Softbank said no follow-on investment in OpenAI has been decided

EU mid-market update: Stronger US payrolls temper rate-cut bets as EU equities advance on earnings and M&A activity; Softbank said no follow-on investment in OpenAI has been decided.

Notes/observations

- European equities opened firmer, initially buoyed by stronger-than-expected U.S. payrolls. Sentiment remains constructive as Q4 results broadly demonstrate resilience despite macro headwinds. More than two-thirds of the S&P 500 have reported, and aggregate growth runs near +13%, ahead of expectations.

- UK Q4 GDP rose 0.1% q/q, undershooting both consensus and the Bank of England’s 0.2% forecast, while December industrial production disappointed materially. Services drove what little expansion occurred, with manufacturing contracting. Money markets now price a roughly 62% probability of a March BoE cut. Gilt yields eased modestly, while sterling remained broadly flat near $1.36. Strategists continue to favour gilts tactically, though political uncertainty around the Labour leadership remains a latent volatility risk. At the European level, leaders convene to address competitiveness, with proposals including regulatory simplification, a “buy European” industrial tilt, and expanded trade deals. The UK is reportedly moving closer to issuing a sovereign bond via blockchain infrastructure.

- Gold softened below $5,100/oz as stronger U.S. data and firmer rate expectations dampened near-term Fed easing bets (June rate-cut odds slipping below 50% and March effectively ruled out), while silver also retreated. The dollar index edged higher, though gains were capped after renewed political calls for rate cuts.

- Treasury Secretary Bessent reportedly agreed to a plan where the Senate Banking Committee, rather than the DOJ, would investigate Fed Chair Jerome Powell. This move is seen as a strategy to persuade Senator Thom Tillis to end his hold on Federal Reserve nominees.

- SoftBank has fully deployed $40 billion into OpenAI, achieving an 11% stake that contributed to a $19.8 billion valuation gain reported during its earnings call this morning. While reports suggest active talks for an additional $30 billion injection to support a broader $100 billion funding round, CFO Yoshimitsu Goto clarified today that no official decision on further follow-on capital has been finalized.

- During its earnings call, Cisco management confirmed they are implementing proactive price increases and revising partner contracts to offset a projected 120-130 basis point gross margin compression caused by surging industry-wide memory costs. CEO Chuck Robbins noted that despite these hikes, customer demand remains resilient with no evidence of order "pull-forwards," as buyers prioritize essential AI and networking upgrades over cost concerns.

- Notable EU earnings: Siemens rallied after beating on orders, revenue and margin and upgrading FY guidance, while Mercedes-Benz Group fell on weaker-than-expected margins and cautious 2026 guidance (3–5% car margin vs expectations nearer 5%+), despite reiterating medium-term 8–10% ambitions. In France, Hermès gained on 9.8% Q4 revenue growth and improving momentum, supporting a rebound in luxury names, while Unilever delivered in-line results with 4–6% 2026 organic growth guidance viewed as demanding. British American Tobacco highlighted 5.5% U.S. revenue growth driven by Velo Plus nicotine pouches, with New Categories now 18.2% of sales and targeted at 50% by 2035, though margin dilution remains a watchpoint.

- Asia closed higher with KOSPI outperforming +3.1%. EU indices +0.2-1.2%. US futures +0.3-0.4%. Gold -0.4%, DXY -0.1%; Commodity: Brent -0.4%, WTI -0.3%; Crypto: BTC +1.5%, ETH +2.3%.

Asia

- Japan Jan PPI (domestic CGPI) M/M: 0.2% v 0.2%e; Y/Y: 2.3% v 2.3%e.

- Australia Feb Consumer Inflation Expectations: 5.0% v 4.6% prior.

- Japan said to have requested US Fed / NY Fed JPY rate check back in Jan.

- Japan Top FX Diplomat Mimura: Reiterates "Closely watching markets with a high sense of urgency".

- Japan Fin Min Katayama: Discussed with PM Takaichi about how to proceed with tax credits for benefits, sales tax cut on food.

- RBA Gov Bullock noted that Board decided that inflation at 3 point something wasn’t acceptable.

Global conflict/tensions

- Russia said to be preparing to dispatch crude oil and fuel cargoes to Cuba.

Europe

- UK Jan RICS House Price Balance: -10% v -11e.

- France Central Bank (BdF): Sees Q1 GDP growth 0.2-0.3%.

Americas

- Fed's Hammack (voter): Consumer spending driven by upper incomes; Labor market looks like it's stabilizing.

- Fed's Miran (dovish dissenter): Today's Jan jobs report does not mean Fed can't lower rates.

- Congressional Budget Office (CBO): 2025 Trump tax act increase 2026-35 deficits by $4.7T; Affirmed 2026 deficit $1.9T; Federal debt will increase to 120% of GDP in 2036.

- House passed the SAVE America Act to tighten voter registration and impose nationwide ID requirements.

- US House passed measure rejecting Trump's tariffs on Canada; Vote was 219 v 211.

Trade

- Taiwan and US to sign reciprocal trade agreement on Friday, Feb 13th.

- President Trump and China President Xi likely to extend their trade truce by up to a year during the expected April summit.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.37% at 623.90, FTSE +0.22% at 10,494.85, DAX +1.31% at 25,206.95, CAC-40 +0.67% at 8,368.83, IBEX-35 +0.01% at 18,047.19, FTSE MIB +0.31% at 46,655.50, SMI -0.10% at 13,557.10, S&P 500 Futures +0.33%].

Market focal points/key themes: European indices opened higher across the board; CAC outperforming thanks to Essilor Luxottica earnings overnight; solid earnings seen supporting risk appetite; among sectors leading the way higher are health care and financials; lagging sectors include utilities and real estate; Schroders receives takeover offer from Nueveen; earnings expected in the upcoming US session includes Applied Materials, Counbase, AirBnB and FedEx’s investor day.

Equities

- Consumer discretionary: Michelin [ML.FR] +6.5% (earnings), Hermes [RMS.FR] +1.5% (earnings).

- Consumer staples: British American Tobacco [BATS.UK] -0.5% (earnings), Unilever [UNA.NL] -0.5% (earnings; buyback).

- Healthcare: Sanofi [SAN.FR] -5.5% (new CEO).

- Industrials: Siemens [SIE.DE] +6.5% (earnings; guidance; conf call comments), ThyssenKrupp [TKA.DE] -0.5% (earnings), AB InBev [ABI.BE] +2.5% (earnings), Mercedes-Benz [MBG.DE] -2.0% (earnings; guidance; conf call comments).

Speakers

- ECB’s Makhlouf (Ireland) reiterated stance that nothing ruled out on rates; Interest rates are in a good place right now; Inflation near target at this time.

- BOE Dep Gov Breeden: Reasonable to expect rate cuts over.

- Italy PM Meloni: EU leaders to discuss EU common debt issuance and measures to lower energy prices the next couple of meeting if economy evolves as expected.

- France PM Macron: Need concrete decisions by Jun on how to make Europe more competitive.

- Turkey Central Bank (CBRT) Gov Karahan: Intertia in inflation showing signs of breaking. Prepared to use all monetary tools. Should maintain tight monetary policy stance.

- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raised the end-2026 inflation from between 13%-19% range to 15.21% while maintaining end-2027 inflation from 9.0%.

- EU Court Advisor: EU should scrap release of €10.2B of funds to Hungary.

- Russia Econ Min Reshetnikov stated that economy to continue slowing down in H1.

- Japan said to have requested US Fed / NY Fed JPY rate check back in Jan.

- China Commerce Ministry (MOFCOM): To impose tariffs of up to 11.7% on EU dairy products; effective Fri, Feb 13th.

- Singapore PM Wong 2026 Budget Speech noted 2026 GDP seen between 2-4% range. Forecasted FY26 budget surplus of S$8.5B, or 1% of GDP.

- IEA Monthly Oil Report (OMR) cut its 2026 global oil demand growth from 930K to 850K (total demand seen at 104.8M v 104.9M) and cut 2026 global oil supply growth from 2.5M to 2.4M.

- Treasury Sec Bessent said to have agreed to Senate committee could probe Fed Chair Powell (**Note: Senate Banking Committee would investigate Powell instead of DOJ).

Currencies/fixed income

- USD unable to sustain any positive momentum despite the recent better US jobs report.

- EUR/USD edging back towards the 1.19 area.

- GBP/USD at 1.3650 despite soft Q4 GDP reading. Data supported the recent BOE dovish tilt at the most recent MPC earlier this month.

- USD/JPY remained soft and was back below the 153 handle by mid-session.

- 10-year German Bund yield last at 2.80%, France 10-year Oat at 3.38% and 10-year Gilt yield at 4.47% 10-year Treasury yield: 4.17%; 10-year JGB: 2.22%.

Economic data

- (SE) Sweden Jan PES Unemployment Rate: 3.8% v 3.8% prior.

- (NL) Netherlands Jan CPI M/M: -0.7% v 0.0% prior; Y/Y (final): 2.4% v 2.4% prelim.

- (NL) Netherlands Jan Final CPI EU Harmonized M/M: -1.3% v -1.3% prelim; Y/Y: 2.2% v 2.2% prelim.

- (FI) Finland Dec Current Account Balance: €1.2B v €0.4B prior.

- (UK) Dec Monthly GDP M/M: 0.1% v 0.1%e.

- (UK) Q4 Preliminary GDP Q/Q: 0.1% v 0.2%e; Y/Y: 1.0% v 1.2%e.

- (UK) Q4 Preliminary Private Consumption Q/Q: 0.2% v 0.2%e; Government Spending Q/Q:0.4% v 0.5%e; Gross Fixed Capital Formation Q/Q: -0.1% v +0.1%e; Exports Q/Q: -0.6% v -0.5%e; Imports Q/Q: 0.8% v 0.2%e.

- (UK) Q4 Preliminary Total Business Investment Q/Q: -2.7% v -0.5%e; Y/Y: 2.0% v 2.5% prior.

- (UK) Dec Industrial Production M/M:—0.9 % v 0.0%e; Y/Y: 0.5% v 1.4%e.

- (UK) Dec Manufacturing Production M/M: -0.5% v -0.1%e; Y/Y: 0.5% v 1.7%e.

- (UK) Dec Construction Output M/M: -0.5% v +0.5%e; Y/Y: -0.3% v -0.1%e.

- (UK) Dec Index of Services M/M: 0.3% v 0.1%e; 3M/3M: 0.0% v 0.2%e.

- (UK) Dec Visible Trade Balance: -£22.7B v -£22.3Be; Overall Trade Balance: -£4.3B v -£4.8Be; Visible Trade Balance (ex-precious metals): -£20.1B v -£18.7B prior.

- (HU) Hungary Jan CPI M/M: 0.3% v 0.6%e; Y/Y: 2.1% v 2.4%e.

- (PL) Poland Q4 Preliminary GDP Q/Q: 1.0% v 1.4%e; Y/Y: 4.0% v 4.0%e.

- (ZA) South Africa Dec Total Mining Production M/M: -1.2% v -5.4% prior; Y/Y: +2.5% v -2.4% prior; Gold Production Y/Y: +1.1% v -6.0% prior; Platinum Production Y/Y: -7.7% v -2.7% prior.

- (GR) Greece Jan CPI Y/Y: 2.5% v 2.6% prior; CPI EU Harmonized Y/Y: 2.9% v 2.9% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €6.25B vs. €5.0-6.25B indicated range in 3-year and 7-year BTP Bonds (3 tranches).

Looking ahead

- (DE) Germany Dec Current Account Balance: No est v €15.1B prior.

- (EG) Egypt Central Bank Interest Rate Decision: Expected to cut Deposit Rate by 100bps to 19.00%.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India Jan CPI Y/Y: 2.8%e v 1.3% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills; Avg Yield: % v 6.07% prior; bid-to-cover: x v 1.51x prior.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (ZA) South Africa Dec Manufacturing Production M/M: No est v -1.1% prior; Y/Y: No est v -1.0% prior.

- 06:00 (IL) Israel Jan Trade Balance: No est v -$3.2B prior.

- 07:00 (BR) Brazil Dec IBGE Services Volume M/M: 0.1%e v -0.1% prior; Y/Y: 3.6%e v 2.5% prior.

- 07:00 (RO) Romania to sell RON600M in 7.5% 2033 bonds.

- 08:00 (RU) Russia Q4 Preliminary Current Account Balance: No est v $9.5B prior.

- 08:00 (RU) Russia Gold and Forex Reserve w/e Feb 6th: No est v $826.8B prior.

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

- 08:30 (US) Initial Jobless Claims: 223Ke v 231K prior; Continuing Claims: 1.85Me v 1.844M prior.

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

- 08:45 (CA) Bank of Canada’s Rogers.

- 10:00 (US) Jan Existing Home Sales: 4.15Me v 4.35M prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- (DE) Germany Dec Current Account Balance: No est v €15.1B prior.

- (EG) Egypt Central Bank Interest Rate Decision: Expected to cut Deposit Rate by 100bps to 19.00%.

- 10:50 (EU) ECB’s Radev (Bulgaria).

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (ZA) South Africa President Ramaphosa gives State of the Nation Address.

- 13:00 (US) Treasury to sell 30-year bonds.

- 13:30 (IE) ECB’s Lane (Ireland, chief economist).

- 14:00 (AR) Argentina Dec Wages M/M: No est v 1.8% prior.

- 14:30 (DE) ECB’s Nagel (Germany).

- 16:00 (KR) South Korea Jan Export Price Index M/M: No est v 1.1% prior; Y/Y: No est v 5.5% prior; Import Price Index M/M: No est v 0.7% prior; Y/Y: No est v 0.3% prior.

- 16:45 (NZ) New Zealand Dec Net Migration: No est v 990 prior.

- 18:00 (PE) Peru Central Bank (BCRP) Interest Rate Decision: Expected to leave Reference Rate unchanged at 4.25%.

- 19:00 (US) Fed’s Logan.

- 19:00 (JP) BOJ’s Tamura.

- 19:05 (US) Fed’s Miran.

- 20:30 (CN) China Jan New Home Prices M/M: No est v -0.4% prior; Used Home Prices M/M: No est v -0.7% prior.

- 21:00 (NZ) New Zealand Q1 2-year Inflation Expectation Survey: No est v 2.3% prior.

- 22:00 (KR) South Korea Dec M2 Money Supply M/M: No est v 0.0% prior; “L” Money Supply M/M: No est v 0.4% prior.

- 23:00 (MY) Malaysia Q4 GDP Q/Q: 0.4%e v 2.4% prior; Y/Y: 5.7%e v 5.2% prior; 2025 Annual GDP Y/Y: 4.9%e v 5.1% prior.

- 23:00 (MY) Malaysia Q4 Current Account Balance (MYR): 11.0Be v 12.2B prior.

- 23:30 (JP) Japan to sell 3-Month Bills.