Market News

• Prior was -95.0B
• Last Feb was -137B
• The fiscal year-to-date deficit is $1.004 trillion vs $1.147 trillion a year earlier
• Outlays $621B vs $603B a year earlier
• Receipts $313B vs $296B a year earlier
• Net customs receipts of $26.59B

When you factor in the tariff refunds that are coming, the deficit is on track to break the prior year. The war expense won't help either, though it's fairly negligible in the US scale. There could be some positive accounting around the SPR release but it will eventually need to be refilled.

The Monthly Treasury Statement, published by the U.S. Department of the Treasury, provides a detailed accounting of federal government receipts, outlays, and the resulting surplus or deficit for each month. It serves as the primary…

Iran has threatened to strike the US west coast with offensive drones in retaliation for American military operations, according to an FBI warning issued to California police departments.

This is an ABC News report and it reads to me like the kind of standard thing that police dept's would send out at a time like this, not some kind of imminent operation.

There is some risk-off trading on this and that kind of attack is the kind of thing that could draw the US into a long, messy ground war.

• High-yield. 4.217%
• WI level at the time of the auction 4.210%
• Tail 0.7 basis points versus 6 month average of 0.3 basis points
• Bid to cover 2.45X versus 6 month average of 2.48X 6 month average of
• Directs 12.8% vs 6 month average of 20.3%
• Indirects 74.5% versus 6 month average of 69.3%
• Dealers 12.7% versus 6 month average of 10.3%

Auction Grade: C-

The 10-year note auction came in with below-average demand, though it was not as weak as the 3-year auction held yesterday.

The auction tailed by 0.7 basis points above the six-month average, indicating investors required a slightly higher yield to take down the supply. The bid-to-cover ratio was roughly in line with the six-month average, suggesting overall participation was steady but not particularly…

• Spain has been bad, may cut off trade
• Spain's leadership is not so good

On Iran:

• Not worried about any Iran-backed attacks on US soil
• Just spoke with leaders of various countries (this would have been on the IEA oil reserves call)
• On Iran, Trump asserts: "We're not finished yet."

From Trump:

"We're doing something that nobody ever thought was possible to do. Our military is the best, it's the most powerful in the world, and they're hitting them very hard. This is 47 years of abuse — and killing lots of people."

The White House is moving to resurrect its tariff agenda through fresh Section 301 probes targeting what it calls unfair trading practices — a workaround after the Supreme Court struck down earlier levies. The NYT says the announcement will come today.

The USTR will lead the investigations, with excess manufacturing capacity the headline issue — Washington's term for countries that subsidize domestic production beyond domestic demand. Also in the crosshairs: digital services taxes, forced labor, and currency manipulation.

The move follows USTR Greer's comments last month flagging Asian nations that "make more than they can consume" as prime targets. We will await signs on which countries are targeted.

Trump is the administration laying the…

Axios spoke with Trump

"Any time I want it to end, it will end," Trump said during the five-minute call with Axios.

"The war is going great. We are way ahead of the timetable. We have done more damage than we thought possible, even in the original six-week period," Trump told Axios.

This is the strongest signal yet that the war could end in the near-term.

Trump in the article hiimself said it will end "soon" however the same article cites other reports saying Israeli and US officials who have said they are preparing for at least two more weeks of strikes in Iran.

But there is one person in charge of the US military during this operation and -- like he said -- it will end when he wants it to. It sounds like he doesn't have the appetite to…

Today's CPI report was bang in-line with estimates so that gives the Fed breathing room to wait and see what happens with prices. What's complicating that is the spike in crude oil due to the Iran war. WTI continues to bounce around and is up $1.52 to $84.90 today after rising as high as $89.

The interaction with oil, inflation and growth is top-of-mine for bond investors at the moment. Against that is the bid for safety in a world of tariffs and unprovoked US attacks. US 10-year yields are up 5 bps to 4.19%.

That rise isn't hurting stock markets as the S&P 500 is now positive, led by a 12% rally in Oracle shares following earnings.

Looking at the chart, 10-year yields hit 4.216% on Monday as oil prices peaked. They fell below 4.10%…

• Prior was +2.4% y/y
• CPI +0.3% m/m vs +0.3% expected
• Prior +0.2% m/m
• Non-seasonally adjusted, unrounded +0.47% vs +0.37% prior
• Core CPI 2.5% vs +2.5% y/y expected
• Prior core 2.5%
• Core CPI +0.2% vs +0.2% expected
• Prior core +0.3%
• Real weekly earnings +0.1% vs +0.5% prior

This report is in-line with estimates right down the list so it's no surprise that it's not making waves in the market. The intriguing report will be the March one as it will include the Iran war price spike.

The Consumer Price Index (CPI), published monthly by the Bureau of Labor Statistics, tracks the average change in prices paid by urban consumers for a representative basket of goods and services. It is one of the most widely followed measures of U.S. inflation.

In January 2026,…

Headlines:

• Oil prices creep back up after Washington fiasco, what's next?
• IEA reportedly to announce recommendation on strategic oil reserve release at 1300 GMT
• G7 energy ministers reaffirm support of using oil reserves
• Japan set to release part of oil reserves from private sector and also state stockpile
• What is the distribution of forecasts for the US CPI?
• The central bank bonanza returns next week
• ECB's Kazimir: Rate hike on Iran may be closer than thought
• ECB policymaker Villeroy says do not expect a rate hike at next week's meeting
• Germany February final CPI +1.9% vs +1.9% y/y prelim

Markets:

• WTI crude oil up 2.4% to $86.04, Brent crude oil up 2.3% to $90.53
• AUD leads, JPY lags on the day
• European indices lower; S&P 500 futures flat
• 10-year…

Well, it's not a surprise given that the G7 leaders' meeting is lined up right after. It is a mere formality now as they look to just finalise the details and nuances in getting this done.

The Reuters headline is saying that the IEA will announce its recommendation at 1300 GMT on releasing oil from its strategic reserves. It cites two sources with knowledge of the discussions. Adding that the release may total 400 million barrels. That seems to be on the upper end of the expected estimate. But as I mentioned earlier, it is not the total amount that really matters when it comes to looking at this move by the IEA.

From earlier:

"We already know that they are touting a big, big number. That somewhere along the lines of 300 million to 400…

The statement said that G7 energy ministers supported, in principle, the implementation of proactive measures in order to address the current market situation. And among those measures, it includes the use of strategic oil reserves.

Well, this is nothing new as it has been talked about since Monday already. However, we're still yet to see official action be taken.

Coming up later today, French president Macron is hosting an emergency call to discuss the ongoing US-Iran conflict and its impact on global energy markets. In particular, it is to talk over the energy situation and the Strait of Hormuz. The meeting is scheduled for 1400 GMT.

It is more than likely we will see this as the official approval step by G7 leaders to coordinate the…