A newly uncovered DEA document from the DOJ’s Jeffrey Epstein files release reveals that Epstein was the subject of a secret, 5-year investigation by the Drug Enforcement Agency (DEA) on suspicions of laundering approximately $50 million through a web of illicit drug and prostitution networks – yet federal prosecutors pursuing his 2019 trafficking case had no idea. 

The DEA investigation, code-named “Chain Reaction,” was launched by the DEA’s New York office on December 17, 2010, and targette4d Epstein (listed as “Target 4”) – as well as 14 other individuals whose names have been redacted. Chain Reaction focused on “illegitimate wire transfers” suspected of funding “illicit drug and/or prostitution activities” in New York City and the US Virgin Islands, where Epstein owned his notorious Little St. James island. 

Drawing from a multi-agency dragnet – including the DEA, FBI, ICE, CBP, FinCEN, and others – the memo compiles biographical data, border crossings, criminal histories, and financial red flags. It reveals roughly $50 million in suspicious transactions from 2010 to 2015, routed through accounts in Switzerland, France, the Cayman Islands, and New York. Epstein himself was flagged in seven Unified Suspicious Activity Reports (USARs) totaling $5.67 million, eight Currency Transaction Reports (CTRs) amounting to $233,397, and three Unified Currency Transaction Reports (UCTRs) for $102,648 – some conducted on his behalf by associates.

The memo also reveals overlapping investigations, including an ICE case in West Palm Beach (2006–2008), a Las Vegas ICE probe (opened 2009, pending in 2010), a Paris-based ICE “Operation Angel Watch” (2013), and an FBI case from 2006 still active in 2015.

The redacted targets include individuals with ties to prostitution (e.g., a Polish fashion model linked to $2 million in transfers) and businesses like SLK Designs LLC (a fashion entity run by Epstein associates) and Hyperion Air Inc. (his aircraft holding company). Epstein’s border crossings (e.g., frequent flights between JFK and Paris’s Charles de Gaulle in 2014) and communications (phones, emails) were tracked.

The memo expands Epstein’s crimes beyond sex trafficking, suggesting a syndicate blending prostitution with potential narco-finance. Redacted associates handled transactions “on behalf” of Epstein, and businesses like SLK Designs appear tied to UCTRs involving negotiable instruments. Little St. James – Epstein’s “Pedophile Island” – is fingered as a hub, aligning with survivor accounts of exploitation.

Timeline of Key Probes:

• 2006: FBI opens investigation (still active in 2015).
• 2006–2008: ICE West Palm Beach case.
• 2009: ICE Las Vegas probe opens.
• 2010: DEA “Chain Reaction” begins.
• 2013: ICE Paris “Operation Angel Watch.”
• 2015: OCDETF memo compiled.
• 2019: SDNY sex-trafficking charges (unaware of DEA).

Elite Banking Ties: From Rothschilds to Qatar’s KBL Lux JV

Epstein repeatedly held himself out to people as a representative to the Swiss-based Edmond de Rothschild Group, led by Ariane de Rothschild at the time. Emails reveal that Ariane met with him dozens of times between 2013 and 2019, stayed at his properties, sought his advice on family feuds (e.g., with cousin David de Rothschild over branding), and listened to geopolitical advice such as how to profit from the 2014 Ukraine coup. For his services, the Rothschilds paid him $25 million in two payments roughly one month apart in October and November of 2015. Epstein introduced her to lawyers like Obama White House counsel Kathy Ruemmler, and pursued funding for Israeli cyber firms (e.g., via Ehud Barak). Last week, former Victoria’s Secret boss Les Wexner testified under oath that he only trusted Epstein due to his work for the Rothschilds in France. 

It’s Fine…

And what happened in December of 2015, after the Rothschilds wired Epstein $25 million? The bank reached a non-prosecution agreement with the Obama DOJ on December 18, 2015 amid a DOJ investigation under the “Swiss Bank Program,” which targeted banks for aiding U.S. tax evasion through undeclared accounts. The bank ended up paying a $45.2 million penalty (including fines and forfeitures) as part of a non-prosecution agreement. 

Behind the scenes, the group’s French chief, Ariane de Rothschild, had tasked Jeffrey Epstein and the lawyer he had introduced her to, Kathy Ruemmler, with closing the deal.

“45 mio [million]?” de Rothschild asked Epstein in a December 2015 email exchange. He replied that, counting a $10mn fee for the lawyers involved and $25mn for him, “I think you will find that . . . all less than 80 pretty good”. “Deep thks for your amazing help,” de Rothschild answered. -FT

Specific allegations against Edmond de Rothschild included knowingly assisting U.S. clients in concealing assets (with an aggregate maximum balance of about $1.8 billion in undeclared accounts), using sham offshore entities in jurisdictions like Liechtenstein, Panama, and the British Virgin Islands to hide ownership, and facilitating cash movements or other methods to evade IRS detection. The bank admitted it was “highly probable” that some American accountholders were non-compliant with U.S. tax laws, and it encouraged clients to use structures that obscured true beneficial ownership. This investigation stemmed from broader U.S. efforts post-2009 UBS scandal (where UBS paid $780 million), which exposed systemic issues in Swiss banking secrecy aiding tax evasion.

Tangled Web of Who’s Who

While the DEA was digging into shady wire transfers, Epstein was moonlighting as a high-society financial fixer. Emails from the DOJ’s Epstein files (DataSet 9) show him brokering a 2013–2015 joint venture between Qatar-owned KBL European Private Bankers (Luxembourg) and the Edmond de Rothschild Group’s Swiss operations. Epstein pitched the deal to Qatari royalty – Sheikh Jaber Al Thani, boasting of his Rothschild representation, though the deal never materialized.

True: here is Epstein trying to convince Qatar’s Jaber al-Thani (via his nephew Jabor) to JV his Luxembourg bank KBL with Rothschild’s Swiss bank https://t.co/YAqrQGOMtD pic.twitter.com/mmpQdljzKZ

— zerohedge (@zerohedge) February 20, 2026

Here are other notable individuals and deals Epstein was involved in while also under DEA investigation:

Peter Thiel

Epstein and tech billionaire Peter Thiel had a multi-year relationship starting around 2014, involving at least eight meetings and over 2,000 emails. Epstein invested $40 million in Thiel’s Valar Ventures fund (backing international startups like Wise and Xero) in 2015–2016. Their correspondence often covered shared interests like tax avoidance (e.g., Thiel’s Roth IRA ballooning to over $2 billion) and anti-globalization views (e.g., celebrating Brexit as a “return to tribalism”). Epstein also used Thiel as a sounding board for other deals, including emergency-services tech startups and connections via former Israeli PM Ehud Barak

In one Feb. 28, 2016 email to Peter Thiel, Epstein sought inroads for “the bank that has 160 b in mgmt’ – which has the ‘best client list in the world.’ 

Brian Armstrong

One of Epstein’s notable tech investments during this time was in Coinbase, the prominent cryptocurrency exchange, where in 2014 he directly invested in the company at an early stage through one of his entities, committing approximately $3 million when Coinbase’s valuation was around $400 million, a move that aligned with his growing interest in emerging fintech and proved successful as he later sold half of his stake for $15 million in 2018, with the total return escalating to over $30 million by the time of his estate’s valuation in 2026, making it one of his few profitable ventures in the Silicon Valley space that showcased his access to startup opportunities amid the DEA’s probe into his broader financial dealings.

Leon Black

Epstein’s involvement in the art world intersected with his advisory role for billionaire Leon Black, particularly in orchestrating the 2015 acquisition of Pablo Picasso’s 1931 sculpture Buste de Femme (Marie-Thérèse), where acting as Black’s tax and estate strategist he helped structure the $106 million-plus deal with Black’s Narrow Holdings LLC purchasing the work from Maya Widmaier-Picasso via intermediary Larry Gagosian, involving over $86 million in wires from May to October 2015 routed through European banks like Banque Leonardo in France amid a legal dispute with Qatari buyers, during which Epstein demanded detailed wire records under joint defense privilege, ultimately succeeding with Black retaining ownership after a 2016 settlement as part of Epstein’s broader management of Black’s $2.7 billion collection that coincided with DEA-flagged transfers and Black’s $50 million-plus payments to Epstein that year.

Larry Gagosian

On the other side of the Buste de Femme (Marie-Thérèse) deal was art dealer Larry Gagosian, who acted as the intermediary in the $106 million-plus deal, purchasing the work from Maya Widmaier-Picasso and selling it to Black’s Narrow Holdings LLC amid a legal dispute with Qatari buyers, with emails showing Epstein’s active role in scrutinizing wire transfers and demanding details under joint defense privilege during the height of the DEA investigation.

Ehud Barak

Epstein also ventured into Israeli security technology by investing in Carbyne (formerly Reporty), a surveillance and emergency-response startup chaired by former Israeli Prime Minister Ehud Barak, committing an undisclosed amount reportedly around $1–2 million from 2014 to 2015 while attempting to introduce Barak to Peter Thiel for additional funding, with the company raising $16 million overall during this period as Epstein’s stake became part of his pattern of pursuing global tech deals with intelligence ties including potential Russian connections, proving successful in terms of his investment and highlighting his networked approach to opportunities that blended tech and geopolitics.

Sergey Belyakov

On the geopolitical front, Epstein explored Russian investment opportunities through contacts like Sergey Belyakov, a Russian government official, where between 2014 and 2015 Belyakov pitched Epstein on attracting foreign capital to Russia such as at the St. Petersburg International Economic Forum while Epstein sought assistance with visas and deals. Epstein also asked Belyakov for help resolving an extortion attempt by a Russian woman targeting a “powerful” businessman in New York – for which Epstein was provided detailed intelligence on the woman which may tie into some of the prostitution and money laundering risks being investigated by the DEA.

Hosain Rahman

In consumer tech, Epstein backed Jawbone, the fitness tracker and headset startup led by CEO Hosain Rahman, with his investment occurring sometime between 2010 and 2015 though exact details are murky, fitting his broader Silicon Valley plays but ultimately failing when the company liquidated in 2017 and resulting in a total loss for his stake.

In 2012, Ian Osborne, an adviser to executives and political figures, reconnected the pair and encouraged Mr. Epstein to invest in Jawbone. When Woody Allen was filming “Blue Jasmine” in San Francisco, Mr. Epstein invited Mr. Rahman to visit the set, where Mr. Epstein showed off a pair of high-tech eyeglasses. -NYT

Paul Tudor Jones

Epstein also engaged in a hedge fund transaction with Paul Tudor Jones, the renowned manager of Tudor Investment Corporation, where during the 2010–2015 window Epstein received $13.5 million from Jones’ fund with the nature of the payment unclear possibly a return on investment or advisory fee, as part of Epstein’s involvement in high-finance circles that surfaced in post-death estate reports and potentially tied into the opaque transfers under DEA scrutiny.

Honeycomb Partners

Finally, Epstein facilitated a significant fund transfer into Honeycomb Partners, moving at least $60 million into this private investment vehicle sometime before 2015, with the assets successfully transferred and valued at over $60 million though the fund’s opacity could have intersected with the DEA’s investigation into Epstein’s illegitimate wire activities.

George Bush / Bill Clinton – that whole Haiti thing

Epstein’s connections even extended to former U.S. President George W. Bush during the 2010-2015 period, notably through his role in coordinating private jet logistics for Bush and Bill Clinton’s joint humanitarian trip to Haiti in March 2010 following the devastating earthquake. You know, the one where a woman named Laura Silsby – who showed up in the Clinton emails – was busted trying to smuggle 33 children out of the country without proper exit documentation. The case gained notoriety due to diplomatic interventions by the U.S. government under Secretary of State Hillary Clinton. Bill Clinton, as UN special envoy to Haiti, visited the smugglers and advocated for their release, emphasizing humanitarian intent amid the earthquake chaos. Hillary’s State Department monitored the case closely, with cables (later leaked via WikiLeaks) showing efforts to expedite trials and releases.

Interesting, Silsby’s original lawyer, Jorge Puello, was arrested in March 2010 as part of an investigation into an international human trafficking ring following an investigation being led by U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI) in connection with the ring – and served just three years in federal prison for “alien smuggling.”

The yen was already sliding on Monday after Nikkei Asia reported that the sharp swing we saw in USDJPY in January was initiated by FX intervention from US Treasury Secretary Bessent not Tokyo, even if Washington, D.C. is open to coordinated forex moves if requested by Japan. FX traders took this as evidence that, contrary to previous conventional wisdom, Japanese authorities were prepared to allow the USDJPY to continue climbing on Jan. 23 and it was only US action which prevented a print at 160, or higher. At the time, investors were leaning toward the upcoming Japanese election as a reason for intransigence, but this report made it seem more like benign neglect of the currency.

Then yen then dropped some more after China added 20 Japanese firms – including affiliates of Mitsubishi Heavy Industries – to an export control blacklist, escalating the dispute between the two nations. 

But it was the third drop that was the biggest, and sent the USDJPY above 156, after Japan’s Mainichi daily reported that Japanese Prime Minister Sanae Takaichi expressed reservations about additional interest rate hikes during her meeting with Bank of Japan Governor Kazuo Ueda last week. 

The report, if true, signals growing friction over monetary policy that could complicate the BOJ’s timetable as coordination with the newly strengthened administration becomes more delicate, and as the new PM does what every other politicians has been so willing to do in recent years: support the stock market at all costs, surging inflation be damned. Oh, and by not hiking rates, Japan can pretend that its Japanese bond market game of musical chairs can extend a little bit longer. 

Ueda had (mis)characterized the meeting last Monday as a general exchange of views on economic and financial developments, and had said the prime minister had not made any specific monetary policy requests.

Takaichi herself has been coy about the particulars of their meeting, saying only that she hoped the central bank would work closely with the government to durably achieve its 2% inflation target accompanied by wage gains. 

The meeting was held amid raging speculation that the rising cost of living, driven in part by the weak yen – but mostly by the surging price in rice which the BOJ has no control over – could prompt the central bank to raise interest rates as soon as March or April. In December, the BOJ raised rates to a 30-year high of 0.75% and signaled further hikes were possible.

A Reuters poll this month showed that a majority of economists expect the BOJ to raise its key rate to 1% by the end of June, with some anticipating a move as soon as April because of mounting concerns about inflationary pressures and a weak yen. Odds of a rate hike have certainly tumbled after last night’s report. 

Following the Mainichi report, the yen tumbled, and the USDJPY surged by 100 pips, rising to 156, the highest price it has been in 2 weeks.

Authored by Dave DeCamp via AntiWar.com,

Tuesday marks four years since Russia first launched its invasion of Ukraine, and, despite President Trump promising to end the war quickly, there’s no end in sight to the conflict as Russian and Ukrainian leadership haven’t budged on their core demands for a peace deal.

Ukrainian President Volodymyr Zelensky reaffirmed in an interview with the BBC over the weekend that he wouldn’t cede the territory Ukraine still controls in the eastern Donbas region and defined “victory” as Ukraine regaining all of the land it has lost to Russia since February 2022.

Ukraine ceding the Donbas is a key Russian demand to end the war, and President Trump has repeatedly called for Zelensky to do so, arguing that Ukraine will likely lose the territory in bloody battles in the coming months and years. When asked by the BBC interviewer if he thought it was a “reasonable request” for a ceasefire, Zelensky said he didn’t agree.

“I see this differently. I don’t look at it simply as land. I see it as abandonment – weakening our positions, abandoning hundreds of thousands of our people who live there. That is how I see it. And I am sure that this ‘withdrawal’ would divide our society,” Zelensky said.

When asked whether he still sought to regain all the land Ukraine has lost, Zelensky answered in the affirmative but suggested he needed more help from his Western backers to do so.

“We’ll do it. That is absolutely clear. It is only a matter of time. To do it today would mean losing a huge number of people – millions of people – because the [Russian] army is large, and we understand the cost of such steps. You would not have enough people, you would be losing them. And what is land without people? Honestly, nothing,” Zelensky said.

“And we also don’t have enough weapons. That depends not just on us, but on our partners. So as of now that’s not possible but returning to the just borders of 1991 without a doubt, is not only a victory, it’s justice. Ukraine’s victory is the preservation of our independence, and a victory of justice for the whole world is the return of all our lands,” he added.

Another major sticking point in the negotiations is the issue of security guarantees. Zelensky and many European leaders want troops from NATO nations to deploy to Ukrainian territory with the backing of US airpower after a peace deal is signed, but Russian officials have repeatedly rejected the idea and made clear that the condition is a non-starter.

Zelensky said in the BBC interview that he wants whatever security guarantee he gets from the US to last 30 years. He made the comments when asked about the Trump administration’s call for him to hold elections, saying that US security guarantees would need to be in place before that happened.

Russian and Ukrainian officials held talks in Geneva last week, but there’s been no sign of progress. Russia maintains it won’t agree to a deal unless its key demands are met, which include Ukraine ceding the territory and guarantees on Ukraine not joining NATO, and has made clear it’s willing to continue the grinding war to achieve those goals.

Norway’s former Prime Minister Thorbjørn Jagland was hospitalized a week ago after a failed suicide attempt, days after he was charged with “gross corruption” after a police probe into his ties with the late sex offender Jeffrey Epstein, local outlet iNyheter reports. 

Jagland, 75, who gave Barack Obama a Nobel peace price less than nine months into his presidency, was charged on February 12 after police carried out an extensive search of his properties – including apartments in Oslo and in Risør.

The man who shockingly awarded the newly elected Barack Obama the Nobel peace prize in 2009, and who was chair of the Nobel Committee from 2009 to 2015, was an Epstein Island regular pic.twitter.com/ObuEO3pB5C

— zerohedge (@zerohedge) February 4, 2026

According to the report, Norway’s Økokrim – which investigates economic and environmental crimes – took the serious step of sending a letter to the Council of Europe requesting that Jagland’s immunity be lifted. It was revoked one day before the raids took place. In the letter, Økokrim says that Jagland and his immediate family used Epstein’s private apartments in Paris and New York multiple times between 2011 and 2018, and stayed at Epstein’s villa in Palm Beach, Florida – with travel being likely covered by Epstein in connection with one of the stays. 

Epstein also reportedly paid for travel and hotel costs for Jagland and five other adults in the Caribbean, and reportedly asked Epstein for a loan, though it’s unclear whether that was actually made. 

If convicted, and he doesn’t successfully kill himself, Jagland faces up to a decade in prison if convicted. 

In one 2018 email exchange, Epstein wrote to Jagland suggesting that “I think you might suggest to Putin, that Lavrov, can get insight on talking to me.”

Jagland served as Norway’s Prime Minister from 1996 to 1997, and held other prominent international roles – including Secretary General of the Council of Europe (2009-2019) and chairman of the Norwegian Nobel Committee. 

Apparently Epstein was in bed with several top Norwegians;

Other prominently placed Norwegians are also facing new scrutiny, including Crown Princess Mette-Marit, Borge Brende, an ex-foreign minister who now runs the World Economic Forum, and Mona Juul, who this week was suspended from her role as ambassador to Jordan and quickly resigned. There has been fallout from the release of the Epstein files around the world, and though seemingly no region’s elites have been immune, Norway has been hard hit. -NYT

Prime Minister Jonas Gahr Store says he supports an independent inquiry and will testify if asked about his time as a former foreign minister. 

By Michael Every of Rabobank

Depressingly, today marks the start of the fifth year of the Ukraine War: a battered Ukraine is still standing against a bruised Russia; the US is still aiming for a peace deal so it can pivot to Asia; and Europe –even as it knows it has to look after both Ukraine and its own conventional defenses after decades of having this provided for it– is still trying to get its act together.

Despite its rhetoric, with a few notable exceptions European rearmament isn’t happening with appropriate scale and speed. Is Ukraine supposed to hold on until 2035, when EU defense budgets will be at the promised 3.5% of GDP? 

EU ministers also just failed to agree their 20th sanctions package on Russia, and Hungary is blocking the €90bn loan to Ukraine the EU had thrashed out. As such, the EU’s Kallas is reopening the controversial Russian frozen assets option shelved in December, which Belgium refused to go along with it. That’s as the UK Telegraph reports that “Kremlin spies” are acquiring ‘Trojan horse’ networks of sites in residential homes near European military bases that could be used to launch sabotage campaigns.

Meanwhile, we appear very close to a new war in the Middle East. Forget Bloomberg headlines and Iranian sabre-rattling. Look to: the USS Ford steaming towards Haifa; US troops removed from bases in Qatar; US staff removed from the embassy in Lebanon; former senior Israeli officials told to return home from abroad immediately; Israel preparing to shutter its embassies; a major underground hospital being opened in Tel Aviv; US Secretary of State Rubio postponing his planned meeting in Israel to next week; Indian PM Modi to speak in the Knesset tomorrow as part of what is claimed will be the announcement of a new extremist coalition (which will also have some EU members); and PM Netanyahu telling the Knesset: “This is not a time to engage in arguing. I am setting that aside. We are in very complex and challenging days. No one knows what tomorrow will bring. We have our eye open and are prepared for every scenario. I have made it clear to the ayatollah regime that if they make an error, perhaps the severest error in their history, and attack Israel, we will respond with force that they cannot imagine…. we must rally the ranks of the nation and stand shoulder to shoulder.”  

Importantly, what looms is not a repeat of the Iran-Israel clashes we correctly predicted following October 7: logically, if it’s to happen, it will be an endgame. The Iranian regime’s response will be appropriate, as seen vs its own people, up to 30,000 of whom may have died while protesting against it. In that respect, if Iran feels it’s going to lose control –which is never has until now– it will do whatever it can to fan the global flames as high as possible for as long as possible.

In the recent Greenland Crisis, we stressed that in 2026 Europe is the Egypt of 1956’s Suez Crisis and the US is still the US. Iran’s goal will be to try to make the US into the UK and France of 1956 via markets telling Trump to pack up and go home rather than play grand macro strategy in the Middle East.

Of course, that involves energy flows – and it’s Iran’s physical ability to stop them that matters more than the politics or “because markets” of it. Could Hormuz be mined or see suicide attacks on tankers? Could missile attacks hit Saudi oil given reports Iran will have heard that Riyadh now backs a US strike? Could there be terror attacks from sleeper cells across the region and the West against civilians or key infrastructure? None of this is available on Bloomberg, so are you sure?

Look to the cartel violence in Mexico as an example of how one can be relaxing one minute and fleeing from gunfire the next. There, following President Shenbaum’s evacuation to a naval vessel for her own safety, the WSJ reports, ‘Mexico Races to Prevent Cartel War’.

That’s plenty of ‘risk off’ for markets. But there’s far more afoot.

Stocks were rocked by a viral report underlining the devastating impact of AI on the economy as another claimed UK unemployment will rise above its pandemic high within months: you think the UK by-election on Thursday shows a fragmented and polarized polity now? Such views overlook the need for resources to power AI but are worth considering – so is the struggle for those resources, which hardly says we are all going to sit and sing kumbaya together.

The US is leaning on Anthropic to get with the (military-industrial) program or be on the outs; and Anthropic is reporting China set up 16,000 fake accounts to use Claude to train DeepSeek. That effectively allows China access to Nvidia chips indirectly. Again, no kumbaya here but rather more controls on who can get access to US AI ahead – and notably that’s as India is strategically looped into the US AI ecosystem. If we are developing separate supply chains from critical minerals up to chips, how does that allow for a “because markets” free trade in the end product AI? Answer: it doesn’t. Walls will go up. Which/whose side you are on will dictate what AI you can use as a consumer.

Relatedly, Trump eviscerated the ‘supreme court’ (no capital letters) and stressed —correctly— that their ruling allowed him to “use Licenses to do absolutely “terrible” things to foreign countries,” and that tariffs can “be used in a much more powerful and obnoxious way, with legal certainty.” He later added another point also clear to us: any country that thinks it can wriggle out of US trade deals will face even higher tariffs. Moreover, the WSJ reports Trump is considering new 232 and 301 national security tariffs on large-scale batteries, cast iron and iron fittings, plastic piping, industrial chemicals and power grid and telecom equipment.

Yet as France bans the US ambassador from talking to its government, the EU Parliament put the US trade deal on ice. Expect US-EU tensions to rise further, it seems. By contrast, Japan has underlined that it’s sticking with its trade deal and the $550bn of pledged, and guided, investment into the US. The contrast between the two is stark – and markets should take note.

More so given the Nikkei Asia reports the marked swing we saw in USD/JPY in January was initiated by FX intervention from US Treasury Secretary Bessent not Tokyo, even if Washington, D.C. is open to coordinated forex moves if requested by Japan. In short, FX markets don’t get to focus on simple risk on/off and the likes of rate differentials anymore: they have to focus on the geopolitics of geoeconomics and who wants to help, and hurt, whom, and how.

Similarly, the WSJ reports that crypto firm Binance fired staff who flagged $1bn moving to sanctioned Iran entities, which sounds like something the Treasury and Pentagon might also like a word about. Moreover, the Trump-backed crypto group World Liberty’s stablecoin says it was the subject of a deliberate attack. Bitcoin is also having a bad time of it rather than rallying on all the above uncertainty. And as those at the leading edge of markets thrash around for what the emerging global architecture may be, China is pushing Hong Kong as its global gold trading hub.

All of this is the backdrop to President Trump’s State of the Union address tonight at 9PM US eastern time. Start the countdown clocks to that piece of political theatre – with what surprises for the viewing audience?

Five, four, three, two, one…

After Boomers and Gen X dragged The Conference Board Confidence measure down to eight month lows to end 2025, expectations were for a rebound to start 2026.

Instead, January was a bloodbath with all the cohorts tumbling. Today sees February’s data released with expectations for a rebound, particularly in expectations… and the consensus was right.

• The headline Consumer Confidence print rose from 84.5 (revised dramatically up to 89.0) to 91.2 (better than the 87.1 expected)

• Under the hood it was kind of crazy with the dismal Present Situation print for January of 113.7 dramatically revised up to 121.8, which meant the 120.0 print for February was actually a decline MoM (but better than expected).

• The Expectations sub-index rose from a revised 67.2 to 72.0 (also better than expected).

So, overall, confidence ticked up in February after falling in January, as consumers’ pessimistic expectations for the future eased somewhat.

“Comments about prices, inflation, and the cost of goods remained at the top of consumers’ minds,” Dana Peterson, chief economist at the Conference Board, said in a statement.

“Mentions of trade and politics also increased in February.”

With Expectations at their lowest since COVID…

Source: Bloomberg

The survey cutoff date was Feb. 17, before the Supreme Court struck down most of President Donald Trump’s sweeping global tariffs.

Finally, under the hood, The Conference Board survey shows the trend of a weaker labor market continued to accelerate…

Source: Bloomberg

Circling back to where we started, how exactly do you ‘revise’ consumer expectations (especially so dramatically?)

Novo Nordisk shares in Copenhagen can’t catch a bid. The liquidation is accelerating again after a Bloomberg headline on Tuesday morning: the Danish drugmaker will slash U.S. list prices for Wegovy and Ozempic next year. The move suggests that the new CEO is pursuing market share amid intensifying competition in the GLP-1 space.

Jamey Millar, Novo’s head of U.S. operations, was quoted by Bloomberg as saying the company set a monthly price of $675 for its family of semaglutide drugs, a reduction of up to 50%. The new pricing regime is set to take effect on Jan. 1, 2027.

Millar said Novo had to announce the new cuts now to allow time to adjust ahead of next year’s rollout.

Meanwhile, Zepbound, Eli Lilly’s competing obesity drug, currently has a list price of around $1,086.

Bloomberg pointed out: “The price drop will apply to the wholesale acquisition cost, a published price that doesn’t reflect the complex system of rebates in the US market. On commercial insurance, both Zepbound and Wegovy can cost patients as little as $25 a month.”

“I’m confident that payers will accept and welcome these lower list prices, as they’ve been calling for them publicly,” Millar said.

While the cuts won’t affect the self-pay prices already offered in the U.S., they could lower out-of-pocket costs for insured patients whose plans require them to cover a larger share of the drug’s cost.

Shares of Novo in Copenhagen are down a little more than 3% and continue to slide, especially after yesterday’s “worst-case scenario” for its next-generation obesity shot, CagriSema, which delivered only 20.2% weight loss over 84 weeks versus 23.6% for Eli Lilly’s tirzepatide (Zepbound).

Novo shares near 2021 lows.

Read more here: “Worst-Case Scenario”: Novo Nordisk Plunges After Next-Gen Obesity Drug Falls Short Of Lilly Rival

For the fifth straight month, US home prices across its 20 largest cities rose in December (according to the admittedly lagged and smoothed Case-Shiller data released today). The 0.47% MoM rise is down very mopdestly from the upwardly revised +0.53% MoM in November

Source: Bloomberg

However, “national home prices grew just 1.3% for the year – the weakest full-year gain since 2011,” according to Nicholas Godec, CFA, CAIA, CIPM, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices.

“Two structural forces have reshaped the market over recent years: mortgage rates and inflation,” Godec continued.

“The 30-year mortgage rate closed 2025 at 6.2%, well above the 4.8% 10-year average and a sharp contrast to the 3.9% average that prevailed from 2016 through 2020. Meanwhile, annual inflation for 2025 came in at 2.7% — modestly below the 3.1% 10-year average — but still outpaced home price appreciation by 1.4 percentage points, effectively eroding real home values for most owners. This marks a notable reversal: Over the prior decade, national home prices outpaced inflation by 3.7 percentage points annually, a dynamic that has quietly reversed, with real home price returns turning negative in June 2025.

…but, declining mortgage rates suggest the rebound in aggregate prices could be about to explode…

Source: Bloomberg

Is this what President Trump wants to see? Flat prices and lower mortgage rates means more affordability…

A short rebound in stocks fizzled after Monday’s drop, as worries about the disruptive impact of artificial intelligence continued to unsettle markets which digested yesterday’s AI scare, and await today’s Claude / Anthropic presentation, while preparing for tonight’s State of the Union address (“SOTU”). Some have suggested that Trump may attack power generation risks during SOTU as he deals with affordability.As of 8:00am ET, S&P 500 futures traded unchanged, erasing an earlier 0.3% gain. The benchmark fell 1% in the previous session following a sharp drop in dealer gamma and a report that rehashes well-known fears about AI. Nasdaq 100 contracts climbed 0.1%, as AMD soared 11% on a $100 billion deal with Meta for data-center gear and a minority investment in the chipmaker. Other Mag7 are all mostly higher while an ETF tracking software firms was flat. IBM remained little changed following a 13% tumble. Nvidia Corp. fell 1.2% ahead of its results on Wednesday. Sentiment was also dented after Jamie Dimon said he’s starting to see parallels with the pre-financial crisis era, when a rush to make loans ended disastrously. At midnight, the US’s 10% blanket tariff went into effect with Trump threatening to raise to 15%. Bond yields aso reversed an earlier gain and were unchanged while the USD was bid driven by a spike in the USDJPY after Takaichi pushed back on rate hikes. Commodities are seeing a muted move today with Energy up, Metals down, and Ags mixed; oil has closed in a tight range the last 3 sessions and remains in those levels. Today’s macro data focus is weekly ADP, home price indices, regional Fed activity indicators, and Consumer Confidence. 

In premarket trading, Mag 7 stocks:are mostly higher (Alphabet +0.1%, Amazon +0.1%, Apple +0.4%, Nvidia -0.7%, Meta -0.4%, Microsoft +0.1%, Tesla -0.5%)

• Advanced Micro Devices (AMD) rises 11% as  Meta Platforms Inc. will deploy 6 gigawatts’ worth of data center gear based on processors from the company.
• Blue Owl (OWL) slips 2% following a downgrade to hold at Deutsche Bank, which also reduces price targets and estimates across its wider alternative asset manager coverage.
• BWX Technologies (BWXT) rises 8% after the nuclear power company reported adjusted earnings per share and revenue for the fourth-quarter that beat the average analyst estimate.
• Hims & Hers Health (HIMS) falls 5% after the telehealth company’s guidance projected subdued profits for 1Q and the full year, citing a step-up in investments. While the full-year guidance implied a growth acceleration beyond 1Q, analysts were more cautious given its copycat weight-loss drugs face regulatory risks.
• Home Depot Inc. (HD) rises 2% after reporting a key sales metric that beat expectations in the latest quarter on steady demand, though the retailer cautioned that macroeconomic challenges remain.
• Keysight Technologies (KEYS) rises 15% after the measurement instruments company guided for above-20% growth for revenue and earnings in FY26, beating estimates. Booming AI workloads, along with faster growth in other business areas including wireless and defense, are all boosting growth, according to analysts.
• Kratos (KTOS) falls 3% after the defense contractor forecast revenue for the first quarter that missed the average analyst estimate.
• MediaAlpha (MAX) rises 11% after the insurance technology platform reported its fourth-quarter results and gave an outlook. Analysts downplayed the risk of AI-related disruption.
• Palvella Therapeutics (PVLA) rises 29% after the drug developer said a late-stage trial of its experimental therapy for lymphatic malformations met its main goal.
• Paymentus Holdings (PAY) falls 9% after the cloud-based bill payment company’s revenue guidance for 2026 came in below the average analyst estimate.
• Planet Fitness (PLNT) falls 5% after the operator of fitness clubs gave an outlook for 2026 adjusted Ebitda growth that implies the profit measure will fall short of Wall Street expectations.
• Super Group (SGHC) rises 16% as the gaming company’s full-year revenue forecast exceeded Wall Street’s estimates.
• Vir Biotechnology (VIR) jumps 57% after the drug developer gave updated data from an early-stage trial for its investigative therapy for prostate cancer and said it is collaborating with Astellas Pharma on the same asset.
• Whirlpool (WHR) falls 8% after the maker of kitchen appliances  announced concurrent separate underwritten public offerings of shares of common stock and depositary shares.
• Ziff Davis (ZD) falls 10% after the digital media and Internet company reported fourth-quarter results that missed expectations. It also deferred its 2026 outlook as it evaluates options.

In corporate news, Anthropic is said to be offering some current and former employees the ability to sell shares at a valuation of about $350 billion. Meta and EssilorLuxottica are said to be at odds on pricing for smart glasses as demand surges. Jane Street is being sued for alleged insider trading by the administrator winding up the affairs of Terraform Labs.

After yesterday’s market fragility which was sparked by last week’s plunge in dealer gamma…

Gamma plunges into the red and today is what you get pic.twitter.com/6WQWs4xUUS

— zerohedge (@zerohedge) February 23, 2026

… and reinforced by a hypothetical report which echoed what we first said in 2024, nervousness abounds, and the market will be tested again when Anthropic holds its livestream at 9:30 a.m when even more volatility is likely. Adding to nerves, Jamie Dimon said he’s starting to see parallels with the pre-financial crisis era, when a rush to make loans ended disastrously.

The so-called AI scare trade has become a dominant theme for stocks, with selling spreading beyond software to hit insurance brokers, private credit and even real estate services. The flight is one of several shifts beneath the surface of a US market that is little changed in 2026 after years of tech-led gains. Traders are also contending with a range of other risks, from trade uncertainty to brewing tensions between the US and Iran. Focus on Tuesday will turn to President Donald Trump’s State of the Union address and consumer data that, in the previous reading, plunged to the lowest level since 2014. Anthropic meanwhile, will give a demo of its AI enterprise agents.

“We are reducing our risk levels by a notch,” wrote Mohit Kumar, chief economist and strategist for Jefferies International. “Ongoing concerns over AI disruption and the possible exposure to private credit and private equity have made investor sentiment fragile. If we do get an escalation in geopolitical risks, markets may face some wobbles.”

For Emmanuel Cau, head of European equity strategy at Barclays Plc, fears about labor-market disruption need to be counterbalanced by the job creation that typically accompanies technological progress.  As for software stocks, which have now been mispriced, “it’s very hard to go prove the market wrong on that,” Cau told Bloomberg TV. “What we are trying to do from an equity allocation standpoint is to be exposed to some of these old-economy, more tangible parts of the market.”

The quest for shelter from AI disruption has moved Goldman Sachs Group Inc. to push a new basket of capital-heavy companies, including utilities, miners, some industrial firms and even luxury-good makers. The selection has outperformed a basket of capital-light businesses by 35% since the start of 2025.

“Markets are rewarding capacity, networks, infrastructure and engineering complexity—assets that are costly to replicate and less exposed to technological obsolescence,” the Goldman team, including Guillaume Jaisson, said in a note.

In geopolitics, Trump said an Iran strike would be “easily won” but he would prefer a diplomatic deal.

After Trump’s new 10% global tariff went into effect on Tuesday and a timeline for a proposed higher rate of 15% is still in question, investors will listen for any further comments on trade in his State of the Union speech. “It’s going to be a long speech,” Trump said. The US is also said to be readying a spate of additional national security investigations that would enable Trump to impose new duties. An EU assessment found that Trump’s new policy will increase levies on some exports, including cheese and some agricultural products, above the level permitted in their trade pact. 

“The focus for investors will be on three issues: tariffs, Iran and the Fed,” said Joachim Klement, head of strategy at Panmure Liberum. “Any hint that a military strike against Iran is imminent should trigger another rally in oil and gold prices. If Trump uses his platform to bully the Supreme Court or the Fed, Treasury markets will not take that lightly.”

Home Depot, Keurig Dr Pepper and Fidelity National are among companies scheduled to report results before the market open. Home Depot’s commentary on the housing market will be a key focus and whether consumers remain on the sidelines for big projects due to high interest and mortgage rates. Earnings from HP and Workday follow later.

European equities edged lower on Tuesday with banking and insurance stocks leading declines, while automobiles and utilities were the biggest outperformers. The Stoxx 600 falls 0.2% to 626.46 with 242 members down, 351 up, and seven little changed. Here are the biggest movers Tuesday:

• Convatec rises as much as 11%, most since November 2024, following full-year results that showed stronger-than-expected second-half revenue performance and raised medium-term growth guidance
• Edenred shares gain as much as 9.3% after the payment solutions firm delivered better earnings and cashflow than anticipated against a backdrop of low expectations, according to Barclays
• Endesa shares jumped 6.2% to the highest level since June 2008 after the Spanish utility firm reported net income for the full year that beat the average analyst estimate and gave a new guidance that Jefferies says is ahead of consensus
• Sika shares gain as much as 3.1% after its board of directors proposes to the Annual General Meeting on March 24 that the gross dividend be increased by 2.8% to CHF3.70 from CHF3.60 previous year, according to a statement
• Banks are the worst performing sector in Europe on Tuesday, tracking declines for US peers, as fears about AI disruption and private credit lending continue to rattle the market
• Novo Nordisk shares fell as much as 4.4% on Tuesday to the lowest intraday level since June 2021, after analysts cut recommendations and price targets for the Danish drugmaker
• Rio Tinto shares drop as much as 1.5% in London after Barclays downgrades to equal-weight from overweight. The analyst says the move reflects near-term headwinds, including iron ore seasonality
• Galenica falls as much as 8.2%, most since July 2022, after UBS downgraded the stock to sell from neutral, expecting liberalization of OTC drug shipments to pose downside risk to sales growth and margin expansion
• Wienerberger falls as much as 6.6%, the most in 10 months, after Morgan Stanley said the full-year outlook of the brick manufacturer came in below estimates ahead of its capital markets day
• MTU Aero shares fall as much as 6.4%, the most since April, after the German engine manufacturer’s cash flow missed expectations

Asian stocks showed resilience after US peers witnessed another selloff on AI disruption fears, as investors snapped up shares of the region’s tech hardware companies — particularly semiconductor makers.The MSCI Asia Pacific Index was up 0.1%, reversing an early decline that followed a 1% slide in the S&P 500 Index on Monday. Chipmaking giants TSMC, Samsung Electronics and SK Hynix were the biggest boosts to the Asian benchmark. They also helped key local gauges in Taiwan and South Korea rally more than 2%. The so-called “AI scare trade” was back in focus after a report by Citrini Research outlined the potential risks to various segments of the global economy, and subsequent warnings from Anthropic and Nassim Taleb soured sentiment. Like in some recent episodes of AI-led selloffs, Asia was able to perform better as the region’s tech sector is dominated by tech hardware firms, notably memory and logic chip makers, which are seen benefiting from sustained demand tied to AI infrastructure build-outs. “Clearly semiconductors are huge winners,” Alap Shah, co-author of the Citrini report, said on Bloomberg Television. “Things that are upstream to semiconductors are huge winners — so everything required to construct a data center.”

In FX, the yen tumbled following local media reports that Prime Minister Sanae Takaichi voiced apprehension about more rate hikes in a meeting with Bank of Japan Governor Kazuo Ueda. Currency markets otherwise calm, with Bloomberg Dollar Spot Index up 0.1%.

In rates, treasuries are unchanged the curve flatter as 5s30s spread partly unwinds Monday’s sharp steepening move.US 10-year yield near 4.035% is less than 1bp higher on the day with bunds and gilts in the sector outperforming by 1bp and 2bp respectively; 2s10s and 5s30s curve spreads are 0.5bp and 1.5bp tighter on the day. European bonds marginally outperform following UK’s £3 billion auction of 2033 bonds and French manufacturing confidence gauge. US session includes packed economic data and Fed speaker slates as well as a 2-year note auction at 1pm New York time.

In commodities, gold prices are down and below $5,200/oz, but copper rallying on the return of traders in China after the Lunar New Year break. Oil little changed, with Brent sitting around $71.50/barrel. Bitcoin weaker and getting close to $63,000.

The US economic calendar slate includes weekly ADP employment change (8:15am), February Philadelphia Fed non-manufacturing activity (8:30am), December FHFA house price index, 4Q house price purchase index and December S&P Cotality home prices (9am), February Richmond Fed manufacturing index and consumer confidence and December wholesale trade inventories (10am) and February Dallas Fed services activity (10:30am). Fed speaker slate includes Goolsbee (8am, 9:30am), Collins and Bostic (9am), Waller (9:15am), Cook (9:30am) and Barkin (3:15pm)

Market Snapshot

• S&P 500 mini unch
• Nasdaq 100 mini +0.1%,
• Russell 2000 mini +0.1%
• Stoxx Europe 600 little changed,
• DAX -0.1%,
• CAC 40 little changed
• 10-year Treasury yield little changed at 4.03%
• VIX -0.1 points at 20.93
• Bloomberg Dollar Index little changed at 1190.43,
• euro unchanged at $1.1785
• WTI crude +0.3% at $66.49/barrel

Top Overnight News

• Trump dismissed reports the Pentagon fears a difficult Iran campaign, saying the Joint Chiefs chairman believes military action would be “easily won.” The president insisted he prefers a diplomatic deal. BBG
• The Trump administration is considering new national security tariffs on a half-dozen industries in the wake of a Supreme Court decision last week that invalidated many of the president’s second-term levies. The new tariffs being considered could cover industries such as large-scale batteries, cast iron and iron fittings, plastic piping, industrial chemicals and power grid and telecom equipment. WSJ
• US President Trump will use the State of the Union address to sell the public on the economy and unveil new measures to lower cost ahead of the mid-terms: WSJ.
• China has restricted exports of rare earth magnets and other critical materials to dozens of leading Japanese companies in an escalation of a dispute with Tokyo. FT
• Chinese AI startup DeepSeek’s latest AI model, set to be released as soon as next week, was trained on Nvidia’s most advanced AI chip, the Blackwell, a senior Trump administration official said on Monday, in what could represent a violation of U.S. export controls. RTRS
• Japanese PM Takaichi expressed reservations about additional interest rate hikes during her meeting with Bank of Japan Governor Kazuo Ueda last week. FT
• The UK announced new sanctions on Russia — its biggest since the early months of the Ukraine invasion — targeting energy firms and suppliers of military equipment. BBG
• Zelenskyy said Russia and Ukraine were at the “beginning of the end” of Europe’s biggest conflict since the second world war, but urged Washington to see through Putin’s negotiating “games.” FT
• Trump is implementing a new global tariff at 10% rather than the 15% rate announced over the weekend after his defeat at the Supreme Court. His move to apply a 10% for the time being rather than the 15% tariffs follows a backlash to the higher rate from several US trading partners such as the EU and UK. FT
• Alap Shah, co-author of a Citrini report that triggered yesterday’s selloff, suggested governments consider taxing AI to cushion the impact of job losses. BBG

Trade/Tariffs

• US President Trump’s 10% global tariff rate takes effect.
• China’s Commerce Ministry called on US to abandon unilateral tariff; will adjust countermeasures and monitor US actions. Willing to hold 6th round of trade talks with the US.
• China MOFCOM adds 20 Japanese companies including Mitsubishi Heavy Industries to its export control list for military activities which bans exports of dual-use items, while it will add another 20 groups to a watch list.
• EU warns the US that President Trump’s new tariff policy breaks the trade agreement.
• Japan’s finance minister Katayama said will closely examine details of US Supreme Court decision on tariffs, adds will steadily carry out US-bound investment package and Japan must be aware that US tariffs on cars remain in effect.
• Japan’s Trade Minister Akazawa held a phone conversation with US Commerce Secretary Lutnick on Monday, and both sides affirmed investment plans in the call.
• US President Trump’s administration is likely to face tough legal obstacles if it opposes refunds for the tariffs struck down by the US Supreme Court, according to Bloomberg.
• US President Trump reportedly considers new national security tariffs after SCOTUS ruling, in which new levies on a half-dozen industries would be issued separately from the new global 15% flat-rate tariff, according to WSJ.
• Taiwan Vice Premier said preferential terms reached with the US under tariff and trade deal would not change, and that they will have proactive talks with the US to ensure their interests protected under deals already reached with Washington.
• China announces that the hot-rolled steel coil issue with South Korea has been resolved.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a mostly positive bias as key participants returned to the market and with the region attempting to shrug off the weak lead from Wall St, where sentiment was weighed on by trade uncertainty and AI disruption concerns. ASX 200 struggled for direction as outperformance in the mining, energy and resources sectors was offset by losses in tech, real estate and financials, while participants continued to digest a slew of earnings. Nikkei 225rallied to back above the 57,000 level on return from the long weekend, but is off today’s best levels amid losses in tech stocks and after China’s MOFCOM added 20 Japanese companies to its export control list, which bans Chinese exports of dual-use items. Hang Seng and Shanghai Comp were mixed with the mainland boosted on return from a 10-day closure and got the first opportunity to react to the recent US tariff developments, which are seen to benefit China the most, while the Hong Kong benchmark underperformed in a reversal of the prior day’s rally amid notable losses in tech and pharmaceuticals.

Top Asian News

• Several senior US officials said the “rate checks” carried out when the yen weakened in January were initiated by US Treasury Secretary Bessent rather than at Japan’s request, according to Nikkei. US officials indicated that coordinated intervention to buy yen and sell dollars would have been considered if requested by Japan.
• Japanese Finance Minister Katayama said Japan is keeping close dialogue with the US on Forex, according to the Wall Street Journal.

European bourses (STOXX 600 -0.1%) are broadly weaker, with the IBEX 35 (-0.7%) the clear laggard as Banks weigh on the index. On the other hand, the SMI (+0.6%) is printing modest gains. European sectors, on the contrary, show a positive bias, with Utilities (+1.7%) and Materials (+0.7%) outperforming, helped by the likes of Sika (+1.9%), Givaudan (+2.2%) and Croda (+2.7%). Sika shares are rising this morning as the Board proposes to lift the gross dividend per share by 2.8%. Croda announced its FY25 earnings, with its revenue and EBITDA metrics rising Y/Y and FY26 guidance in line with forecasts. This is helping the broader Chemicals sector rise. On the other hand, Banks (-1.1%) have been hit this morning following weak Q4 earnings by Standard Chartered (-1.9%) and the effects of Anthropic’s Claude on jobs as the code can now automate COBOL modernisation efforts.

Top European News

• French Business Climate Indicator (Feb) 97 (Prev. 99).
• French Business Confidence (Feb) 102 vs. Exp. 104 (Prev. 105).

FX

• DXY is mildly firmer this morning, and trades at the mid-point of a 97.69-97.95 range; the high of the day is a pip above its 50 DMA. The theme in the US remains firmly on a) the trade situation and b) the growing woes surrounding AI – spurring increased uncertainty about the US economy, and hence the USD. Nonetheless, the index is firmer this morning, largely thanks to considerable pressure in the JPY (more on that below). For the time being, focus will be on some Tier 2 US data including Consumer Confidence, Richmond Fed Index and ADP Employment Change Weekly – Fed speak today includes, Waller (voter, dove), Cook (voter, neutral), Barkin (2027 voter, neutral), Goolsbee (2027 Voter, Dovish), Bostic (retiring, hawk), Collins (2028 voter, neutral). Thereafter, US President Trump is set to deliver his State of the Union address, where he is expected to speak on the economy, new policies and potentially trade (02:00 GMT Wednesday / 21:00 EST Tuesday).
• JPY is shunned today, currently off by around 0.8%, with USD/JPY trading at the upper end of a 154.52 to 156.27 range – the pair currently pivots its 50 DMA at 155.97. Overnight, pressure stemmed from reports that US Treasury Secretary Bessent initiated rate checks, rather than those occurring at the request of the Japanese. The weakness in JPY was then exacerbated by source reports that PM Takaichi relayed to BoJ Governor Ueda her reservations about further rate hikes; she was reportedly “stricter than at the previous meeting”, in November. As a reminder, the PM and Ueda met last week, where traders assigned some risk that the PM would ask Ueda to cull future rate hikes; despite this, Ueda suggested that the PM “didn’t have any particular requests”.
• Finally, G10 peers are broadly incrementally firmer/flat against the USD. Antipodeans benefit from the constructive sentiment seen in the APAC session, and as base metals remain bid. EUR/USD remains steady within a narrow 1.1767-1.1796 range; the low for today is a handful of pips below its 50 DMA at 1.1772.

Central Banks

• Japanese PM Takaichi reportedly relayed to BoJ Governor Ueda her reservations about further rate hikes, according to Mainichi citing sources.
• Chinese Loan Prime Rate 1Y (Feb) 3.00% vs. Exp. 3.00% (Prev. 3.00%).
• Chinese Loan Prime Rate 5Y (Feb) 3.50% vs. Exp. 3.50% (Prev. 3.50%).
• NBP’s Glapinski said monetary policy needs to be cautious.

Fixed Income

• JGBs were boosted this morning by a Mainichi report that PM Takaichi relayed reservations to BoJ Governor Ueda about further tightening, with Takaichi’s stance described by the sources as “stricter” vs their last meeting. This lifted JGBs by around 30 ticks to a 133.10 peak.
• USTs flat, in a narrow 113-07+ to 113-13 band. Awaiting further updates on the AI disruption narrative, US-Iran and numerous Fed officials. From those, the most pertinent include Cook (voter), who, in early February, said she supported waiting after December to cut again and described tariff price-rises as temporary. Waller (voter) has already spoken post-SCOTUS, saying the impact would likely be limited. The docket also includes 2027 voters, Barkin & Goolsbee, and 2028 voter Collins.
• Bunds firmer by around 10 ticks, holding just off a 129.73 peak which is just above Monday’s 129.71 best. ECB’s Lagarde theoretically headlines the docket, though she has spoken extensively recently. As such, the benchmark will likely conform to leads from USTs and the global risk tone if there is an AI/tariff/US-Iran update.
• Gilts also firmer by around 10 ticks and at a 92.97 peak, taking out the high from January and notching a fresh YTD and contract best. For the UK, the main event is the Treasury Select Committee. Pertinently, Governor Bailey headlines the outing alongside known dove Taylor and the hawkish Greene & Pill. The Governor and the two hawkish members are the focus, for any hint that the recent string of data and/or tariff updates have pushed them towards easing in the near-term. Commentary that will, by extension, inform on the ongoing debate between March and April, with 21bps of easing implied for March and 27bps in April.
• Italy sold EUR 2.5bln vs exp. EUR 2-2.5bln 2.20% 2028 BTP Short Term & EUR 2.0bln vs exp. EUR 1.5-2bln 1.10% 2031, 1.80% 2036 BTPei.
• UK sold GBP 3bln 4.125% 2033 Gilt: b/c 3.37x (prev. 3.18x), average yield 4.075% (prev. 4.296%), tail 0.2bps (prev. 0.2bps).
• Japan’s Finance Ministry is said to mull tweaking liquidity-enhancement auctions and reduce super-long supply further to steady yields.
• Australia sold AUD 1.2bln 4.25% March 2036 bonds, b/c 2.71, avg. yield 4.6969%.

Commodities

• Crude benchmarks remain mostly firmer amid the ongoing geopolitical update between the US and Iran over the last few week which has seen a gradual escalation over recent weeks. WTI and Brent trade at the upper end of their respective USD 66.16-66.95/bbl and USD 70.87-71.78/bbl, ranges.
• Spot gold has eroded some of Monday’s upside, hovering just below the USD 5,200/oz mark, with recent USD strength weighing. XAU and XAG trade in the lower ranges of USD 5135.135-5250.005/oz and 84.785-88.756/oz, respectively.
• Copper prices have picked up, coinciding with its largest buyer, China, returning to the market after the holiday period. As such, the red metal trades above the USD 13k/t mark. That aside, there hasn’t been much newsflow regarding the red metal. Currently, 3M LME copper trades in the upper range of USD 13.005-13.061k/t.
• UBS said spot gold may reach USD 6,200/oz in the near future as the factors fuelling its recent rally remain intact.
• The UK imposes new sanction on Russia’s Transneft oil operation.
• Shanghai Gold Exchange said it is to cut margin ratio and price limits for some gold and silver contracts from the closing settlement on February 24th.
• Chevron (CVX) has entered exclusive talks to take over Lukoil’s stake in Iraq’s West Kerner II oil field (480k bpd), as US sanctions pressure the Russian firm to divest.
• New Zealand is to lower the price cap on Russian crude oil.

Geopolitics: Ukraine

• Russia’s Kremlin highlights that the special operation goals have not yet been achieved, cannot provide a date for the next round of Ukraine talks.
• Russian Foreign Ministry Spokesperson said Russia will seek to find a solution to the problem of NATO’s expansion to its borders by military or political means. Added that without solving the problem of NATO’s expansion to Russia’s borders, it is impossible to solve the situation in Ukraine.
• Ukrainian President Zelensky said we will do everything necessary to ensure a strong and lasting peace.

Geopolitics: Middle East 

• Iran reportedly nears a deal to purchase anti-ship missiles from China, according to sources.
• Israeli official tells Yedioth Ahronoth that a US attack on Iran is imminent.
• US President Trump said top general Dan Caine predicts an easy victory over Iran, which is at a contrast to recent comments by Caine, according to NYT.
• US President Trump is growing frustrated by the limited military options against Iran, with advisers warning that strikes may not be decisive and risk escalating the conflict, according to CBS News.
• US President Trump on Truth said “If we don’t make a deal, it will be a very bad day for Iran”.

Geopolitics: Other

• China said it is open to nuclear talks in Geneva and urges the US to resume strategic stability dialogue with Russia.
• South Korea and US are reportedly at odds over war games’ scale with the US pushing back on South Korea’s request for smaller drills, forcing the postponement of a major joint military briefing, according to SCMP.

US Event Calendar

• 9:00 am: United States Dec FHFA House Price Index MoM, est. 0.3%, prior 0.6%
• 10:00 am: United States Feb Richmond Fed Manufact. Index, est. -4.5, prior -6
• 10:00 am: United States Feb Conf. Board Consumer Confidence, est. 87.1, prior 84.5
• 10:00 am: United States Dec F Wholesale Inventories MoM, est. 0.2%, prior 0.2%

Central Bank Speakers

• 8:00 am: United States Fed’s Goolsbee Speaks on Economy
• 9:00 am: United States Fed’s Collins Gives Opening Remarks
• 9:00 am: United States Fed’s Bostic in Moderated Discussion
• 9:15 am: United States Fed’s Waller Gives Keynote Address
• 9:30 am: United States Fed’s Cook Speaks on AI
• 9:30 am: United States Fed’s Goolsbee on Bloomberg TV
• 3:15 pm: United States Fed’s Barkin & Collins on Panel

Main Rating Changes:

DB’s Jim Reid concludes the overnight wrap

Luke and Galina in my team have published a timely piece (link here) examining a group of global stocks that have sold off sharply in recent weeks amid rising fears of AI-driven disruption. They look at how valuations have adjusted, analysing PE and PEG ratios, and assess how far current prices now sit from our equity analysts’ targets. The most compelling section, for me, comes at the end, where those analysts explain why they believe these companies are far better positioned to withstand AI disruption than the market currently assumes.

It’s good timing for the note as just as US equities had fought their way back to flat yesterday, shaking off weekend tariff uncertainty and an early sell off in futures, the AI disruption narrative resurfaced once again. In the final hour or two of European trading, the S&P 500 rolled over sharply, eventually closing -1.04% down on the day, while 10 year US Treasury yields fell by -5.2bps. The declines included IBM posting its worst day since the 2000 tech bubble burst, while the software component of the S&P 500 (-3.82%) dropped to its lowest level since the Liberation Day turmoil last year, with the VIX peaking at 22.0, not far from its YTD high of 23.1. Elsewhere, Brent crude briefly touched its highest level since July on renewed fears of a potential US strike on Iran, before fading to close marginally lower on the day.

Much of the AI-related sell off was attributed to a Citrini Research memo from the future, “The 2028 Global Intelligence Crisis”, outlining a hypothetical scenario in which AI adoption drives the US unemployment rate into double digits by mid 2028. The note had been forwarded to me around ten times late last week and was ubiquitous across my social media feeds, so it was something of a surprise to see it cited as the catalyst for the sudden mid afternoon sell off in London. As with Matt Schumer’s viral “Something big is happening” piece a few weeks ago — which was also linked to significant equity losses — the argument leans heavily on narrative and emotion rather than hard evidence. That doesn’t mean it will ultimately be wrong, but in both cases the vibes to substance ratio is undeniably high. I’ll stop there, before anyone accuses my own research of the same thing.

The net result was a renewed sell-off in stocks perceived to be at risk from AI disruption. Software stocks were again affected, with that component of the S&P 500 falling -3.82% (and now -31.8% down from its October peak), including sharp declines for Workday (-6.24%), Adobe (-4.61%) and Oracle (-4.57%). But various other companies were also hit, with IBM (-13.15%) the worst performer in the S&P 500 after Anthropic said Claude Code could modernise COBOL, a legacy programming language run mostly on IBM machines. Meanwhile, several of the names namechecked in the Citrini report, including Capital One (-8.84%), American Express (-7.20%) and Doordash (-6.60%) saw outsized declines, while KKR (-8.89%) led the losses among PE firms as private credit fears again rose. More broadly, the Mag-7 (-1.51%) saw a modest underperformance, and the equal-weighted S&P 500 (-1.12%) also saw a sizeable decline as the broad array of losers outweighed the gains for defensive sectors like consumer staples (+1.46%), healthcare (+1.15%) and utilities (+0.72%). And credit also came under pressure, with US IG spreads +2bps wider and HY +10bps wider.

When it comes to tariffs, the weekend news injected another dose of uncertainty for markets, with big questions surrounding the trade deals the US agreed last year. Notably, the EU have paused the process of ratifying the US trade deal, and the chair of the EU Parliament’s trade committee, Bernd Lange, said yesterday that “We want to have clarity from the US that they are respecting the deal because that’s a crucial element.” The EU concern is that a stacking nature of the 15% Section 122 tariffs would bring total tariff rates for some products above the 15% maximum agreed by the EU and the US. The UK are another with an unclear situation, as they reached a 10% tariff deal last year, but could now face the 15% global tariff rate that would be higher than the deal already agreed to. Indeed, the UK government haven’t ruled out retaliation, with a spokesperson for PM Starmer saying that “Nothing is off the table at this stage”.

Back on the US side, it was also unclear how Trump would respond to these developments. But he did post yesterday that countries which “play games” would “be met with a much higher Tariff, and worse, than that which they just recently agreed to.”

In the meantime, the new Section 122 tariffs have just come into force at midnight Eastern Time. At the moment the rate is 10% with White House officials stating that they are working on a formal order to raise to 15%. Perhaps the stacking concern is delaying things for now. Late yesterday, we also saw the WSJ and Bloomberg report that the administration was preparing new Section 232 national security

investigations into several industries including batteries, telecom equipment and industrial chemicals. Remember that Trump’s delivering the State of the Union address tonight, so it’s possible we might get a better sense of the next steps on tariffs. As I mentioned in my CoTD yesterday (link here), net-net we still think the effective tariff rate will fall this year and that the world post-SCOTUS will see lower tariffs than the pre-SCOTUS world. For more on the latest state of the world of US tariffs, see Matt Luzzetti’s latest trade chart book here. 

Elsewhere, geopolitics remained in the spotlight, as speculation continued to mount about a potential US strike on Iran. There wasn’t much fresh news yesterday, although it was reported by multiple outlets yesterday, including Bloomberg, that the State Department had ordered the evacuation of some people from their Beirut embassy. The US-Iran talks are reportedly still ongoing, and Bloomberg also said that the US’ Steve Witkoff and Jared Kushner would be in Geneva this week for more discussions on Thursday. Escalation concerns saw Brent crude rise to as high as $72.50/bbl intra-day, its highest since July, but it was down by -0.38% to $71.49/bbl by the close. It’s back up +0.6% in Asia.

The risk-off mood boosted US Treasuries, as investors made a push into safe havens. Indeed, the 10yr Treasury yield (-5.2bps) fell back to 4.03%, its lowest level since November, and the 2yr yield (-3.9bps) fell to 3.44%. The front-end rally came despite somewhat less dovish comments from Fed Governor Waller, who said he may favour a pause in rates at the March meeting if the February labour market data showed continued improvement. However, he did add that “if the good labor market news of January is revised away or evaporates in February” then he’d again back a 25bp cut, suggesting that Waller remains among the more dovish FOMC members.

Earlier in Europe, yields also moved lower across the continent, with those on 10yr UK gilts (-3.9bps) and Italian BTPs (-2.4bps) both reaching their lowest level since December 2024, whilst 10yr bund yields (-2.7bps) were down to their lowest since November, at 2.71%. The equity moves were more mixed in Europe, with the STOXX 600 down by a more moderate -0.45%, as the more tariff-sensitive DAX (-1.06%) underperformed but Spain’s IBEX 35 (+0.56%) recorded a record high. Separately, this week is also set to see German Chancellor Merz travel to China, and our economists have a note of what to expect (link here).

Looking at other asset classes, the backdrop around the tariffs, AI and Iran boosted traditional safe havens. Gold rose +2.35% to $5,227/oz, the highest since its record levels in late January, while the Japanese yen (+0.26% versus the US dollar) and the Swiss franc (+0.12%) were the best performing G10 currencies. By contrast, Bitcoin (-4.47%) had its worst day in over two weeks. 

Asian equity markets are mostly shrugging off the US weakness with the KOSPI (+1.99%) again at the forefront of gains in the region, surging to a record high, supported by advances in exporters and local chipmakers. Chinese markets are returning from their week plus break with the CSI (+1.11%) and the Shanghai Composite (+0.94%) in a positive mood along with the Nikkei (+0.99%) after yesterday’s holiday. Conversely, the Hang Seng (-2.12%) is the weakest performer, suffering losses in technology and pharmaceutical shares. S&P 500 (+0.22%) and NASDAQ 100 (+0.34%) futures are bouncing back a little with European futures seeing a similar move. US Treasuries are around +1-2bps higher across the curve after the sizeable rally yesterday.

Looking at the day ahead, President Trump will deliver the State of the Union address tonight. Otherwise, US data releases include the Conference Board’s consumer confidence for February, the FHFA house price index for December, and the Richmond Fed’s manufacturing index for February. Finally, central bank speakers include the Fed’s Goolsbee, Collins, Bostic, Waller, Cook and Barkin, the ECB’s Kocher, and BoE Governor Bailey, and the BoE’s Greene and Taylor.

Authored by Jack Phillips via The Epoch Times,

The average tax refund for American taxpayers has increased on a year-over-year basis, the IRS said in a Feb. 20 update.

The average refund amount increased 14.2 percent in 2026 to $2,476 as of Feb. 13, according to the agency. Last year, the average refund for the same time period was $2,169.

Meanwhile, the average direct deposit refund amount for taxpayers is up 13.1 percent year over year, from $2,252 in 2025 to $2,548 in 2026.

The IRS added that the total number of tax returns that the agency has received and processed is down slightly year over year.

About 32,175,000 tax returns have been filed as of Feb. 13, a 2.6 percent decrease year over year. For the same time period last year, 33,040,000 tax returns were filed, the agency said.

The total number of returns processed by the IRS paints a similar picture. Some 31,795,000 tax returns have been processed as of Feb. 13, a year-over-year decline of 3.1 percent.

“Average refund amounts are strong,” the IRS said in its update, adding that the agency is required by federal law to hold refunds until Feb. 15 for returns that claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).

“It’s important to note this week’s refund numbers do not include millions of EITC and ACTC refunds to these taxpayers. This means the refund numbers expected to be released Feb. 27, for refunds processed through Feb. 20, are expected to be higher.”

Also, since some taxpayers were “still waiting for important tax documents at the end of January, the IRS expects the tax return filing numbers generally will catch up in the following weeks,” the agency said.

The final average refund amount last year was $3,167, IRS figures show.

The data release comes as President Donald Trump and administration officials have been touting their tax plan under the One Big Beautiful Bill Act (OBBBA) that was passed in Congress and signed by Trump into law last year.

Late last month, Treasury Secretary Scott Bessent said in a Fox News interview that there would be “substantial refunds for working Americans.” He added that once a change in tax withholding is underway, employees “have bigger take-home pay every two weeks” or “every month.”

Multiple new tax law provisions under the OBBBA took effect this year, according to the IRS. Congressional Democrats have been largely critical of the Trump administration’s economic agenda, especially after the Democratic Party had victories in several states during the November 2025 elections.

Democrats have also targeted the administration for what they said are policies that have increased inflationary pressures due to its tariffs, which were dealt a blow by the Supreme Court this past week.

“Housing costs have been skyrocketing. Rent is too high and eating away at the ability for people to save money to own a home. The average age of a first-time homebuyer just hit a record high of over 40 years old,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in a January statement.

Tax filing season officially started on Jan. 26 and is scheduled to end on April 15, 2026. The IRS Free File started on Jan. 9, while the extension deadline is Oct. 15.

The tax revenue agency said it expects that approximately 164 million individual tax returns will be filed in 2026.