Markets rallied across the board this week, with Russell 2000 leading at +2.77% and USD Index lagging at +0.79%. On the safe-haven front, Gold climbing 2.68% to $2,942.10 while the 10-year yield rising to 4.53% while the dollar strengthening 0.79% to 109.05.
The macro picture was busy. CPI (Year-over-Year) came in above expectations (3.1% vs. 2.9%). Initial Jobless Claims came in below expectations (218000 vs. 225000). Retail Sales (Month-over-Month) came in above expectations (0.6% vs. 0.3%). The combination of hot inflation and strong consumer spending paints a picture of an economy that's running warm -- good for earnings, but it keeps rate cuts off the table for now.
Looking ahead, the key events to watch are: FOMC Meeting Minutes, S&P Global Flash US Manufacturing PMI, S&P Global Flash US Services PMI. Position sizing and hedges should reflect the potential for volatility around these releases.
📈 Large Cap
📊 Broad Market
🏦 Fixed Income
| Index | Close | Weekly % | Week Range |
|---|---|---|---|
| Russell 2000 | 2,343.20 | +2.77% | 2,270.00 – 2,365.00 |
| Gold | 2,942.10 | +2.68% | 2,858.20 – 2,948.20 |
| Nasdaq | 20,005.80 | +1.66% | 19,620.50 – 20,080.50 |
| S&P 500 | 6,106.40 | +1.12% | 6,020.10 – 6,130.50 |
| 10Y Treasury | 4.53 | +5 bps | 4.46 – 4.60 |
| Dow Jones | 44,795.10 | +1.07% | 44,250.00 – 44,800.00 |
| USD Index | 109.05 | +0.79% | 107.90 – 109.40 |
| Date | Event | Actual | Expected | Previous | Surprise |
|---|---|---|---|---|---|
| 2026-02-10 | CPI (Year-over-Year) | 3.1% | 2.9% | 2.9% | Above |
| 2026-02-11 | Core CPI (Month-over-Month) | 0.3% | 0.3% | 0.2% | Inline |
| 2026-02-12 | Initial Jobless Claims | 218000 | 225000 | 222000 | Below |
| 2026-02-13 | Retail Sales (Month-over-Month) | 0.6% | 0.3% | 0.4% | Above |
🔥 CPI (Year-over-Year)
Hotter-than-expected inflation pressures the Fed to hold rates higher for longer. Bond prices may fall, and rate-sensitive sectors (REITs, utilities) could underperform. Consider inflation hedges like TIPS or commodities.
➡️ Core CPI (Month-over-Month)
In-line core CPI is neutral -- no new signal for the Fed. Markets may look through this and focus on the headline number that came in hot.
💼 Initial Jobless Claims
Fewer layoffs than expected signals continued labor market strength. Good for consumer spending and cyclical stocks, but reinforces the Fed's case to stay hawkish.
🛒 Retail Sales (Month-over-Month)
Consumers are spending more than expected -- bullish for retail and discretionary ETFs (XLY, XRT). But strong demand can also feed inflation, keeping rate-cut expectations in check.
| Date | Event | Importance |
|---|---|---|
| 2026-02-16 | Presidents' Day -- Markets Closed | Low |
| 2026-02-18 | FOMC Meeting Minutes | High |
| 2026-02-19 | Housing Starts | Medium |
| 2026-02-20 | S&P Global Flash US Manufacturing PMI | High |
| 2026-02-20 | S&P Global Flash US Services PMI | High |
| Signal | Suggested Action |
|---|---|
| USD Index strengthened +0.79% this week | A stronger dollar weighs on multinational earnings and commodities. Consider reducing exposure to export-heavy sectors and commodity ETFs (GLD, DJP). |
| CPI came in hot at 3.1% vs. 2.9% expected | Inflation-sensitive sectors may see pressure. Consider TIPS (TIP) or defensive tilts (XLU, XLP). |
| Jobless claims came in lower than expected (218,000 vs. 225,000) | Labor market remains tight, supporting risk-on positioning. |
| Retail sales surprised to the upside (0.6% vs. 0.3%) | Consumer discretionary (XLY) and cyclicals may benefit. |
| FOMC Meeting Minutes on 2026-02-18 | Expect volatility. Consider trimming position sizes or hedging with VIX calls. |
| Flash Manufacturing PMI on 2026-02-20 | A key read on factory activity. Watch industrials (XLI) for directional cues. |