Global News Summary: 7 to 13th Feb 2026

The week was defined by a clear macro tension: cooling inflation versus rising fiscal and political risk. In the United States, January inflation eased to 2.4% y/y (+0.2% m/m), reinforcing soft-landing hopes but failing to trigger immediate rate-cut expectations amid tariff uncertainty and sticky services inflation. In the Eurozone, inflation dipped below target to 1.7%, while Q4 GDP held at +0.3% q/q, allowing the ECB to maintain a cautious but steady stance. China’s inflation cooled sharply (CPI +0.2%, PPI −1.4%), underscoring weak domestic demand. The biggest volatility impulse came from Japan, where Prime Minister Sanae Takaichi’s landslide election victory (LDP 316 seats, forming a two-thirds supermajority with its coalition) lifted equities but pushed bond yields higher on fiscal-spending concerns. Singapore reinforced its status as a trade bellwether, confirming 2025 GDP at 5.0% and upgrading its 2026 growth forecast to 2–4%, explicitly tied to the global AI and electronics cycle. Meanwhile, Switzerland’s franc surged to decade highs, and with inflation at just 0.1%, the narrative shifted from disinflation toward genuine deflationary risk.

United States

Inflation

• January CPI: +0.2% m/m, +2.4% y/y

• Core CPI: ~2.5% y/y, reflecting persistent services and shelter costs

Disinflation continues, but the decline is gradual rather than decisive. The inflation trajectory supports stability, not urgency.

Debt Securities / Policy

The Federal Reserve remains firmly in “wait-and-see” mode. Cooling inflation helps, but potential tariff effects and sticky services inflation keep the bar high for further rate cuts. Markets continue to price patience rather than policy acceleration.

Recession / Growth

The data remain consistent with slowing but stable growth. Labour-market moderation is visible, but not yet recessionary.

United Kingdom

Inflation

Headline CPI: ~3.2–3.4% y/y

Services inflation remains elevated, with wage growth still running above levels consistent with a clean return to target. Inflation is easing gradually, but domestic cost pressures — especially wages — keep the Bank of England cautious.

Economic Growth

Recent GDP prints show marginal expansion, with activity stabilising rather than accelerating. Consumer spending remains restrained, and business investment is selective.

The economy is avoiding recession, but momentum remains fragile.

Jobs

Unemployment: drifting toward the mid-4% range. Wage growth: still elevated relative to productivity. The labour market is loosening slowly. Hiring has cooled, but not enough to decisively remove wage pressure from the inflation outlook.

Debt Securities / Policy

Bank Rate: 3.75%. The Bank of England maintains a cautious easing bias, but sticky wage growth limits the scope for rapid rate cuts. Gilts remain sensitive to global bond-market moves, particularly US Treasuries and Japanese government bonds.

Policy patience — not urgency — defines the UK outlook for now.

Eurozone

Inflation

• January headline inflation: 1.7%

• Core inflation: ~2.2%

• Services inflation: ~3.2%

Inflation is now below the ECB’s 2% target, though services prices remain elevated.

Economic Growth

• Q4 2025 GDP: +0.3% q/q

The region continues to expand modestly, avoiding contraction despite global headwinds.

Debt Securities / Policy

The ECB held its policy rate at 2.0%, reinforcing the message that policy remains steady unless a clearer trend emerges.

China

Inflation

• January CPI: +0.2% y/y

• January PPI: −1.4% y/y

Consumer demand remains soft, and factory-gate prices continue to decline. Industrial deflation is narrowing but not resolved.

Growth / Recession

The data confirm a fragile domestic-demand backdrop. Policymakers remain in stabilisation mode rather than stimulus acceleration.

Japan

Politics / Fiscal Impulse

• LDP secured 316 of 465 seats

• With coalition support, this forms a two-thirds supermajority

Markets interpreted the outcome as a mandate for assertive fiscal expansion.

Debt Securities

The election result triggered a rise in sovereign bond yields as investors priced in increased debt issuance and fiscal stimulus. Japan again acted as a global volatility node for duration and currency markets.

Equities

Japanese equities rallied strongly in response to the fiscal-growth narrative — the classic “Takaichi trade”: stocks up, bonds down.

Singapore

Economic Growth

• 2025 GDP: +5.0%

• Q4 2025 GDP: +6.9% y/y

• 2026 forecast upgraded to 2–4% (from 1–3%)

Singapore’s upgrade explicitly cited the global AI and electronics investment cycle, reinforcing its role as a bellwether for global trade momentum.

Risks

Policymakers cautioned that rising protectionism and global fragility remain the primary downside risks.

Australia

Labour Market

• Unemployment (trend): 4.2%

Late-2025 labour data continue to frame early-2026 thinking. The market remains relatively tight but not overheating.

New Zealand

Labour Conditions

• Underemployment: ~5.2%

• Underutilisation rate: ~13%

Slack in the labour market suggests wage-driven inflation pressure is unlikely to re-emerge in the near term.

Switzerland

Inflation

• Inflation: ~0.1% y/y

At these levels, price stability risk shifts from disinflation to outright deflation.

Currency

The Swiss franc strengthened to levels last seen around the 2015 “franc shock,” reinforcing safe-haven demand but tightening financial conditions.

Policy Implication

With inflation so low, sustained currency strength increases the risk of a deflationary spiral, potentially requiring foreign-exchange intervention.

What This Week Meant for Investors

• Disinflation is real — but fragile.

• Fiscal risk (Japan) is now a global duration driver.

• China remains the weak link in domestic demand.

• Singapore is the cleanest read on the AI-driven trade cycle.

• Switzerland’s safe-haven strength carries deflation risk.