Key Points

• Strong Jobs Data Clouds Fed Rate Outlook: U.S. markets closed slightly lower as robust January payrolls complicated expectations for monetary easing.
• Japan Equities Extend Gains on Policy Optimism: The Nikkei 225 surged past 58,000 as investors welcomed Prime Minister Takaichi’s post-election mandate.
• House Challenges Trump on Tariffs: A symbolic but bipartisan vote in Congress pushes back against Canada tariffs, exposing GOP fractures.
• Tariff Revenues Soar Ahead of Supreme Court Ruling: U.S. customs collections surged 304% year-to-date, providing temporary fiscal relief amid legal uncertainty.

February Economic Calendar

Feb 12 — Initial Jobless Claims & Existing Home Sales (U.S.): Weekly labor market data and housing activity provide early signals on employment trends and consumer confidence ahead of key inflation readings.

Feb 12 — IEA Monthly Oil Market Report: Offers insights into global oil supply and demand dynamics, with implications for energy markets and CPI components.

Feb 13 — Continuing Jobless Claims (U.S.): Tracks ongoing unemployment support claims, providing further visibility into labor market durability.

Feb 13 — 30-Year U.S. Treasury Auction: Signals demand for long-term debt and influences benchmark yields, equities, and currency markets.

Feb 13 — Fed Balance Sheet Release: A weekly snapshot of Federal Reserve asset holdings that can affect liquidity conditions and money market pricing.

Feb 13 — Reserve Balances with Federal Reserve Banks: Reflects banking system liquidity, influencing credit markets and short-term rate stability.

Feb 13 — U.S. CPI (YoY/Monthly): A critical inflation gauge likely to shape Federal Reserve policy expectations and currency movements.

Feb 14 — U.S. Retail Sales (Monthly): Measures consumer spending, a primary driver of GDP, and contributes to inflation and growth analysis.

Feb 14 — U.S. Fed Speak (Various Officials): Comments from policymakers can shift rate expectations and risk sentiment, particularly around inflation trends.

Dow Edges Lower as Strong Jobs Data Clouds Fed Outlook

U.S. equities ended modestly lower Wednesday, with the Dow dipping after a three-day winning streak. The January jobs report showed a surprise gain of 130,000 positions, reinforcing labor market strength but complicating the Federal Reserve’s interest rate trajectory.

Investors weighed the implications for inflation, with attention turning to the upcoming CPI report. Cisco fell 7% in extended trading on soft guidance, while McDonald’s edged lower despite surpassing earnings expectations. Futures opened little changed as markets awaited additional labor and housing data later in the week.

Nikkei Hits 58,000 as Post-Election Rally Extends in Asia

Asian equities advanced broadly, led by Japan’s Nikkei 225, which briefly surpassed the 58,000 level for the first time, extending its post-election rally.

Optimism surrounding Prime Minister Sanae Takaichi’s mandate and policy agenda lifted sentiment, with strong participation across sectors. South Korea’s Kospi and Singapore’s STI also reached record highs, while China and Hong Kong markets posted mixed results. Regional markets largely brushed aside hotter U.S. labor data, even as it reduces the likelihood of near-term Federal Reserve rate cuts.

House Rebukes Trump Over Canada Tariffs in Symbolic Vote

The U.S. House of Representatives passed a resolution disapproving of President Trump’s tariffs on Canadian imports, marking a rare bipartisan rebuke. Several Republicans joined Democrats in opposition, citing concerns about higher consumer costs and economic strain.

Although the measure is expected to face a veto and remain largely symbolic, it highlights internal GOP divisions ahead of the 2026 elections and increasing scrutiny over executive trade authority. Financial markets showed limited reaction, but analysts noted growing legislative attention on trade policy.

U.S. Tariff Revenue Surges Over 300% as Court Decision Looms

Tariff collections climbed to $124 billion fiscal year-to-date, representing a more than 300% increase compared to the previous year. The surge has helped narrow the federal deficit to $95 billion in January.

The increase follows across-the-board duties introduced last April, while the legality of those measures awaits review by the Supreme Court. A ruling against the administration could require the Treasury to reimburse collected duties, creating fiscal and market uncertainty. The case is closely watched for its broader implications on trade authority and federal revenue structures.

Conclusion

This week’s developments highlight the delicate balance between economic resilience, policy direction, and geopolitical trade tensions. Strong U.S. labor data reinforces economic momentum but tempers expectations for imminent Federal Reserve rate cuts, leaving markets highly sensitive to inflation readings.

In Asia, political clarity has supported a powerful rally in Japanese equities, reinforcing confidence in reform-driven growth. Meanwhile, U.S. trade policy remains under both legislative and judicial pressure, adding another layer of uncertainty. Investors face a near-term environment shaped by solid domestic fundamentals, external volatility, and evolving global policy signals.

Investment Insights

• Labor Resilience Equals Rate Caution: Continued job strength may support equities in the short term but could delay rate relief. Inflation-sensitive sectors require careful positioning.
• Japan Policy Tailwinds: A strong mandate for the Takaichi government supports Japanese equities, particularly domestic cyclicals and export-oriented sectors.
• Monitor U.S. Trade Risks: While congressional opposition to tariffs may be symbolic, legal outcomes could materially affect fiscal forecasts and supply chains.
• Tariff Revenue Carries Legal Risk: Elevated customs receipts provide short-term deficit relief, but a potential Supreme Court reversal could introduce budgetary and market volatility.