Week-in-review and thoughts for the upcoming week of 02/16/2026

Many names came under pressure last week as this fear spread, with media, legal, travel and even trucking companies all selling off on concerns about AI penetration. It remains to be seen whether these fears are justified or not, but the concern is clearly out there.

With equities still shaky, US Treasurys enjoyed a strong finish to the week. The two-year yield settled at its lowest level since September 2022, ending at 3.41%, off nine basis points on the week. The 10-year yield fell 15 basis points to end at 4.06%. Despite falling Treasury yields, the general dollar index finished slightly higher on the week.

In the commodity space, we saw modest changes in base metals. Copper lost about 0.9% on the week, nickel followed with a 0.6% decline, while aluminum, zinc, tin and lead finished just about flat.

Nickel rallied early in the week on news that Indonesian authorities have instructed the country’s largest nickel mine owned by China’s Tsingshan to slash output. Apparently, the company will receive a production quota of 12 million tons this year, down from 42 million tons in 2025. French nickel producer Eramet will also get a reduced production allowance of about 12 million wet metric tons this year, down from 32 million tons last year. Although these announcements were taken constructively, nickel’s price gains faded on doubts that the government will actually enforce these reductions, given its previous record in this regard. In addition, nickel demand out of China seems to be weakening, while there are signs of increased supply coming from the Philippines, perhaps offsetting the prospect of supply cuts.

In the precious metals space, gold and silver tacked on modest gains for a second week in a row, but platinum and palladium both lost ground. The complex remains under pressure as weak-looking charts could be discouraging retail speculators from reentering the markets. In addition, a 10-day holiday that starts in China this week (the Lunar New Year) will likely thin the ranks of the speculative community further.

In the energy space, we saw slight weekly declines in both crude contracts and distillates, but a more substantial nine-cent sell-off in gasoline prices. EIA inventory numbers did not help sentiment much, as crude stocks rose by 8.5 million barrels from the previous week, coming in well ahead of estimates. Gasoline inventories increased by 1.2 million barrels and are now about 4% above the five-year average, while distillates decreased by 2.7 million barrels and are 4% below the five-year average as well. Separately, there were reports out last week that OPEC+ is leaning toward resuming production increases when it meets next in April.

Natural gas prices settled about $10 per billion cubic feet (bcf) higher on the week, but have had a losing month so far in February. Latest EIA inventory showed stocks falling by 249 bcf, a smaller draw than the consensus forecast of 258 bcf. This brings US stocks to 3.6% below year-ago levels and 5.5% below the five-year average. In Europe, storage is 36% full, compared to the five-year average of 52% for this time of year.

In trade developments, the Financial Times early on Friday reported that President Trump is considering a “scale-back” on tariffs on steel and aluminum goods as he battles an affordability crisis.

Reportedly, the administration is reviewing a list of products to exempt, and there was some speculation that it could cover steel and aluminum as well, but when asked about the story, Treasury Secretary Bessent downplayed it, saying that “if anything is done, I think it would be some sort of clarification on some incidental objects, but again, that’s going to be the president’s decision”. The Bessent statement tempered some of the selling we saw set in over both aluminum and the Midwest premium by day’s end Friday, but both recovered to roughly unchanged levels. However, a number of steel and aluminum equities did not bounce back and instead ended the week lower.

In other trade developments, several Republican House members joined Democrats to overturn President Trump’s tariffs on Canada, and although the measure will not survive a presidential veto if it goes to the Senate, it does underline the growing unease about the administration’s tariff policies.

Separately, we are also reading that US customs officials are having trouble ascertaining what the correct duties are for various imports. Reuters cites the experience of one European company that sent four identical containers of machinery to the US and was charged different rates for each one. We have heard similar stories, too. One trader told us that officials at the US/Mexico border were not aware that Mexican aluminum scrap was exempt from tariffs and insisted that the importer pay the duty. After this experience, the trader is no longer shipping scrap to the US.

On the geopolitical front, Iran and the US are preparing for a second round of talks starting Tuesday. In fact, President Trump told reporters that he expects negotiations with Iran to wrap up over the next month. We shall see. In the meantime, one US carrier group is already in the Gulf and a second is working its way there. Separately, the Russians and Ukrainians are planning to resume their negotiations this week as well. (Oddly, CNN reports that President Putin has not been seen in public for about a week now.)

Macro readings and other news from the past week

• US December retail sales came in flat month over month (consensus 0.4%) following a 0.6% increase in November. Excluding autos, sales were flat (consensus 0.4%) following a 0.4% rise in November. These are somewhat disappointing numbers, as two of the last three retail reports for Q4 showed no growth month over month, an indication of slowing consumer spending and something that will weigh on the Q4 GDP numbers when they are released later this week. 

• The December nonfarm payrolls figure came in at 130,000, well ahead of the 68,000 expected, while the unemployment rate fell slightly to 4.3% from 4.4%. Most of the job gains (roughly 123,000) were concentrated in health care and social assistance. Outside of this, there were job losses in mining and logging (2,000), manufacturing (4,000), transportation and warehousing (11,000), information services (12,000), financial activities (22,000), and government (42,000). Meanwhile, there were drastic downward annual revisions in jobs numbers for both 2024 and 2025; nonfarm employment for 2025 was reduced from +584,000 to just +181,000, while the total 2024 employment number was slashed by a whopping 862,000. This does not mean that jobs were in fact lost, but rather that the economy did not produce the number of jobs that we thought it did.

• Total CPI in January increased by 0.2% month over month (consensus: 0.3%) and was up 2.4% year over year versus December’s 2.7% year over year reading. Core CPI increased 0.3% month over month (in line with consensus) and was up 2.5% year over year, versus 2.6% for the 12 months ending in December. These were encouraging declines considering that the CPI has been stubbornly plateauing for months.

• Among the various subcomponents, the energy index was down 1.5% month over month, while the used cars and truck index fell by nearly 2%. Rents are showing a much more moderate rate of increase (0.2% month over month) and are up only 3% year over year. However, the service index remains sticky – up 3.2% year over year and 3.4% excluding rent – the latter being the indicator Chairman Powell watches closely. As the chief economist at Briefing.com pointed out: “Taken together, the January employment and inflation reports reinforced a familiar theme: the labor market is holding up, yet its strength is uneven and heavily concentrated. Inflation is cooling, yet not uniformly enough to erase concerns about lingering price pressures in everyday essentials. The economy is not flashing warning signs of imminent trouble, but with pockets of softness in the labor market and price pressures persisting beneath the headlines it is unlikely that the stock market will trade with an all-clear signal.” We should add that the data will likely not influence the Fed’s thinking on rates either.

• Existing home sales tumbled to their lowest level in more than two years in January, off some 8.4% month over month to a seasonally adjusted annual rate of 3.91 million units. Weather could have had something to do with this decline, although Reuters points out that the data consisted of contracts signed in November and December and so would not have been impacted by the January storms that slammed large parts of the country. We will wait to see if there is any kind of rebound next month. Meanwhile, housing affordability readings have improved, while mortgage rates continued to decline. Housing supply fell in January but is still up 3.4% from year-ago levels. At the January sales pace, it would take 3.7 months to exhaust the current inventory of existing homes. The median existing home price rose 0.9% from a year ago to $396,800, the highest for any January. Lastly, the median days on market for listed properties increased to 46 from 41 a year ago.
• The 50% Section 232 tariffs on steel led to a surge in production in 2025, leading to higher shipments for US producers last year, this according to the Steel Manufacturing Association. The association’s president noted that US production climbed by 300,000 tons last year, up 3.36% versus 2024 levels. Left unsaid, however, is that the cost of this steel to the US consumer was substantially higher as well.
• Ball Corp. reported a “record year” in 2025 “reflecting the strength of our strategy and disciplined execution,” Ball’s CEO noted in the company’s earnings call. The company saw a 6% rise in shipments in the latest quarter and full-year growth of 4.1%. Net sales rose to $13.16 billion in 2025 fiscal year, compared to $11.79 billion in 2024. Ball did say that it is passing on the increased cost of aluminum through to the public, but noted that “so far, the US consumer has been able to continue to keep buying our [packaging].”  Ball also noted that it aims to move “smaller amounts of production” from Mexico to the US.
• Century Aluminum said last week that it sold its Hawesville, Kentucky site to TeraWulf, which will redevelop the property into a digital infrastructure campus. Century will retain a noncontrolling minority equity stake in the new venture. Last week, Century and EGA announced that they are combining efforts to build a single new smelter, rather than each building their own. Century will report Q4 earnings on Feb. 19th.
• Aluminum producer Novelis reported that fires at its Oswego, New York, plant in September and November contributed to a $160 million net loss for this quarter, more than wiping out net income of $110 million achieved in the same quarter last year. “We are intensely focused on safely restoring operations at the Oswego hot mill so we can return our system to full capacity to meet growing demand for aluminum rolled products,” a company officer said. Ford, which is Novelis Oswego’s main customer, also reported an unexpected $1 billion increase in import taxes due in part to bringing in replacement aluminum from overseas.
• Reuters reports that physical copper demand from Chinese buyers has cooled substantially in the run-up to the Chinese holidays that start this week. According to Morgan Stanley, Q4 Chinese copper demand was off by a whopping 12% year over year, although full-year 2025 offtake was up by 4%. Not surprisingly, the drop-off in Q4 offtake shadowed the steep price run-up we saw in copper over this period, suggesting that an element of demand destruction was perhaps setting in. We will see how things develop once China come back from its holiday. Meanwhile, copper inventories continued to climb last week across all major exchanges.
• The China Association of Automobile Manufacturers showed vehicle production and sales in January 2026 falling sharply month over month, down by 26% and 28%, respectively, as some subsidy programs ended.

This week’s US macro readings

Nothing comes Monday as US markets are closed, but on Tuesday we get the February Empire State manufacturing survey (expected at 10, last 7.7).

Wednesday brings us November and December housing starts and building permits (both delayed because of the government shutdown).

December durable goods orders come out Thursday (expected at -2.3%, last 5.3%), along with January industrial production numbers (expected at 0.3%, last 0.4%) and the minutes of the Fed January meeting.

Thursday also brings weekly initial jobless claims (expected at 220,000, last 227,000), the December US trade deficit (expected at -$56 billion) and the Philadelphia Fed manufacturing survey.

On Friday, we get our first look at Q4 GDP (expected at 2.5%, last 4.4%), as well as personal income and spending for December (expected at 0.3% and 0.4%, respectively, last .3% and .5%). Also on Friday, we get the PCE and the PCE core inflation readings for December (both expected at 0.3%, last 0.2%).

The year-over-year changes are expected to come in at 2.8% and 2.9% on the overall and the core rate (higher than the most recent CPI readings). We also get the S&P flash PMI readings for both services and manufacturing on Friday, along with the delayed November and December new home sales report (expected at 730,000 each).

Finally, on Friday, Michigan consumer sentiment readings come out (expected at 57.1, last 57.3).

We wish all our readers all the best for the upcoming week.