February 13, 2026

Global markets took a breather this Friday as investors locked in profits ahead of upcoming U.S. inflation data. While the MSCI All-Country World Index dipped, the U.S. saw a split performance: the Dow hovered near its recent historic 50,000 milestone, but broader indices struggled following reports of stagnant retail sales.

Key Market Drivers:

  • Economic Mixed Signals: Weak consumer spending has increased hopes for Federal Reserve rate cuts, lowering Treasury yields but sparking concerns over economic durability.

  • Bond Market Overheating: Corporate bond spreads have tightened to multi-year lows. Analysts warn of a "complacent" credit market, noting that record-low risk premiums leave investors vulnerable if inflation spikes or growth stalls.

  • Trade Policy Shifts: Reports that Donald Trump may revise metal tariffs and semiconductor trade policies have added a layer of geopolitical uncertainty.

  • Banking Resilience: Despite a cooling economy, NatWest’s significant bonus pool announcement underscores continued high profitability within the financial sector.

The Bottom Line: Markets are currently caught in a "wait-and-see" loop. While AI-driven earnings and potential rate cuts provide a bullish backdrop, stretched valuations in both stocks and bonds suggest a period of heightened volatility ahead.