine Lagarde said economic activity in the Euro area “is expected to be supported by a resilient labour market, as well as investment in defence, infrastructure and digital technologies, while at the same time, the trade environment remains challenging owing to higher tariffs, a stronger euro and a persistently volatile global policy environment”. She notes that “wage growth remains elevated but has eased gradually and is expected to continue to moderate to around 3% in the medium term,” which in turn will help inflation “to stabilise at our 2% target.”
The latest Euro area economic data were somewhat underwhelming. The European Commission’s Economic Sentiment Indicator fell in February (albeit following a strong increase in January), largely reflecting a decline in sentiment in the services sector, and remained below its long-term average. Meanwhile, credit growth in the zone remained relatively modest in January, with the year-on-year increase in lending to households (dominated by lending for house purchase) unchanged at 3% but lending growth to non-financial corporations easing for a second month in a row, to 2.8% from 3% in December and 3.1% in November.
The Days Ahead
It’s a relatively quiet end to the week in terms of economic data. Producers prices (for January) and construction spending (for December) are scheduled in the US, while the ECB publishes its latest survey of short (1-year ahead) and medium (3-year ahead) inflation expectations.
Todays Talking Points 26.02.2026
Market Commentary
It remains fairly sedate in FX. Sterling did edge higher against the dollar and euro yesterday, getting up to around $1.3570 and below £0.8710 respectively at one stage, with the ‘risk -on’ mood in markets (evidenced by a further rise in equity markets) and some small paring back of expectations for a Bank of England rate cut next month supporting the currency. It has slipped this morning though (to about $1.3535 and £0.8720) ahead of the results of a key by-election taking place today in the Greater Manchester constituency of Gorton and Denton (which Labour is at risk of losing have won convincingly in the 2024 general election). Meanwhile, the euro has nudged back up above the $1.18 level this morning, trading at about $1.1810.
Yesterdays Events
Equity markets rallied again yesterday with US and European stocks gaining almost 1%. Asian markets are mixed overnight though, despite better than expected results from Nvidia after the US close, while European indices have opened marginally higher this morning. It was another uneventful day in government bond markets with yields little changed.
Headline and core CPI inflation in the Euro area were confirmed at 1.7% and 2.2% in January according to yesterday’s final reading, down from 2% and 2.3% in December. Within core, a decline in services inflation t0 3.2% (from 3.4%) more than offset an increase in goods inflation to 0.4% (from 0.3%).
ECB member Vujcic notes that, “although inflation is back at our medium-term target again, the overall economic and geopolitical environment leave no room for complacency,” adding that he will continue to monitor “evolving risks” to the outlook and decide on interest rates on a meeting-by- meeting basis.
The Days Ahead
For the day ahead, economic data due include money supply/credit growth and the European Commission’s Economic Sentiment Indicator in the Euro area, and the regular weekly jobless claims report in the US. ECB President Lagarde speaks at the European Parliament, while a few Fed officials are due on the wires during the course of the day.
25 Feb 2026
Todays Talking Points 25.02.2026
Market Commentary
it was fairly quiet in FX markets yesterday with most of the main currency pairs trading in narrow ranges. Donald Trump’s State of the Union address overnight has had little impact, which perhaps should be taken as good news. The euro and sterling are marginally firmer against the dollar this morning, with the single currency trading just shy of $1.18 and the pound hovering north of $1.35. EURGBP is trading at about £0.8730, having briefly dipped to a low of just under £0.8710 in yesterday’s session.
Yesterdays Events
Government bond yields were little changed. Curve flattening was again in evidence with short-dated yields generally a touch higher and long-dated yields flat to marginally lower. In equity markets, US stocks reversed most of Monday’s losses, gaining around 1%, while European indices ended broadly flat on the day.
Bank of England Governor Andrew Bailey reiterates that “with inflation returning to target, there should be scope for some further easing in monetary policy”. However he cautions that “this does not mean that I expect to cut (rates) at any particular meeting…it means that I will go into the coming meetings asking whether a cut is justified.” The market is pricing in a circa 75% chance of a 25bps reduction in rates at next month’s meeting (March 19th).
Fed’s Goolsbee says he remains “optimistic that there can be more rate cuts this year…though that hinges on seeing actual progress on inflation that shows we are on a path back to the 2% target.” The latest PCE data, published last Friday, showed headline inflation still well above target in December at just under 3%.
Consumer confidence in the US ticked up in February, according to the Conference Board’s measure, having fallen quite sharply in January. It remains well below year-earlier levels though, with ‘affordability’ concerns remaining “at the top of consumers’ minds.”
The Days Ahead
It’s very light in terms of economic data today with a final reading of Euro area CPI inflation in January the only release of note – the flash reading showed headline inflation fell to 1.7% last month from 2.0% in December. A few Fed members are scheduled to speak during the course of the day.
24 Feb 2026
Todays Talking Points 24.02.2026
Market Commentary
US and European equity markets were on the back foot yesterday amid the latest bout of tariff uncertainty and ongoing AI-related concerns, while government bonds rallied with yields ending lower on the day. In FX, the dollar regained some ground during the course of the session. EURUSD and GBPUSD are trading at around $1.1790 and $1.3485 respectively this morning, down from yesterday’s best levels of about $1.1835 and $1.3535. EURGBP is little changed once again as it continues to hover just below £0.8750.
Yesterday’s Events
In equity markets, the S&P 500 shed 1% while the Euro Stoxx 600 finished down around half a percent. The latter is also marginally lower again at the open this morning. Government bonds staged a decent rally amid the weakness in the stocks. This was concentrated mainly at the long end of the curve with US 10-year yields falling by around 5bps and equivalent German and UK yields about 3-4bps lower.
Fed Governor Waller – a noted ‘dove’ who dissented in favour of a 25bps rate cut at the central bank’s last monetary policy meeting – says that if upcoming data “support the idea” of a further improvement in the labour market (following January’s stronger than expected job gains of 130k), then it may be appropriate to keep policy on hold at the next meeting in March. The market continues to expect the next quarter-point cut in rates in July.
ECB President Christine Lagarde reiterates that the risks to the Euro area growth and inflation outlook remain ‘broadly balanced’, but says the central bank “has to be agile and determine whether something needs to be done” on interest rates on a meeting-by-meeting basis. Current market pricing continues to see a small chance of a cut in rates this year.
The Day Ahead
It is quiet on the economic data front today with consumer confidence and house prices in the US and the CBI’s latest retail sales survey in the UK. Members of the Bank of England MPC discuss the latest Monetary Policy Report at a meeting of the Treasury Committee, while a number of ECB and Fed officials are scheduled to speak during the course of the day.
23 Feb 2026
Todays Talking Points 23.02.2026
Market Commentary
The dollar is under a little pressure this morning amid the latest instalment of the Trump tariff turmoil. Shortly after the Supreme Court on Friday struck down his IEEPA-imposed (mostly reciprocal) tariffs, the US President slapped a temporary (150 day) 10% tariff on all countries using alternative legislation, raising it to 15% in less than 24 hours. How the new levy interacts with the trade deals the US has agreed recently is unclear. Indeed, the EU has asked for “full clarity” from the US, noting that “the current situation is not conducive to delivering fair (and) balanced…trade and investment” as agreed between the two sides in the deal reached in August last year. The euro and sterling are trading at around $1.1815 and $1.3515 against the dollar respectively this morning (up from around $1.1750 and $1.3450 before the Supreme Court announcement), leaving EURGBP at just under £0.8750.
Yesterday’s Events
US government bond yields increased on the week as the market pared back expectations for Fed rate cuts – about 55bps is now priced in for this year versus 65bps previously – with 2- and 10-year yields rising by circa 8bps and 4bps respectively. In the UK, bond yields at the long end curve fell further with 10- and 30-year yields declining by another 7bps or so, while German yields were marginally higher in the 2-year area but marginally lower further out the curve. In equity markets, European and US stocks chalked up solid gains with the Euro Stoxx 600 and S&P 500 ahead by about 2% and 1% respectively. Asian stocks are mostly in the red overnight though, and European indices have opened lower this morning also.
Friday’s GDP report showed the US economy grew by 0.4% q-o-q (or 1.4% at an annualised rate) in Q4 2025, less than the consensus forecast of 0.7% (2.8%) and a moderation from 1.1% (4.4%) in Q3. Government spending made a negative contribution to growth in Q4, reflecting the impact of the government shutdown in October-early November, but this should reverse in the current quarter. On a y-o-y basis, GDP grew by 2.2% in the fourth quarter, while for 2025 as a whole growth averaged 2.2%, a slowdown from 2.8% in 2024.
Staying with the US, headline PCE inflation – the Fed’s target measure of inflation – came in slightly higher than forecast in December at 2.9%, up from 2.8% in November. Core inflation was also ahead of expectations at 3%, up from 2.8%, driven by an acceleration in core goods inflation to 2.0% from 1.2% in November, while core services inflation was unchanged from November at 3.3%.
Economic growth in the UK looks to have picked up in the opening months of 2026 judging by the last PMIs, have remained sluggish in the final quarter of 2025 (at just 0.1% q-o-q). The composite PMI remained well above the 50 expansion-contraction threshold in February, nudging up to 53.9 from 53.7 in January. The manufacturing index rose slightly to 52.0, above the 50 level for a second month in a row, while the services index slipped to 53.9 from January’s 54.0. Meanwhile, the PMIs for the Euro area showed the composite index rebounded in February, rising to 51.9, having fallen in each of the two previous months, consistent with ongoing economic growth in the zone.
The Days Ahead.
Looking to the week ahead, markets will obviously be watching for (and responding to) any further developments on the tariffs front. Economic data due include consumer confidence (Tuesday), weekly jobless claims (Thursday) and producer prices (Friday) in the US; the European Commission’s Economic Sentiment Indicator for the Euro area (Thursday); and both consumer and business confidence in the UK (Friday). Members of the Bank of England MPC discuss the latest Monetary Policy Report at a meeting of the Treasury Committee on Tuesday, while a number of ECB and Fed officials are scheduled to speak over the course of the week.