Market drivers and catalysts
Equities: U.S. and Europe rose on an artificial intelligence tech rebound, while Asia surged as Japan hit records and Hong Kong recovered.
Volatility: Calm surface, but key US data and heavy Treasury supply keep downside protection relevant
Digital assets: Crypto drifts lower, but ETF resilience suggests caution rather than capitulation
Currencies: USD weakened sharply Monday, JPY recovered broadly Tuesday on reassurance on fiscal stability from PM Takaichi.
Commodities: Precious metal volatility eases while oil markets stay fixated on Iran
Fixed Income: Longest-dated Japanese Government Bonds rally on reassurance from PM Takaichi, Google-parent Alphabet set to issue 100-year bonds, some of them in sterling.
Macro: US December Retail Sales
Macro headlines
US one-year inflation expectations dropped to 3.1% from December's 3.4%. Slower rises are expected in gas, medical care, rent, and home prices. Three and five-year inflation expectations remain at 3%. Earnings growth rose to 2.7%, with unemployment at 41.9%.
Fed Governor Miran supports a reduced central bank balance sheet but advises maintaining asset purchase options for downturns. Bloomberg highlighted his view that reducing the balance sheet won't hinder the Fed's crisis response, emphasizing the balance between reduction and policy flexibility.
Australia’s Consumer Sentiment Index fell 2.6% in February 2026 to a ten-month low of 90.5, following January's 1.7% dip, marking a third consecutive decline due to inflation worries and recent policy tightening after a 25bp rate hike.
The Chinese Yuan surged to its strongest since May 2023 after China advised financial institutions to limit their holdings of US Treasuries. A shift away from US sovereign debt reinforces global dollar diversification and could accelerate capital repatriation into Chinese assets, providing a tailwind for the yuan. Onshore and offshore yuan extended gains; the currency is up about 3% against the dollar since late September.
Macro calendar highlights (times in GMT)
0700 – Norway Jan CPI
1100 – US Jan. NFIB Small Business Optimism
1315 – US ADP Weekly Employment Change (4 weeks to Jan 10)
1330 – US 4Q Employment Cost Index
1330 – US December Retail Sales
1800 – US Treasury to auction USD 58 billion 3-year notes
0130 – China Jan. PPI / CPI
Earnings events
Today: Coca-Cola, AstraZeneca, Gilead Sciences, S&P Global, Welltower, BP, Duke Energy, Barclays, Spotify, Marriott, Ferrari, Robinhood, Cloudflare, Ford, Datadog, Kering, Xylem, Fiserv
Wednesday: Cisco, McDonalds, T-Mobile US; TotalEnergies, Shopify, Siemens Energy, EssilorLuxottica, Applovin, CVS Health, Hilton Worldwide, Vertiv Holdings, Motorola, Heineken
Thursday: Hermes, L’Oreal, Applied Materials, Siemens, Arista Networks, Unilever, Softbank Group, Anheuser-Busch InBev, British American Tobacco, Vertex Pharmaceuticals, Brookfield, Agnico Eagle Mines, Howmet Aerospace, Airbnb, Vale, Mercedes Benz, Japan Tobacco, KBC Group, American Electric Power, Zoetis, Coinbase
Friday: Safran, Enbridge, NatWest, Tokio Marine Holdings, Japan Post Bank, TC Energy, Cameco
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: S&P 500 rose 0.5% to 6,964.82, the Nasdaq 100 added 0.8% to 25,268.14, and the Dow was unchanged (0.0%) at 50,135.87. Large-cap tech led as last week’s artificial intelligence (AI) nerves cooled and yields stayed steady. Oracle jumped 9.6% after an AI-driven upgrade, Nvidia gained 2.5% on a chip rebound, and Kroger rose 3.9% after naming a new chief executive, while Waters slid 13.9% on cautious guidance. Investors now watched the consumer price index (CPI) and Federal Reserve (Fed) messaging for the next rate-cut clue.
Europe: STOXX 600 climbed 0.7% to a record 621.41 and the Euro STOXX 50 rose 1.0% to 6,059.01 as Europe followed Wall Street higher. The mood improved as investors looked past last week’s artificial intelligence (AI) wobble and refocused on earnings and deals. UniCredit surged 6.4% after lifting its profit outlook, STMicroelectronics rallied 9.8% on a deeper Amazon Web Services collaboration, Novo Nordisk gained 5.3% after Hims & Hers halted a copycat weight-loss pill, and InPost leapt 13.5% on a takeover. Next, investors watched European Central Bank (ECB) speakers and incoming results for signs the record run still has fuel.
Asia: Japan led the region as the Nikkei 225 jumped 3.9% to 56,363.89 and the Topix rose 2.3% to 3,783.57 after Prime Minister Sanae Takaichi’s election win. Hong Kong also rebounded, with the Hang Seng up 1.8% to 27,027.16 as Wall Street’s chip rebound supported risk appetite ahead of Lunar New Year positioning. China’s foreign-exchange reserves rose to 3.3991 trillion USD, the highest since 2015, adding a mild macro tailwind. Within Hong Kong, Tencent gained 2.3% and Alibaba rose 1.9% on broad tech strength, while Innovent climbed 7.4% on a new Eli Lilly partnership and Meitu added 5.0% after a positive profit alert.
Volatility
Market volatility eased after Monday’s rebound, with implied measures drifting lower across the curve. VIX closed at 17.36, while very short-dated gauges (VIX1D and VIX9D) also softened, signalling less immediate stress. The calmer surface, however, masks a busy macro week. Investors are watching US retail sales today, followed by the delayed January jobs report on Wednesday and US CPI on Friday, all of which could quickly reset expectations around rates and liquidity. Treasury supply adds another variable, with 3-, 10- and 30-year auctions spread across the week.
From an options perspective, pricing still reflects meaningful uncertainty: SPX options imply a weekly move of roughly ±82 points (≈±1.18%) into Friday.
0DTE skew check (today’s expiry): near spot, calls trade at slightly higher implied volatility than comparable puts, suggesting limited urgency for same-day crash protection and a more balanced intraday positioning.
Digital Assets
Digital assets are softer, but orderly, as investors wait for clarity from US macro data. Bitcoin trades around $69k, ether near $2,040, with solana and xrp modestly lower, reflecting a market that is cautious rather than risk-averse. Interestingly, listed crypto exposure is holding up better than spot prices. IBIT and ETHA are both higher on the day, while crypto-linked equities such as Coinbase and MicroStrategy also trade firmer, pointing to selective dip-buying rather than broad capitulation.
ETF flows remain the key confidence barometer. Recent data still show uneven demand across bitcoin and ethereum products, reinforcing the idea that investors are staying involved, but sizing positions carefully ahead of CPI and labour data. Overall, the message from crypto is similar to equities: participation continues, but conviction is tempered by macro uncertainty.
Fixed Income
US Treasury yields eased lower Monday after poking above 3.50% briefly intraday, ending the day near 3.48%, near the middle of the recent range. Despite strong risk sentiment, longer-dated US treasuries rallied Monday as well, as the benchmark 10-year treasury yield reversed an earlier rise of three basis points to fall back toward 4.20% and even below 4.19% in the Tuesday session in Asia. Some important data points incoming for the US this week, including Retail Sales for January Tuesday, the January jobs report on Wednesday and the January CPI data on Friday.
Japan’s longest government bonds found strong buying interest as Prime Minister Sanae Takaichi stated that she wants to build trust with markets and will not seek to fund a sales tax cut with new bond issuance. The benchmark 30-year JGB yield fell five basis points to reach 3.51% Tuesday, its lowest level since mid-January. The benchmark 40-year JGB fell nine basis points in Tuesday’s Tokyo session.
Google-parent Alphabet made waves yesterday in raising USD 20 billion for new bond issuance, more than the USD 15 billion expected as demand was so overwhelming. The company also announced plans for rare 100-year bonds to finance data centers. Those long bonds, and other bonds will be issued in sterling.
Commodities
Oil trades steady after a two-day advance, with the Iran-related risk premium continuing to ebb and flow. Prices, however, are struggling to break convincingly above USD 70 amid speculation that the risk of higher oil prices—and the impact of rising fuel costs—could ultimately push President Trump toward a negotiated settlement with Iran. Such an outcome would reduce the risk of conflict and, by extension, the threat of a major supply disruption from the Middle East.
Gold holds above USD 5,000 following a two-day gain, supported in part by reports that Chinese regulators have advised financial institutions to reduce their holdings of US Treasuries. Additional support continues to stem from longer-term themes, including geopolitical risks, fiscal debt concerns, and dollar weakness. Importantly, volatility has started to ease—a prerequisite for more orderly and manageable price action.
Silver volatility has started to ease ahead of next week’s Lunar New Year holiday, during which the Shanghai Futures Exchange will remain closed for more than a week. Monday’s trading range of 7% was elevated but still the narrowest since 28 January, and—together with a softening of the Shanghai premium over London—suggests calmer market conditions following weeks of mayhem.
Currencies
The yen firmed broadly as the longest-dated Japanese government bonds found strong support on Prime Minister Takaichi’s move to reassure markets that she wants to build trust and does not want to fund a sales tax cut with JGB issuance. From an early Tuesday high in Tokyo of 156.29, USDJPY sold off to as low as 155.09 before finding support. EURJPY sold off from a 156.00 high to just below 185.00.
The USD sold off sharply and broadly Monday, in part inspired by China discouraging its banks from holding US treasuries but extending to weakness against all major currencies through the day as EURUSD rallied clear of 1.1900 and AUDUSD pulled all the way to almost 0.7100, poking at the highest levels since early 2023.
- Sterling was volatile on Monday, perhaps in part on Google-parent Alphabet announcing plans to issue 100-year and other bonds in sterling. EURGBP had rallied to above 0.8740 before selling off back to just below 0.8700.
