Market Report.
💼 The US labor market seems to be more robust than previously believed. It’s not really good news, as it reduces the Fed’s need or urgency to cut rates, which has not been welcomed by Wall Street.
📈 U.S. job growth unexpectedly accelerated in January, with nonfarm payrolls increasing by 130,000 jobs. The unemployment rate also fell to 4.3%. However, revisions showed the economy added only 181,000 jobs in 2025, a fraction of the 1.459 million jobs added in 2024 under the previous administration.
🏥 The job gains were concentrated in healthcare, social services, and construction related to AI facilities. As a result, the Federal Reserve may keep interest rates unchanged for some time to monitor inflation.
💰 Traders have trimmed their bets on the Fed cutting rates, with nearly a 40% chance now seen of no rate move at the June meeting, up from around 25% before the jobs report.
🔄 The structural changes in the labor market, which we have explained in other reports, seem to be slowly manifesting themselves.
🧑💼 The sharp decline in immigration during President Trump’s first year back in office was likely a major factor behind the frozen job market in 2025, as a shrinking labor force means less need for new job creation. Productivity gains, potentially from the adoption of artificial intelligence, have also contributed to the muted hiring, as companies are able to do more with less labor.
🏛️ Trump seems to be doing well. The U.S. government saw a significant improvement in its budget deficit in January, driven by higher revenue from customs duties and lower debt interest payments, despite continued growth in overall government spending.
📉 The U.S. government posted a $95 billion budget deficit in January, down 26% from a year earlier. Adjusting for calendar shifts, the deficit would have been $30 billion, a 63% decline.
💵 January receipts totaled $560 billion, up 9% from a year earlier, while outlays totaled $655 billion, up 2%. Through the first four months of fiscal year 2026, the deficit fell to $697 billion, down 17% from the same period in fiscal 2025. Year-to-date receipts were up 12% while outlays were up 2%.
🛃 The improved budget results were driven by sharply higher net customs receipts due to President Trump’s tariffs, which totaled $27.7 billion in January compared to $7.3 billion in January 2025.
🏛️ However, the Republican-led U.S. House passed legislation aimed at ending President Donald Trump’s tariffs on Canada, defying the president’s threats of political consequences.
🗳️ The vote signals growing anxiety among Republicans over Trump’s economic agenda ahead of the midterm elections, which are heavily focused on affordability issues.
✍️ Trump has threatened to veto similar measures, making it unlikely the legislation will become law. However, the defections from six Republicans, along with Democratic opposition, underscore Trump’s tenuous hold on the narrow House majority.
🌎 The vote comes as Trump privately weighs quitting the U.S.-Mexico-Canada trade pact (USMCA) he signed during his first term, which could further worsen trade tensions in North America.
⚖️ The votes represent an increase in political pressure to change course on tariffs just months before the November midterm elections, forcing swing-district Republicans to weigh when or if to cross the president.
🇪🇺 Macron’s “Made in Europe” agenda appears to be facing resistance from Germany and the UK
🏭 French President Emmanuel Macron renewed his call for a “Made in Europe” push, urging priority for local content in strategic sectors ahead of a key EU meeting. German Chancellor Friedrich Merz pushed back against Macron’s stance, warning against excessive protectionism and underscoring divisions over how to strengthen Europe’s competitiveness.
💶 Macron reiterated his support for expanding the EU’s capacity to issue common debt to finance strategic investments, which Germany opposes. He also urged the EU to move forward with creating a full-blown “energy union” to support the bloc’s decarbonization efforts
🤝 UK Chancellor Rachel Reeves urged including partners like the UK, Norway and Canada in Europe’s economic strengthening efforts.
Geopolitics.
📜 The U.S. House Judiciary Committee has issued a report that details how the unelected European Commission has pressured social media platforms to censor content, including political speech on topics like migration, climate change, and LGBTQ rights.
🛑 The report argues the EU’s censorship strategy has been successful, with the Digital Services Act in 2022 making content moderation compulsory, and the EU targeting “populist rhetoric,” “anti-government/anti-EU” content, “anti-elite” content, “political satire,” and other forms of legitimate criticism and opposition.
🕊️ The recent resumption of indirect talks between the U.S. and Iran in Oman has reopened a narrow diplomatic corridor, but the risk of war remains high.
🇺🇸🇮🇷 The U.S. wanting a wider agenda beyond just the nuclear program, while Iran insists on keeping the talks strictly focused on the nuclear file.
🇺🇸🇮🇱 The meeting between President Trump and Prime Minister Netanyahu appears to have been tense, with the two leaders holding divergent views on how to approach the Iran issue.
🏛️ President Trump met with Israeli Prime Minister Netanyahu for a reported 3-hour meeting at the White House, away from the cameras, to discuss the Iran negotiations. Despite Netanyahu’s push for a more aggressive U.S. stance towards Iran, Trump indicated that he is committed to continuing the negotiations with Iran, stating “If it can, I let the Prime Minister know that will be a preference. If it cannot, we will just have to see what the outcome will be.”
🚢 Trump is not yet ready to order a second U.S. aircraft carrier group to the Middle East, despite Pentagon preparations, indicating he wants to give the diplomatic process a serious try.
🚀 The key sticking point appears to be Iran’s ballistic missile program, which Israel wants completely dismantled or significantly reduced, while Iran sees it as a vital deterrent and is unlikely to agree to such demands. Israel was hit in he past by Iranian ballistic missiles in retaliation for its attacks on Iran.
Market View.
📊 US markets continue to trade sideways following the release of the US employment data.
📉 E‑mini S&P 500 futures, which initially pulled back on the stronger‑than‑expected labour market figures, have stabilised once again within the same range seen in previous sessions, currently trading around 6,982 points.
💻 Nasdaq 100 futures are showing similar behaviour, holding near 25,352 points.
💵 The US Dollar Index (DXY) strengthened immediately after the employment report but has since returned to levels similar to those seen in recent days, currently trading around 96.90. This has generated some volatility in EUR/USD, which has retreated from 1.1925 yesterday to around 1.1870.
🇪🇺 European markets also appear to be stabilising, with DAX 40 futures trading near 25,055 points. In contrast, Euro Stoxx 50 futures are pushing towards fresh highs, currently trading around 6,098 points.
🛢️ The oil market continues to edge higher as negotiations between the United States and Iran appear to be progressing. Spot Brent crude moved above $70.70 per barrel in recent hours before easing back to around $69.60.
🥇 Gold futures briefly moved above the $5,100 per ounce level yesterday but have since eased slightly to around $5,082 per ounce.
₿ Finally, Bitcoin remains under pressure, trading below the $68,800 level, which now acts as near‑term resistance, with the current price around $67,065.
