Equities higher into US GDP data and potential Supreme Court decision on tariffs

EU mid-market update: Markets absorb Blue Owl redemption halt while Middle East tensions sustain energy bid; Equities higher into US GDP data and potential Supreme Court decision on tariffs.

Notes/observations

- Risk appetite is modestly positive ahead of key US GDP and PCE data. Private credit concerns dominated early sentiment after Blue Owl Capital permanently halted redemptions at its retail fund OBDC II following a $1.4B loan sale. Markets viewed this as a structural shift in liquidity terms rather than a credit-quality event, reinforcing debate around reflexivity risks in retail-facing private credit. More on Blue Owl below.

- Geopolitics kept a risk premium embedded in oil and gas. Trump’s 10–15-day deadline for an Iran deal and chatter about potential U.S. strikes kept crude near six-month highs, with European natural-gas prices also bid on LNG-route concerns. Pres Trump is reportedly considering limited military strikes against selective Iranian military and government sites to pressure the regime into a new nuclear deal. While a final decision has not been made, an approved plan could see strikes launched within days, with the threat of a broader attack on regime facilities if Iran continues to refuse negotiations.

- We are yet to see any bomber movements, but OSINT analysts have confirmed that over 12 F-22 Raptors are being forward-positioned from RAF Lakenheath into the USCENTCOM area to support a "Dual-Carrier" pincer movement involving the USS Abraham Lincoln and the USS Gerald R. Ford. While the world’s largest aircraft carrier prioritizes operational security during its high-speed Mediterranean transit, its arrival is expected to double sortie rates to over 300 daily, potentially reaching striking distance of Iran as soon as later today.

- U.S. Supreme Court may issue a pivotal ruling on the Trump administration’s International Emergency Economic Powers Act (IEEPA) tariffs as soon as today, Feb 20th, with subsequent potential decision dates scheduled next week for Feb 24 and 25. If the Court rules against the administration, U.S. Customs and Border Protection (CBP) would likely halt revenue collection and begin a complex refund process, though the White House could pivot to alternative authorities like Sections 301, 232, or 338 to re-implement duties. Conversely, the justices could uphold the tariffs entirely or offer a "split" ruling—validating some while striking down others—which would likely send the case back to lower courts for further scrutiny.

- The Bureau of Economic Analysis is scheduled to release the December personal-consumption expenditures (PCE) price index, the Federal Reserve’s primary inflation gauge, alongside an advance estimate of Q4 2025 GDP. Concurrently, the Atlanta Fed’s GDPNow model will provide its initial estimate for first-quarter 2026 US economic growth.

- Blue Owl has fundamentally rewritten the retail private credit playbook by converting predictable tender offers into manager-timed distributions, evoking the August 2007 BNP Paribas fund freezes by revealing that exit liquidity in these wrappers is merely a conditional option. The purported "mark-to-market certainty" of their recent loan sales is undermined by a related-party structure where assets are moved "out of one Blue Owl pocket and into another" via CLOs purchased by Kuvare, a life insurer the firm actually owns. By replacing investor agency with discretion and managing the gap between smooth marks and hard clearing prices through these internal channels, the firm has again triggered a systemic repricing based on the fear of a retail-driven reflexivity loop.

- Amazon Web Services experienced a 13-hour service disruption in mid-December 2025 after engineers allowed its Kiro AI coding tool to implement system changes. Amazon clarified that while Kiro normally requires authorization, the incident was caused by a user access control issue involving an engineer with "broader permissions than expected" rather than an issue with AI autonomy.

- Asia closed mixed with KOSPI outperforming +2.3%. EU indices +0.3-1.0%. US futures +0.1-0.3%. Gold +0.6%, DXY +0.1%; Commodity: Brent -0.7%, WTI -0.7%; Crypto: BTC +2.0%, ETH +0.4%.

Asia

- Japan Jan National CPI Y/Y: 1.5% v 1.6%e; CPI (ex-fresh food) Y/Y: 2.0% v 2.0%e (Core slowest rise in 2 years); CPI (ex-fresh food/energy) Y/Y: 2.6% v 2.7%e.

- Japan Feb Preliminary PMI Manufacturing: 52.8 v 51.5 prior (2nd month of expansion and highest since May 2022); PMI Services: 53.8 v 53.7 prior (15th months of expansion); PMI Composite: 53.8 v 53.1 prior.

- Japan FSA warns regional banks on real estate lending.

Americas

- Blue Owl permanently halts redemptions at private retail debt fund - FT.

- US Pres Trump: Regarding affordability "we've solved it"; Will talk about inflation in the State of the Union next week.

- Colombia President Petro: Maintains 2026 minimum wage hike at 23%.

- Trump Admin said to consider banning investors from owning >100 single-family homes, offers new details on its push to ban housing investors - WSJ.

- Trump: Based on the tremendous interest shown, I will be directing the Secretary of War and other agencies to begin releasing files related to alien life - post on Truth Social.

- Argentina Lower House on Congress approves labor reform.

Europe

- ECB Chief Lagarde: Reaffirmed her intention to serve through 2027. Calls for cooperation to 'Save global order' - NY speech.

- Czech Central Bank (CNB) Vice Gov Zamrazilova: If price developments in services and real estate calm down, may be room for 25bps rate cut.

- Poland Central Bank's Zarzecki: Sees some basis for 25bps Polish rate cut.

- Germany Feb Preliminary Manufacturing PMI: 50.7 V 49.5e (1st expansion in 3.5 years).

- France Feb Preliminary Manufacturing PMI: 49.9 V 50.9e (lowest since Nov 2025).

- UK Feb Preliminary Manufacturing PMI: 52.0 v 51.5e (highest since Aug 2024).

- Turkey Fin Min Simsek: No services inflation stickiness, it just takes time.

Trade

- India Trade Min Goyal: India-US trade deal likely to be operational by April.

- Japan Trade Min Akazawa: No set timing on second set of US investment project.

Tensions/conflicts

- Iran govt letter to UN Sec Gen: Trump comments signal a real risk of military aggression.

- China said to be monitoring US military aircraft movements over the Yellow Sea - state-backed Global Times.

- German Govt: Currently no plans for additional F-35 jets.

- Reportedly next round of Russia-Ukraine talks is possible next week - Russian press.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.46% at 628.24, FTSE +0.60% at 10,690.85, DAX +0.38% at 25,112.35, CAC-40 +0.76% at 8,462.94, IBEX-35 +0.48% at 18,104.66, FTSE MIB +0.91% at 46,211.50, SMI +0.19% at 13,826.90, S&P 500 Futures +0.25%]

Market focal points/key themes: European indices opened generally higher and remained upbeat through the early part of the session; macro data seen supporting risk appetite along with earnings; CAC outperforming with apparel names; among sectors leading the way higher are consumer discretionary and communication services; lagging sectors include utilities and telecom; luxury subsector supported after Richemont earnings beat; focus on US GDP and PCE price index data coming out later in the day; earnings expected in the upcoming Americas session include Western Union, Array Digital and Alstom.

Equities

- Consumer discretionary: Danone [BN.FR] -0.5% (earnings; comments on infant formula recall impact).

- Energy: Shell [SHEL.UK] -0.5% (Trump said to consider limited strike against Iran to push it into a nuclear deal).

- Industrials: Aston Martin Lagonda [AML.UK] +0.5% (trading update), ThyssenKrupp [TKA.DE] +4.0% (analyst upgrade).

- Materials: Air Liquide [AI.FR] +3.5% (earnings), Anglo American [AAL.UK] +1.5% (earnings).

Speakers

- Czech Central Bank (CNB) Vice Gov Zamrazilova: If price developments in services and real estate calm down, may be room for 25bps rate cut.

- Japan PM Takaichi: There is a dearth of domestic investment in Japan; confirms will suspend sales tax on food and beverages for 2 years without relying on deficit financing bonds - Policy speech for new govt term.

- Fed's Daly (non-voter): Policy is in a good place; Labor market is in a better position after 75 bps of cuts; Inflation continues to come down outside of the goods sector.

- RBNZ Gov Breman: Reiterates the economy can recover without inflation lift-off.

- Philippines Central Bank (BSP) Gov Remolona: We are seeing signs of recovery; Inflation is under control - CNBC Interview.

- South Korea BOK Gov Rhee: Downside risks to economic growth have intensified; Exchange Rate Volatility has increased due to unexpected political risks.

- Poland Central Bank's Zarzecki: Sees some basis for 25bps Polish rate cut.

FX

- Euro strengthened on firmer German/French PMIs.

- GBP rose on UK retail sales and budget-surplus data.

Economic data

- (EU) Euro Zone Q4 Negotiated Wages: 3.0% v 2.9%e.

- (UK) FEB Feb preliminary Manufacturing PMI: 52.0 V 51.5E (highest since Aug 2024); Services PMI: 53.9 v 53.5e; Composite PMI: 53.9 v 53.2e.

- (EU) Euro zone Feb preliminary Manufacturing PMI: 50.8 V 50.0E; Services PMI: 51.8 v 51.9e; Composite PMI: 51.9 v 51.5e.

- (HK) Hong Kong Jan Unemployment Rate: 3.9% v 3.8%e.

- (DE) Germany Feb preliminary Manufacturing PMI: 50.7 V 49.5E (1st expansion in 3.5 years); Notes new orders have risen robustly, suggesting that production growth will continue in the coming months; Services PMI: 53.4 v 52.4e; Composite PMI: 53.1 v 52.3e.

- (FR) France Feb preliminary Manufacturing PMI: 49.9 V 50.9E (lowest since Nov 2025); Services PMI: 49.6 v 49.2e; Composite PMI: 49.9 v 49.6e.
- (TR) Turkey Jan Foreign Tourist Arrivals Y/Y: 3.5% v 5.0%e.

- (TH) Thailand May Foreign Reserves w/e Feb 13th: $292.4B v $289.7B prior.

- (ES) Spain Dec Home sales Y/Y: 7.9% v 7.8% prior.

- (HU) Hungary Dec Average Gross Wages Y/Y: 8.4% v 8.4%e.

- (SE) Sweden Jan Final CPI M/M: 0.1% v 0.1%e; Y/Y: 0.5% v 0.4%e; CPIF M/M: 0.3% v 0.2%e; Y/Y: 2.0% v 2.0%e; CPIF (ex-energy) M/M: -0.4% v -0.5%e; Y/Y: 1.7% v 1.7%e; CPI Level: 124.58 v 124.51e.

- (DE) Germany Jan PPI M/M: -0.6% v +0.3%e; Y/Y: -3.0% v -2.2%e.

- (DK) Denmark Q4 Preliminary GDP Q/Q: 0.2% v 2.2% prior; Y/Y: 3.0% v 4.0% prior.

- (SE) Sweden Q4 Industry Capacity: 88.2% v 88.8% prior.

- (UK) JAN public finances (PSNCR): -£59.3B V +£16.9B prior; net borrowing (PSNB): £30.4B V -£24.0BE; PSNB (ex-Banking Groups): -£30.4B v +£11.6B prior; Central Government NCR: -£39.8B v +£14.5B prior.

- (UK) JAN Retail Sales(EX-AUTO/FUEL) M/M: 2.0% V 0.3%E; Y/Y: 5.5% V 3.6%E; Retail Sales M/M: 1.8% v 0.2%e; Y/Y: 4.5% v 2.8%e.

- (IN) India Feb Preliminary PMI Manufacturing: 57.5 v 55.4 prior (56th month of expansion); PMI Services: 58.4 v 58.5 prior (55th month of expansion); PMI Composite: 59.3 v 58.4 prior.

Fixed income issuance

- India sells INR330B vs. INR330B indicated in 2029 2033 and 2055 bonds.

- South Africa sells total ZAR1.0B vs. ZAR1.0B indicated in 2033, 2038 and 2046 bonds.

- France Debt Agency (AFT) announces upcoming issuance; To sell €6.0-7.6B in 3-month, 6-month and 12-month bills on Mon, Feb 23rd (4 tranches).

Looking ahead

- 06:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £2.0B respectively).

- 06:30 (IN) India Jan Eight (Key) Infrastructure Industries Y/Y: No est v 3.7% prior.

- 06:30 (IN) India Forex Reserve w/e Feb 13th: No est v $717.1B prior.

- 06:30 (IS) Iceland to sell Bonds.

- 07:00 (MX) Mexico Dec Retail Sales M/M: -0.2%e v +1.0% prior; Y/Y: 3.6%e v 4.4% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (US) Q4 Advance GDP Annualized (1st of 3 readings) Q/Q: 3.0%e v 4.4% prior; Personal Consumption: 2.5%e v 3.5% prior.

- 08:30 (US) Q4 Advance GDP Price Index (1st of 3 readings): 2.8%e v 3.8% prior; Core PCE Price Index: 2.6%e v 2.9% prior.

- 08:30 (US) Dec Personal Income: 0.3%e v 0.4% prior; Personal Spending: 0.4%e v 0.5% prior (revised from 0.4%); Real Personal Spending (PCE): 0.1%e v 0.3% prior.

- 08:30 (US) Dec PCE Price Index M/M: 0.3%e v 0.3% prior; Y/Y: 2.8%e v 2.8% prior.

- 08:30 (US) Dec Core PCE Price Index M/M: 0.3%e v 0.2% prior; Y/Y: 2.9%e v 2.8% prior.

- 08:30 (CA) Canada Dec Retail Sales M/M: -0.5%e v +1.3% prior; Retail Sales (ex-auto) M/M: 0.0%e v 1.7% prior.

- 08:30 (CA) Canada Jan Industrial Product Price M/M: +0.2%e v -0.6% prior; Raw Materials Price Index M/M: 0.7%e v 0.5% prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:45 (US) Feb Preliminary S&P Manufacturing PMI: 52.3e v 52.4 prior; Services PMI: 53.0e v 52.7 prior; Composite PMI: 53.0e v 53.0 prior.

- 10:00 (US) Feb Final University of Michigan Confidence: 57.2e v 57.3 prelim.

- 10:00 (US) Dec New Home Sales: 730Ke.

- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Ireland; Fitch on UK).

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- (MX) Mexico Citi Survey of Economists.