Credit Bubble Bulletin

Saturday, February 14, 2026

With risk aversion gathering momentum, deleveraging looms.

“US Financial Shares Extend Selloff on Continued AI Concerns.” “US Brokerage Shares Slide in Latest Sell-off Driven by New AI Tool.” “Wealth Manager Stocks Sink as Investors Flee AI’s Next Casualty.” “Insurance Broker Stocks Plunge as New App Sparks AI Risk Fears.” “AI ‘Scare Trade’ Hits Real Estate Stocks.” “Real Estate Services Stocks Sink in Latest ‘AI Scare Trade’.” “Tech Rout Intensifies As Angst Over AI Deepens.” “Biotech Contractors Extend Slump Amid AI Fears, Weak Earnings.” “Logistics Stocks Sink on AI Fear Trade.” “AI Panic Hits Trucking, Transport Stocks.” “Stocks Have Few Pockets of Calm Amid AI Worries.” “Wall Street’s New Trade is Dumping Stocks in AI’s Crosshairs.”

February 13 – Bloomberg (Carmen Reinicke): “For three years, AI was the stock market’s savior. Suddenly, it’s become a marauder, and virtually no corner of the equity market looks safe from its impact. Just in the past 10 days, investors have delivered swift routs to companies toiling in industries as disparate as logistics, real estate, software, private credit, insurance and wealth management. In each case, the release of a new artificial intelligence tool, most famously from Anthropic PBC but also from small, lesser-known startups, prompted a rapid reassessment of business prospects… ‘All we have done and seen in the past few weeks is the market torch the perceived AI losers. Obviously the definition of AI losers is changing almost daily to the point where you can’t track it via themes or baskets,’ said David Wagner, portfolio manager at Aptus Capital Advisors. The one constant is that AI applications have become the market’s bogeyman, capable of erasing billions in value in a matter of hours as investors question the very viability of large swaths of the corporate landscape… ‘The perception is spreading like a wildfire, and it’s spreading horizontally,’ Joseph Shaposhnik, portfolio manager at Rainwater Equity, said. ‘In other words, it was once confined to a particular sector, and now it’s spreading across sectors, the fear of the risk’.”

For starters, the “AI scare” is a catalyst exposing underlying market fragility. In a robust market environment, we would not see such a proliferation of individual stock and sector blowups. It’s become a minefield out there. And it’s the type of market vulnerability consistent with incipient financial conditions tightening. With deleveraging rocking crypto and gaining momentum in Big Tech, we’re on watch for waning liquidity and tightened conditions.

Things are anything but straightforward. For the most part, financial conditions remain extraordinarily loose. The iShares Investment-Grade Corporate Bond ETF (LQD) returned 0.93% this week, increasing y-t-d returns to 1.65%. The iShares High Yield ETF’s (HYG) marginal weekly gain (0.05%) boosted 2026 returns to 0.77%. At 79 bps, investment-grade (IG) spreads (to Treasuries) widened four bps this week. Yet IG spreads are only nine bps off multi-decade lows – and compare to the five-year average of 104 bps. Up a more noteworthy 30 bps from January’s multi-decade low, to 280 bps, high yield spreads have started to move (two-month highs), signaling nascent risk aversion (5-yr avg. 346bps).

To be sure, global liquidity abundance persists. South Korea’s KOSPI equities index surged another 8.2% this week, with major indices up 5.8% in Japan, 5.6% in Thailand, 4.9% in Turkey, 4.1% in Taiwan, 3.9% in Vietnam, 3.5% in Indonesia, 2.4% in Australia, and 1.9% in Brazil and Canada. The South Korean KOSPI’s 30.7% y-t-d gain has inflated y-o-y gains to 113%. Japan’s Nikkei 225 Index has jumped another 13.1%, boosting one-year gains to 45.4%.

Particularly for U.S. stocks, mounting fragility coupled with general market liquidity excess stokes volatility and escalating instability. This dynamic has manifested into extraordinary stock and sector performance dispersion, foreshadowing more systemic de-risking/deleveraging. Such chaotic and unpredictable performance dispersion wreaks havoc on many levered hedge fund and derivatives strategies. So-called “pairs trades” turn precarious. Moreover, with the breakdown of traditional correlations, hedging stock market risks has turned problematic. While many stocks and some sectors have been clobbered, the S&P500 index has declined only 1.4% y-t-d.

Meanwhile, sections of the U.S. equities market (most stocks) have performed well, offering ongoing enticing opportunities despite the “AI scare.” The (this week) highflying Utility stocks surged 6.7% this week, boosting y-t-d gains to 8.6%. Down this week (2.8%), the Transports still enjoy an 11.4% y-t-d gain. The broader market has been strong. The Midcaps are up 7.8% y-t-d (about six weeks), while the small cap Russell 2000 has gained 6.6%. The “average stock” Value Line Index is 5.8% higher.

Providing a notably poor hedge, the Goldman Sachs Most Short Index has gained 6.8% so far in 2026. The Mag7 Index was hit 3.2% this week (Apple down 8.0%, Amazon 4.5%, Alphabet 5.3%, Meta 3.3%), boosting 2026 losses to 7.2%. The Crowded (previously free money) trade, long Big Tech versus short the broader market, is blowing up. Loose conditions have combined with squeeze dynamics to create ongoing speculative opportunities. Clock ticking.

“AI Borrowing Boom Shakes Bond Market.” “AI Spending Surge to Pressure High-Grade Credit.” “The AI Debt Binge is Transforming Big Tech: Everything Risk.” “AI Debt Deluge: Tip of the Iceberg as Big-Tech Borrowing Swells.” “AI Bond Blitz Spurs Biggest Tech Spread Penalty Since the GFC.” “Investors Sour on Listed Credit Funds Over AI Hit to Software Sector.” “AI Fears Weight on Call Center Operator’s $600 Million Bond Sale.” “UBS Says Credit Markets to Price in More Pain From AI Disruption.” ‘AI-Driven Debt Binge Threatens to Disrupt Passive Credit Funds.” “AI Scare Trade Goes Cross-Asset.” “How Private Equity’s Big Bet on Software Was Derailed by AI.”

Stock performance from the big “private Credit” players continues to warn of an approaching Credit storm. Apollo sank 6.0% this week (down 13.6% y-t-d), with Ares Management 1.8% lower (down 17.2%), and KKR declining 1.4% (20.2%). Up marginally this week, Blue Owl and Blackstone are still down 17.7% and 14.8% y-t-d.

Seemingly signaling an uptick in crisis dynamics, bank and financial stocks came under heavy selling pressure this week. The KBW Bank Index was slammed 5.5%, the largest decline since “liberation day” week April 4th. The Broker/Dealers slumped 3.7%, also the biggest drop since April.

Notable losses this week included Ameriprise Financial 12.8%, Charles Schwab 10.8%, Citigroup 9.6%, Robinhood 8.3%, Raymond James 7.8%, Wells Fargo 7.4%, Bank of America 7.0%, Truist Financial 7.0%, Capital One 6.9%, and JPMorgan 6.2%. Real estate kingpin CBRE Group sank 16.3%. It’s worth noting that European Banks stocks (STOXX index) sank 5.5% - the “worst week since April amid AI worries.”

Leveraged Loan prices remained under pressure, ending the week down another 0.03 to 95.37. This boosted one-month losses to 1.29 – the steepest decline since “liberation day” April 2025.

Treasury bonds caught fire this week. Ten-year yields sank 16 bps to 4.05%, the low back to December 1st. This was the largest weekly yield decline since early September (dovish Waller comments). Data were generally supportive. A weak December Retail Sales report (flat m-o-m) followed by favorable January CPI data were bond friendly. Stronger-than-expected January payrolls data - 130k jobs added, 4.3% Unemployment Rate, 0.4% gain in Average Hourly Earnings – were disregarded.

I view this week’s bond market (safe haven bid) action as corroborating mounting systemic deleveraging risks. The rates market priced a 3.00% year-end policy rate Friday, eight bps lower on the week and down 20 bps over 16 sessions – to the low since November 28th.

De-risking/deleveraging was ongoing throughout the cryptocurrency universe. Bitcoin dropped 2.5% Tuesday, declined 1.2% Wednesday, sank 2.9% Thursday, and then rallied 5.0% (trading from 65,000 to 69,000) Friday. “Bitcoin Traders Warn the $60,000 Mark is a Liquidation Trigger.”

February 9 – Decrypt (Vismaya V): “Crypto’s Super Bowl presence has shrunk from a multi-company marketing blitz to a single exchange’s sing-along, with Coinbase returning to the big game alone this year, as Seattle… defeated New England… to win Super Bowl LX. Four years after Coinbase brought its viral bouncing QR-code commercial to the ‘Crypto Bowl,’ the exchange aired the only major crypto ad during this year’s Super Bowl broadcast—unlike Super Bowl LVI, which featured celebrity campaigns from multiple firms, including the now-bankrupt crypto exchange FTX.”

February 9 – New York Times (Andrew Ross Sorkin, Bernhard Warner, Sarah Kessler, Michael J. de la Merced, Niko Gallogly, Brian O’Keefe, Ian Mount, Grady McGregor and Lauren Hirsch): “Big Tech’s artificial intelligence spending spree has roiled the market lately. The wallet was open for Sunday night’s Super Bowl LX broadcast, too, with a flood of A.I.-related ads that may prove more memorable than the game. The A.I. Bowl, as some are calling it, appeared to overshadow the… Seahawks’ victory. Yes, there were some creative gems among the commercials. But the torrent of spending is reminding some of previous years when tech companies tried to capitalize on the Super Bowl limelight. Those efforts didn’t end well for the advertisers. The numbers: Almost a quarter of this year’s Super Bowl ads — 15 of the 66 spots, which sold for an average of $8 million for 30-second slots — featured A.I…”

Whether it was Super Bowl ads, equities trading or corporate Credit performance, AI dominated. Headline of the week: “Former Karaoke Company Drags Logistics Into the ‘AI Scare Trade’.” AI might be the Bogeyman, but newfound negative market impacts are only a symptom.

The mind is a peculiar thing. My thoughts this week kept returning to early 1991. The Dow traded below 2,500 in mid-January. GDP printed negative 3.6% during Q4 1990. The economy was in recession, markets were in the tank, the banking system was severely impaired, and our nation was heading to war. Prospects could not have appeared much bleaker.

The S&P500 surged 3.7% on January 17, 1991, as it became clear that Saddam Hussein’s army had no answer to initial Operation Desert Storm strikes. What unfolded was a short squeeze for the ages. From January lows, the S&P rallied 35% into year-end.

The squeeze triggered the start of a transformative surge in marketplace liquidity. The Greenspan Fed had commenced aggressive rate cuts. Starting with 25 bps (from 8.25%) on July 13, 1990 – rates were down to 4.00% to end 1991, while on their way to a then unprecedented 3.00% by September 4, 1992.

Alan Greenspan orchestrated a steep yield curve to drive banking system recapitalization, a godsend for the fledgling leveraged speculating community. When bond Bubble deleveraging erupted in 1994, the GSEs operated as quasi-central banks to stabilize marketplace liquidity and the hedge fund industry – a role they would replay during the 1998 liquidity crisis (LTCM) and again in 1999 and 2000. The bursting of the nineties “tech” Bubble saw the Fed slash rates 475 bps in 2001 to 1.75%, unleashing mortgage finance Bubble leveraged speculation.

The Fed responded to the spectacular 2008 bursting Bubble with an unprecedented $1 TN of QE liquidity injections. Our central bank doubled down on QE, doubling its balance sheet to almost $4.5 TN between 2011 and 2014. The 2020 pandemic deleveraging crisis provoked liquidity injections to the tune of $5 TN, reckless monetary inflation that unleashed history’s greatest Everything Bubble of Levered Speculation. The March 2023 bank mini crisis triggered a swift (Fed/GSE) $500 billion liquidity injection. More recent repo market instability elicited the restart of QE.

Back in early 1991, the financial system was deeply impaired, and illiquid markets were in the toilet. Prospects looked dreadful. And for 35 years, government and central bank officials have done everything imaginable (and more) to ensure liquid markets. It’s to the point where virtually the entire market structure is built on the assumption of liquid and continuous markets. Astounding speculative leverage has accumulated over decades, ever more certain of liquid and continuous markets. Hundreds of Trillions of derivatives have enveloped global finance, premised on liquid and continuous markets. Trading strategies have proliferated, and ETF structures have ballooned to the many Trillions on the assumption of liquid and continuous markets.

It's been a Credit, asset inflation, and leveraged speculation super cycle Bubble for the ages. And, importantly, it all regressed to self-destructive “terminal phase excess” throughout the global government finance Bubble finale. More specifically, the recent years’ government debt, “repo,” “basis trade,” money market fund, “private Credit,” crypto and AI mania/arms race blow-off excesses went completely off the rails. Boy do things go crazy at the end of super cycles.

I thought of 1991 this week, as I monitored the makings for a super cycle deleveraging that would conclude three decades of ever-growing confidence in the capacity of governments to ensure marketplace liquidity abundance. Market history is strewn with booms turned bust, where liquidity excess spurred speculative Bubbles that ended in illiquidity and panic. No one thirty-five years ago contemplated the monumental transformation in liquidity dynamics that was to unfold. Today, seemingly everyone is unprepared for liquidity challenges ahead (mildly said).

The yen’s 3% rally was another of the week’s notable developments.

February 11 – Bloomberg (Greg Ritchie): “The carry trade in the yen is ‘a ticking time bomb,’ with the popular hedge-fund strategy vulnerable to a massive unwind, according to BCA Research... The trade — broadly defined as borrowing in the low-yielding Japanese currency to fund purchases of higher-yielding assets — benefits from the greater ‘carry’ on these foreign investments. But the trade unravels if the riskier assets tumble or the yen rallies. The BCA team led by Arthur Budaghyan sees the risk of a similar collapse in the trade to those seen in 2008, 2015 and 2020… ‘Our hunch is that the next unwinding case will also be triggered by a combination of a drop in ‘carry assets’ and/or a rebound in the yen,’ the team wrote… ‘It is impossible to know which will occur first. But they will reinforce each other, resulting in a major reversal of the yen carry trade’.”

February 12 – Bloomberg (Tasos Vossos): “The largest wave of corporate bond supply in history is set to be met by a rapidly-growing pool of passive buyers. Some investors are warning that disruption will follow. As Big Tech firms rush to raise unprecedented amounts of money to build out artificial intelligence, a growing share of those deals will be bought by passive funds. These strategies — which follow an index or buy a basket of bonds and wait until maturity — have ballooned in recent years, raising concerns that their indiscriminate style of bond buying has distorted metrics of risk and left investors vulnerable.”

For the Week:

The S&P500 declined 1.4% (down 0.1% y-t-d), and the Dow fell 1.2% (up 3.0%). The Utilities surged 6.7% (up 8.6%). The Banks sank 5.5% (up 1.3%), and the Broker/Dealers slumped 3.7% (up 0.7%). The Transports dropped 2.8% (up 11.4%). The S&P 400 Midcaps dipped 0.7% (up 7.8%), and the small cap Russell 2000 declined 0.9% (up 6.6%). The Nasdaq100 declined 1.4% (down 2.0%). The Semiconductors added 1.1% (up 14.9%). The Biotechs slumped 2.2% (up 1.1%). With bullion rising $70, the HUI gold index rallied 8.0% (up 24.2%).

Three-month Treasury bill rates ended the week at 3.59%. Two-year government yields fell nine bps to 3.41% (down 7bps y-t-d). Five-year T-note yields dropped 15 bps to 3.60% (down 12bps). Ten-year Treasury yields sank 16 bps to 4.05% (down 12bps). Long bond yields fell 16 bps to 4.70% (down 15bps). Benchmark Fannie Mae MBS yields dropped 13 bps to 4.87% (down 17bps).

Italian 10-year yields dropped 10 bps to 3.36% (down 19bps y-t-d). Greek 10-year yields fell 10 bps to 3.36% (down 8bps). Spain's 10-year yields dropped nine bps to 3.13% (down 15bps). German bund yields declined nine bps to 2.76% (down 10bps). French yields dropped 11 bps to 3.34% (down 22bps). The French to German 10-year bond spread narrowed about two to 58 bps. U.K. 10-year gilt yields dropped 10 bps to 4.42% (down 6bps). U.K.’s FTSE equities index added 0.7% (up 5.1% y-t-d).

Japan’s Nikkei 225 Equities Index surged 5.0% (up 13.1% y-t-d). Japan’s 10-year “JGB” yields were about unchanged at 2.23% (up 16bps y-t-d). France’s CAC40 increased 0.5% (up 2.0%). The German DAX equities index added 0.8% (up 1.7%). Spain’s IBEX 35 equities index fell 1.5% (up 2.1%). Italy’s FTSE MIB index declined 1.0% (up 1.1%). EM equities were mixed. Brazil’s Bovespa index jumped 1.9% (up 15.7%), and Mexico’s Bolsa index added 0.9% (up 11.0%). South Korea’s Kospi surged 8.2% (up 30.7%). India’s Sensex equities index declined 1.1% (down 3.0%). China’s Shanghai Exchange Index added 0.4% (up 2.9%). Turkey’s Borsa Istanbul National 100 index jumped 4.9% (up 25.9%).

Federal Reserve Credit jumped $19.2 billion last week to $6.569 TN, with a nine-week rise of $78.4 billion. Fed Credit was down $2.321 TN from the June 22, 2022, peak. Since the September 11, 2019 restart of QE, Fed Credit has expanded $2.842 TN, or 76%. Fed Credit inflated $3.758 TN, or 134%, since November 7, 2012 (692 weeks). Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt gained $5.4 billion last week to $3.095 TN. “Custody holdings” were down $206 billion y-o-y, or 6.2%.

Total money market fund assets (MMFA) declined $22.7 billion to $7.774 TN - with a 30-week surge of $751 billion, or 18.5% annualized. MMFA were up $912 billion, or 13.3%, y-o-y - having ballooned a historic $3.190 TN, or 70%, since October 26, 2022.

Total Commercial Paper jumped $19.7 billion to $1.431 TN. CP has expanded $172 billion, or 13.6%, y-o-y.

Freddie Mac 30-year fixed mortgage rates dipped two bps to 6.09% (down 78bps y-o-y) - just off the low back to September 2022. Fifteen-year rates fell six bps to 5.44% (down 65bps). Bankrate’s survey of jumbo mortgage borrowing costs had 30-year fixed rates down three bps to 6.33% (down 64bps).

Currency Watch:

February 9 – Bloomberg (Tian Chen): “The yuan surged to its strongest level since May 2023 after China was said to have asked banks to limit their holdings of US Treasuries. Any shift away from US sovereign debt reinforces a broader global trend of diversification away from the dollar. Such a move might accelerate the repatriation of capital into Chinese assets, providing a fundamental tailwind for the yuan… The latest move is adding momentum for the yuan, which is already the third-best-performing currency in Asia since the end of September with a gain of around 3%.”

For the week, the U.S. Dollar Index declined 0.7% to 96.915 (down 1.4% y-t-d). On the upside, the Japanese yen increased 3.0%, the Norwegian krone 1.8%, the South Korean won 1.4%, the Swedish krona 1.2%, the Swiss franc 1.1%, the Australian dollar 0.9%, the Singapore dollar 0.7%, the Mexican peso 0.5%, the South African rand 0.5%, the euro 0.5%, the Canadian dollar 0.4%, the New Zealand dollar 0.4%, and the British pound 0.3%. On the downside, the Brazilian real declined 0.1%. China's (onshore) renminbi increased 0.42% versus the dollar (up 1.20% y-t-d).

Commodities Watch:

The Bloomberg Commodities Index declined 0.5% (up 7.0% y-t-d). Spot Gold rose 1.6% to $5,042 (up 16.7%). Silver slipped 0.5% to $77.4148 (up 8.0%). WTI crude declined 66 cents, or 1.0%, to $62.89 (up 10%). Gasoline dropped 2.2% (up 11%), and Natural Gas sank 5.2% to $3.243 (down 12%). Copper dipped 1.3% (up 2%). Wheat jumped 3.6% (up 8%), and Corn increased 0.3% (down 2%). Bitcoin dropped $1,700, or 2.4%, to $68,900 (down 21.4%).

Market Instability Watch:

February 10 – Bloomberg (Alexandra Semenova): “US equity markets are moving more money than ever before, blowing past $1 trillion in shares traded each day as heavy volume becomes the new norm. The surge marks a sharp step-up from a year ago. Equity turnover averaged a record $1.03 trillion in January, a roughly 50% increase from the same period in 2025… More than 19 billion shares traded hands daily over the span, the second-most ever... The jump reflects a broad-based increase in participation across the market. Mom-and-pop investors and institutional players alike have become more active as US stocks hover near record highs… ‘There’s more trading from retail, pod shops and hedge funds, and market makers, while automated trading is more prevalent than ever,’ said Bloomberg Intelligence… analyst Jackson Gutenplan.”

February 12 – Financial Times (Richard Waters): “Wall Street is getting extremely jumpy about the threat of AI disruption to a widening range of industries. That is the best explanation for the hammering that brokerage and wealth management stocks took this week, thanks to a little-known US fintech company called Altruist. The idea that an upstart armed with better technology can threaten giants of the finance industry has fuelled various waves of fintech mania over the years. Generative AI has just given a new twist to this — as it has in other industries. As with previous waves of tech disruption, the most exposed are those whose basic product is information — finance, legal services, media and software.”

February 7 – Bloomberg (Emily Graffeo and Caleb Mutua): “The biggest tech companies are gearing up to spend even more on artificial intelligence than investors had anticipated, and money managers increasingly fear that whatever happens, credit markets will get hit… A chunk of those investments will come from the high-grade corporate bond market… But the more tech companies borrow, the greater the potential pressure on bond valuations. The securities are already expensive by historical standards, trading at close to their tightest spreads since the late 1990s. ‘The AI spending bonanza is finding buyers today but leaves little upside and even less room for error,” said Alexander Morris, chief executive officer and co-founder of F/m Investments. ‘There is no asset class that can’t and won’t spoil’.”

February 10 – Financial Times (Peter Wells): “Shares in Charles Schwab, Morgan Stanley and Raymond James sank on Tuesday, in the latest bout of selling triggered by investor concerns about the disruption AI start-ups will have on established companies. The sell-off of several US financial services companies began in late-morning trading after fintech Altruist announced the launch of a tax-planning tool within its AI platform, Hazel… Schwab and Raymond James had their share price gains for 2026 wiped out, with the stocks closing 7.4% and 8.7% lower, respectively. Rival Stifel Financial was down 3.8% and ETrade parent Morgan Stanley shed 2.4%.”

February 10 – Bloomberg (Paul J. Davies): “Artificial intelligence doesn’t only threaten to put herds of software businesses out to pasture. Anthropic PBC’s schooling of its Claude models in financial modelling has also sent a cold shiver down the spines of bankers and analysts. While I mostly suspect that the banking industry’s talent for self-preservation will defend it from technological change, I do wonder if the extreme version of our fully automated AI future could make financial services as irrelevant as everything else. Finance has a very long history of always finding new ways to get paid even as the world of money keeps changing. In only the past few decades, collecting peoples’ savings, buying and selling securities and sending money to the other side of the world have all become faster and cheaper. The internet and smartphones have taken out the frictions and delays that were long a source of revenue for intermediaries.”

February 9 – Bloomberg (Stephanie Hughes): “US insurance broker stocks were pummeled Monday as the launch of an artificial intelligence tool from privately held online insurance shopping platform Insurify sparked fears about the industry facing disruption. The S&P 500 Insurance index closed down 3.9%, in its biggest drop since October.”

February 10 – Bloomberg (Winnie Hsu): “The relentless surge in memory chip prices over the past few months has driven a vast divide between winners and losers in the stock market… Companies from game console maker Nintendo Co. to big PC brands and Apple Inc. suppliers are seeing shares slump on profitability concerns. Memory producers, meanwhile, are soaring to unprecedented heights. Money managers and analysts are now assessing which firms can best navigate the squeeze by locking in supplies, raising product prices or redesigning to use less memory.”

February 12 – Bloomberg (Arvelisse Bonilla Ramos): “Commercial real estate stocks nosedived Thursday as traders worried about risk to demand for office space from higher use of artificial intelligence tools, broadening a selloff that began Wednesday... Shares of CBRE Group… fell 8.8%, bringing the two-day decline to 20% in the worst such move since 2020. Jones Lang LaSalle Inc. fell 7.6% Thursday, Cushman & Wakefield Ltd. dropped 12% and Newmark Group Inc. slid 4.2%.”

February 12 – Bloomberg (Alice Atkins): “Markets are complacent on the outlook for US inflation, making trades that pay out if price pressures climb look attractive, according to… Citigroup... Investors may be underestimating the resilience of the US consumer and market expectations for inflation are likely to be revised slightly higher, said Benjamin Wiltshire, a rates trading desk strategist at the US bank. ‘Markets seem to have this conviction that inflation is going to come down,’ Wiltshire said... ‘We’re still in a structurally higher inflation environment’.”

U.S. and Global Credit Excess Watch:

February 11 – Reuters (Jamie McGeever): “The global economy is at an odd juncture, one that points to an ugly few years for bond markets. The fiscal picture across developed economies is deteriorating rapidly and uniformly, yet unlike previous bouts of huge government spending in the last two decades, there is no global financial crisis or pandemic requiring trillions of dollars. Far from it. Growth appears solid, an unprecedented private sector capex boom is underway courtesy of the artificial intelligence arms race, and stock markets are at record highs. All these dynamics are clearly feeding off each other. Governments are loosening their purse strings because they are adjusting to a new world reality: globalization is fraying – or, some might say, dying - and being replaced by polarization, isolationism, and rising geopolitical tensions. Promises to ramp up spending on defense, energy and resource security, and technological advancements – alongside pledges to help voters with affordability issues – threaten to put enormous strain on public finances that have never fully recovered from the Covid-19 pandemic.”

February 12 – Wall Street Journal (Heather Gillers and Sam Goldfarb): “A new AI borrowing frenzy and lingering fears about potential defaults haven’t deterred investors hungry for bonds from U.S. companies, states and cities. The extra yield—or spread—that investors demand to hold highly rated corporate bonds instead of ultrasafe U.S. Treasurys hit a 27-year low in late January. Spreads on speculative-grade corporate bonds dropped to an 18-year low. In the $4 trillion municipal bond market, the spread between interest rates on triple-A and triple-B bonds is at one of its lowest points in two years. Those tight spreads are the latest sign of how bonds remain stubbornly resistant to concerns rattling other markets.”

February 12 – Financial Times (Ian Smith and Michelle Chan): “A rally in corporate bonds has pushed the reward for taking extra credit risk to historic lows, prompting warnings from some investors of ‘bubble-like behaviour’ in parts of the market. Corporate bonds have been swept up in a huge rally for risky assets since early last year… The average additional borrowing cost — or spread — that highly rated US and European companies pay compared with government debt has fallen to its lowest since before the 2008 global financial crisis, while the extra yield offered by more risky debt has also shrunk markedly… ‘Credit markets have increasingly exhibited bubble‑like behaviour since late last summer,’ said Nuwan Goonetilleke, head of capital markets at FTSE 100 insurer Phoenix Group…”

February 9 – Bloomberg (Laura Benitez): “Apollo Global Management Inc. set a record in its business of making loans, a crucial plank in the firm’s ambition to become one of the largest underwriters on Wall Street. The… firm originated a record $97 billion in the fourth quarter, totaling $309 billion for the year, and almost $100 billion more than the year before.”

February 9 – CNBC (Jennifer Elias): “As Alphabet returns to the debt market to fund its artificial intelligence build-out, the company is acknowledging new risks tied to the rise of AI and its hefty investments in infrastructure. In its annual financial report…, the Google parent highlighted the potential impact of AI on the company’s core advertising business and the possibility of ending up with ‘excess capacity’ from its costly commitments. ‘To meet the compute capacity demands of AI training and inference, as well as traditional cloud computing services, we are entering into significant leasing arrangements with third party operators, which may increase costs and operational complexity,’ the company stated… Large commercial agreements could also increase ‘liabilities and obligations in the event of nonperformance by us, our counterparties, or vendors’…”

February 9 – Bloomberg (Rachel Graf and Scott Carpenter): “In the $1.3 trillion market for collateralized loan obligations — where money managers sell bonds to finance buying pools of buyout loans — ugly math used to kill a deal. Less so now. Money managers are increasingly raising special funds known as captive equity: pools of capital they control that buy any and all CLO equity a firm might sell. By becoming their own guaranteed buyer of the deal’s riskiest portion, managers can quickly launch CLOs without needing to prove immediate profitability to the broader market — a hurdle that could have swiftly torpedoed an offering… This shift has allowed CLO issuance to hit record levels…”

February 10 – Wall Street Journal (Jack Pitcher and Juliet Chung): “BlackRock went all in on Wall Street’s booming business of private lending last July when it acquired HPS Investment Partners, a firm founded by alumni of Goldman Sachs… Days after the deal closed, an analyst at HPS’s… headquarters spotted a big problem. The company was the lead lender on a more-than $400 million credit agreement with a telecom entrepreneur, Bankim Brahmbhatt, accepting as collateral accounts receivable the executive’s firm had acquired from other businesses. Reviewing those invoices, the analyst noticed that the email address domain on one didn’t match what was on the website of the company it was supposed to be from. HPS dug deeper, and found the same issue again and again. The lender scrambled to get answers from Brahmbhatt, but he had left for India and eventually stopped picking up the phone. Two weeks later, HPS was in court accusing Brahmbhatt of carrying out a ‘breathtaking’ fraud. The emails were fake, the invoices were fake—and the collateral was worthless, they alleged.”

U.S. Credit Trouble Watch:

February 9 – Financial Times (Michelle Chan): “Investors are souring on listed private credit funds that lend to software companies as concerns grow over AI’s potential to disrupt their business models and eat into their profits. Worries over some software companies’ ability to service their debt have intensified this month after start-up Anthropic launched a new AI model that can automate a variety of professional tasks such as sales, finance and legal work… Bonds and shares of business development companies (BDCs), which make loans to middle-market groups, have also fallen sharply, despite a rebound on Friday and Monday, highlighting the large exposure that the private credit industry has built to the sector in recent years. ‘The software sector is facing an existential crisis right now,’ said Christian Hoffmann, head of fixed income at Thornburg Investment Management. ‘The recent product rollouts have really accelerated those fears. Both private credit and software are facing significant pullbacks,’ he added.”

February 11 – Bloomberg (Shannon D. Harrington): “Private credit funds are seeing another sign of growing stress: the share of private equity-backed companies deferring cash interest payments increased for a third consecutive quarter. So-called ‘bad PIK,’ where borrowers opted to delay interest during the life of the loan rather than when it was originated, now represent 6.4% of private loans, up from 2.5% in late 2021, according to… Lincoln International.”

February 10 – Bloomberg (Laura Benitez): “Ares Management Corp. Chief Executive Officer Michael Arougheti downplayed the idea of trouble in the private credit market and fears of AI disruption, two factors that hammered shares of alternative asset managers recently. Arougheti said the firm’s institutional investors are not anxious about private credit risks and that 97% of its wealth clients have not asked to redeem from such products. ‘It’s frankly a frustrating narrative to folks like us that have been doing it a long time,’ Arougheti said…”

February 10 – Reuters (Michael S. Derby): “Overall credit troubles in the U.S. increased modestly but held at low levels during the fourth quarter as some parts of the mortgage market saw accelerated fraying, amid ongoing difficulties for student loan borrowers, the Federal Reserve Bank of New York said… Total debt delinquencies ‘worsened’ in the fourth quarter, with 4.8% of loans in some sort of trouble… Troubled loans in the third quarter stood at 4.5%. ‘We would characterize overall that delinquency rates have, especially for non-mortgage debt, that they've really stabilized or leveled off,’ a… Fed researcher said…”

February 10 – Bloomberg (Ye Xie, Ruth Carson and Tian Chen): “The slump in Treasuries after China’s latest call to curb its holdings was fleeting, but it put a spotlight on Beijing’s decade-long shift from US debt and rekindled fears about a broader, global retreat. A look at the data on China’s Treasury holdings suggests why traders were so quick to move on from the report that Beijing had urged Chinese banks to limit their Treasury purchases. Once the largest foreign lender to the US government, China has quietly halved its holdings of Treasuries since 2013... The danger now is whether President Donald Trump’s unpredictable policies alienate US allies further, and encourage traditional lenders like Europe and Japan to follow in China’s footsteps.”

Trump Administration Watch:

February 7 – Wall Street Journal (Angus Berwick and Eliot Brown): “In the depths of Donald Trump’s interregnum, his eldest two sons huddled in a Mar-a-Lago conference room with boyhood pal Zach Witkoff to conjure up a new money machine. Two other would-be cryptocurrency entrepreneurs showed up… That pre-election confab sowed the seeds for World Liberty Financial, a crypto venture that, with the senior Trump back in power, is generating cash far faster than the president’s decades-old real-estate business. While his father Steve Witkoff acts as President Trump’s all-purpose special envoy, 32-year-old Zach Witkoff now heads up World Liberty, which has doled out at least $1.4 billion to both families since the president’s re-election… Among the payouts: a secret $500 million deal to sell almost half the company to an Abu Dhabi royal and his co-investors. Witkoff is part of a small cadre of Trump administration offspring who, since their fathers moved to Washington, have metamorphosed into wealthy financial celebrities in their own right. Key to their transformation has been the crypto sector…”

February 9 – Financial Times (Aime Williams): “Donald Trump’s administration intends to spare companies including Amazon, Google and Microsoft from forthcoming tariffs on chips as they race to build the data centres powering the AI boom. The commerce department is planning to provide US hyperscalers with tariff carve-outs, which would be tied to investment commitments made by Taiwan-based chip group Taiwan Semiconductor Manufacturing Company (TSMC), people familiar with the matter said.”

February 11 – Bloomberg (Josh Wingrove): “President Donald Trump is privately musing about exiting the North American trade pact, people familiar… said, injecting further uncertainty about the deal’s future into pivotal renegotiations involving the US, Canada and Mexico. The president has asked aides why he shouldn’t withdraw from the agreement, which he signed during his first term, though he has stopped short of flatly signaling that he will do so, according to the people who spoke on condition of anonymity to describe internal discussions.”

February 7 – CNBC (Spencer Kimball): “The Trump administration’s portfolio of equity stakes in U.S. companies has reached a scale that is unprecedented outside economic crisis or wartime. The administration has taken stakes or has agreements to do so with at least 10 companies, most of which are publicly traded. The government announced its latest investment, USA Rare Earth, at the end of January… ‘It is a invisible barrier to startups and new market entrants,’ said Scott Lincicome, an international trade lawyer affiliated with Cato Institute. ‘Why would you ever want to enter a market that you know your chief competitor is backed by the U.S. government?’”

February 10 – Financial Times (Christian Davies): “Donald Trump has threatened to block the opening of a new suspension bridge connecting the US and Canada, escalating tensions between the two neighbours… The US president wrote… that the Gordie Howe International Bridge — which is set to open this year and connects the key auto hubs of Detroit, Michigan and Windsor, Ontario — had been built with ‘virtually no US content’. ‘I will not allow this bridge to open until the United States is fully compensated for everything we have given them, and also, importantly, Canada treats the United States with the Fairness and Respect that we deserve… We will start negotiations, IMMEDIATELY,’ he added. ‘With all that we have given them, we should own, perhaps, at least one half of this asset’.”

February 10 – Associated Press (Joey Cappelletti, Steve Peoples and Steven Sloan): “An annual meeting of the nation’s governors that has long served as a rare bipartisan gathering is unraveling after President Donald Trump excluded Democratic governors from White House events. The National Governors Association said it will no longer hold a formal meeting with Trump when governors are scheduled to convene in Washington later this month, after the White House planned to invite only Republican governors. On Tuesday, 18 Democratic governors also announced they would boycott a traditional dinner at the White House.”

February 9 – Wall Street Journal (Rebecca Picciotto): “The White House is at loggerheads with Congress over one of President Trump’s signature housing proposals, a ban on Wall Street investors buying single-family homes. Trump officials pressured congressional Republicans in recent weeks to include the investor ban as an amendment in either of the major housing bills currently winding through the House and the Senate… But lawmakers in both chambers have resisted adding the investor ban, which traditional free-market advocates, Wall Street executives and the home-builder industry generally oppose.”

February 6 – Bloomberg (Olga Kharif): “The government didn’t pay for it — and it’s not planning to sell. But for the US Treasury, now sitting atop billions of dollars worth of stockpiled Bitcoin tokens, the recent selloff has delivered an uncomfortable lesson in what it means to treat ‘digital gold’ like a reserve asset — and whether the notoriously volatile token deserves the backing of the world’s largest economy. Since President Donald Trump signed an executive order last March to establish a strategic Bitcoin reserve, the market value of the government’s holdings of the digital currency has cratered.”

February 12 – Bloomberg (Catherine Lucey): “The White House sought to ramp up pressure on JPMorgan Chase & Co.’s Jamie Dimon to cap credit card interest rates, a demand of President Donald Trump amid his push to address affordability. ‘James Dimon, lower your friggin’ credit card interest rates. You are a criminal the way you charge the American people at 22, 25 and 30% and the president wants you to lower that,’ White House trade adviser Peter Navarro said… ‘Jamie, until you do that, please refrain from commenting on other public policies’.”

February 9 – Financial Times (Jude Webber, Joe Daniels and Michael Stott): “Cuba has told international airlines that it will not be able to supply them with jet fuel from Tuesday, as US President Donald Trump squeezes the communist island’s oil supplies. The measure, at the height of the tourist season, has prompted Air Canada to suspend flights to the island and is expected to hit US, Spanish, Panamanian and Mexican airlines. The notice, issued at the weekend, said the measure would last until March 11.”

Budget Watch:

February 11 – Associated Press (Fatima Hussein): “The nonpartisan Congressional Budget Office’s 10-year outlook projects worsening long-term federal deficits and rising debt, driven largely by increased spending, notably on Social Security, Medicare, and debt service payments. Compared with the CBO’s analysis this time last year, the fiscal outlook has deteriorated modestly. Major developments over the last year are factored into the latest report…, including Republicans’ tax and spending measure known as the ‘One Big Beautiful Bill Act,’ higher tariffs, and the Trump administration’s crackdown on immigration…, the projected 2026 deficit is about $100 billion higher, and total deficits from 2026 to 2035 are $1.4 trillion larger, while debt held by the public is projected to rise from 101% of GDP to 120% — exceeding historical highs.”

February 11 – Financial Times (Myles McCormick and Kate Duguid): “Donald Trump’s policies will expand the federal budget deficit by $1.4tn over the coming decade, Congress’s fiscal watchdog has warned… ‘Our budget projections continue to indicate that the fiscal trajectory is not sustainable,’ said CBO director Phillip Swagel… ‘There’s no sugarcoating it: America’s fiscal health is increasingly dire,’ said Jonathan Burks at the Bipartisan Policy Center. “Our debt is now 100% of GDP, and rather than pumping the brakes, we are accelerating’.”

February 11 – Wall Street Journal (Richard Rubin): “The U.S. budget deficit will remain roughly flat for the next two years and then widen over the next decade as interest costs consume an increasing share of spending, the Congressional Budget Office said… in a forecast that highlighted the country’s long-run fiscal challenges. The U.S. is projected to run a deficit of $1.85 trillion, or 5.8% of gross domestic product, in the year that ends Sept. 30, and then stay about level at 5.7% of GDP in fiscal 2027. For every $1 the U.S. collects in taxes and tariffs, it will spend $1.33 this year. That continues a trend of high and persistent deficits that is historically rare outside of emergencies, wars and recessions.”

Trade War Watch:

February 9 – Reuters (Wen-Yee Lee and Ben Blanchard): “It would be ‘impossible’ to move 40% of Taiwan's semiconductor capacity to the U.S., the island’s top tariff negotiator said, pushing back against recent comments by American officials who called for a major production shift… Taiwan Vice Premier Cheng Li-chiun said she had made it clear to Washington that Taiwan’s semiconductor ecosystem, ‌built up over decades, could not be relocated. ‘I have made it very clear to the United States that this is impossible,’ she said…”

New World Order Watch:

February 12 – Associated Press (Sam McNeil): “European Union leaders broadly agreed… on a plan to restructure the 27-nation bloc’s economy to make it more competitive as they face antagonism from U.S. President Donald Trump, strong-arm tactics from China and hybrid threats blamed on Russia. Meeting in a Belgian castle, the EU leaders agreed an ‘action plan’ with a strict timeline for the economic restructuring, European Commission President Ursula von der Leyen said. ‘The pressure and the sense of urgency is enormous, and that can move mountains,’ she said. The plan, to be presented formally in March, would include measures to coordinate upgrading energy grids, deepen financial integration and loosen merger regulations to allow European firms to grow to better compete globally, she said. ‘We need European champions,’ von der Leyen said.”

February 7 – Wall Street Journal (David Luhnow, Kim Mackrael and Bertrand Benoit): “In a world increasingly shaped by two unpredictable great powers—the U.S. and China—the world’s middle powers are boosting cooperation in areas from trade to security in a bid to ensure they don’t become roadkill in the new world order. Canada’s Prime Minister Mark Carney has emerged as one of the biggest proponents of cooperation among a range of countries including Canada, most of Europe, Japan, South Korea, Australia, India, Brazil, Turkey and others. ‘Middle powers must act together because if we’re not at the table, we’re on the menu,’ the Canadian leader told the World Economic Forum... The emerging world order leaves many countries feeling unmoored.”

Iran Watch:

February 12 – Wall Street Journal (Lara Seligman, Shelby Holliday and Marcus Weisgerber): “The Pentagon has told a second aircraft carrier strike group to prepare to deploy to the Middle East as the U.S. military readies for a potential attack on Iran… President Trump said… he was weighing sending a second carrier to the Middle East to prepare for military action if negotiations with Iran failed… The carrier would join aircraft carrier USS Abraham Lincoln that is already in the region.”

February 9 – Bloomberg (Courtney McBride and Ben Bartenstein): “The US said in an advisory that American-flagged ships should stay as far as possible from Iranian waters when navigating the Strait of Hormuz after a vessel was harassed last week… Iranian forces historically have utilized small boats and helicopters during boarding operations and have attempted to force commercial vessels into Iranian territorial waters, including as recently as Feb. 3, the US government said in a maritime advisory…”

Ukraine Watch:

February 7 – Axios (Barak Ravid): “The U.S. wants Russia and Ukraine to sign a peace deal that ends the war by June, before President Trump pivots to focusing his energy on the midterm elections, Ukrainian President Volodymyr Zelensky told reporters. The U.S. timeline Zelensky laid out is pretty ambitious, both because there are still significant gaps between Russia and Ukraine and because Ukraine will have to hold a referendum on the peace deal before it is signed — a process that can take several months.”

February 9 – Financial Times (Max Seddon): “Russia’s army in Ukraine has suffered a sharp rise in men killed or missing in action, according to European and Ukrainian officials… The recent jump in losses will make it harder for Russian forces to sustain gruelling offensive operations… Not enough Russians are being induced to fight in Ukraine by the enormous payouts on offer, forcing Moscow’s army to recruit a higher share of accused criminals, pressure conscripts into signing contracts once their mandatory service ends and redeploy wounded soldiers.”

Trade War Watch:

February 10 – Axios (Julianna Bragg): “Several states are rolling out new incentives to lure Canadians back to the U.S. after visits from America’s northern neighbor fell by roughly 20% between January and October 2025. Canada leads all international visitors to the U.S. Those 20.4 million visits in 2024 generated about $20.5 billion in spending and supported 140,000 American jobs… Since April, Canadians staying in the U.S. longer than 30 days must also register with U.S. immigration authorities, upending the process for many snowbirds who spend the winters south of the border. Driving the news: Florida — which saw a 15% decrease in Canadian visitors between the third quarter of 2024 and the same period of 2025 — is among the states trying to win back Canadian tourists.”

Taiwan Watch:

February 9 – Financial Times (Demetri Sevastopulo and Kathrin Hille): “Chinese fighter jets carried out unusually dangerous manoeuvres near Taiwanese F-16 aircraft during the ‘Justice Mission’ military exercise that the People’s Liberation Army conducted around Taiwan in December… One person briefed on the incidents… said the ‘risky and provocative’ acts followed a pattern of aggressive behaviour towards China’s neighbours in recent months.”

February 9 – Reuters: “China will offer firm support for ‘patriotic pro-reunification forces’ in Taiwan and strike hard against ‘separatists’, the top Chinese official in charge of policy towards the democratically-governed island said… China… has ramped up its military and political pressure against the island as Beijing seeks to assert its sovereignty claims. Addressing this year’s annual ‘Taiwan Work Conference’… the ruling Communist Party's fourth-ranked leader Wang Huning said officials must advance the ‘great cause of national reunification’…”

U.S./Russia/China/Europe/Iran Watch:

February 10 – Financial Times (Andy Bounds): “The EU is seeking to ban all cryptocurrency transactions with Russia, in a bid to crack down on Moscow using assets outside the traditional banking system to evade sanctions.”

AI Bubble/Arms Race Watch:

February 12 – Axios (Madison Mills): “Top AI experts at OpenAI, Anthropic and other companies warn of rising dangers of their technology, with some quitting in protest or going public with grave concerns. Leading AI models, including Anthropic’s Claude and OpenAI’s ChatGPT, are getting a lot better, a lot faster, and even building new products themselves. That excites AI optimists — and scares the hell out of several people tasked with policing their safety for society. On Monday, an Anthropic researcher announced his departure, in part to write poetry about ‘the place we find ourselves.’ An OpenAI researcher also left this week citing ethical concerns. Another OpenAI employee, Hieu Pham, wrote on X: ‘I finally feel the existential threat that AI is posing.’ Jason Calacanis, tech investor and co-host of the ‘All-In’ podcast, wrote on X: ‘I’ve never seen so many technologists state their concerns so strongly, frequently and with such concern as I have with AI.’ The biggest talk among the AI crowd Wednesday was entrepreneur Matt Shumer’s post comparing this moment to the eve of the pandemic.”

February 11 – Axios (Madison Mills): “Spending by hyperscalers — the data center behemoths in the vanguard of the AI revolution — is expected to total $610 billion at the midrange of company guidance estimates, about triple the spending from just two years ago. The AI buildout is getting more and more expensive.”

February 10 – Axios (Madison Mills): “AI CEOs are openly trash-talking each other, sniping over advertising and their philosophical approaches to the future. The squabbling is intensifying as the cost of staying competitive in AI soars — and pressure is mounting for the technology to deliver real returns. The fighting ramped up around the Super Bowl. Anthropic pledged to keep its large language model, Claude, ad-free, alongside a commercial poking at OpenAI, which is testing ads in ChatGPT. OpenAI CEO Sam Altman fired back…, calling the ad ‘dishonest.’ Altman was already fending off rumors about OpenAI's relationship with Nvidia… Reuters’ sources said OpenAI has been exploring alternatives to Nvidia’s chips. ‘What a huge coincidence that after Nvidia hurt OpenAI’s feelings, OpenAI hurt Nvidia’s feelings back… high-school level behavior,’ Gil Luria of D.A. Davidson told Axios.”

February 11 – Reuters (Milana Vinn, Isla Binnie and Charlie Conchie): “A broad selloff in software stocks is starting to stall deal-making and IPOs in the sector as volatility makes valuations unreliable and potential buyers cautious… Bankers and investors interviewed link the slowdown in mergers and acquisitions and initial public offerings to a few related reasons. With software shares dropping sharply, the valuation benchmarks from peer companies, such as revenue multiples, are moving too quickly for either side to anchor a price, and buyers fear overpaying for assets that could be marked down again. Sellers, meanwhile, are reluctant to transact at trough levels. ‘Some people can’t afford to sell on the way down,’ said Vincenzo La Ruffa, managing partner at private equity firm Aquiline Capital Partners.”

Bubble and Mania Watch:

February 9 – Bloomberg (Tom Maloney): “Blue Owl Capital Inc.’s record-setting stock plunge was triggered by doubts about the firm’s private credit investments. Now, a different form of leverage is threatening to bring more instability to the shares: its founders’ loans. Co-Chief Executive Officers Doug Ostrover and Marc Lipschultz have pledged more than half of their Blue Owl stakes in order to secure loans from financial institutions, according to regulatory filings. The value of that collateral has slumped by $260 million since the start of the year as Blue Owl’s shares have lost 16% of their value.”

February 12 – CNBC (Ari Levy and Jordan Novet): “While the prospect of a SpaceX initial public offering and the hopeful listings from OpenAI and Anthropic have juiced IPO excitement on Wall Street, the current action in tech capital markets has nothing to do with equity. Rather, it’s all about debt…In a report late last month, UBS estimated that after tech and AI-related debt issuance across the globe more than doubled to $710 billion last year, that number could soar to $990 billion in 2026. Morgan Stanley foresees a $1.5 trillion financing gap for the AI buildout that will likely be filled in large part by credit as companies can no longer self-fund their capex. Chris White, CEO of data and research firm BondCliQ, says the corporate debt market has experienced a ‘monumental’ increase in size, amounting to ‘massive supply now in the debt markets’.”

February 10 – Reuters (Johann M Cherian): “Retail investors snapped up software and tech stocks following last week's heavy selloff, largely brushing aside worries that advances in artificial-intelligence models could upend parts of the industry. Net inflows into BlackRock's iShares Expanded Tech-Software Sector exchange-traded fund hit a record $176 million on a one-month rolling period as of Monday’s close… The analytics firm said the flows were more than double the peak seen in late 2024.”

February 9 – Reuters (Arasu Kannagi): “Pent-up demand for new listings and a strong pipeline of high-profile private companies such as Elon Musk's SpaceX is setting the stage for what could be a breakout year for ‌the U.S. initial public offering market. Goldman Sachs predicted last week that proceeds from U.S. IPOs ‌could vault to a record $160 billion in 2026, should the marquee names go public this year.”

February 11 – Bloomberg (Laura Nahmias): “Wall Street bonuses and an aggressive savings plan have helped shrink New York City’s expected two-year budget gap by roughly $5 billion, according to Mayor Zohran Mamdani. ‘I’m glad to report that by assuming an aggressive posture on savings without compromising city services, incorporating updated revenue and bonus estimates, and using in-year reserves, we have lowered that $12 billion gap to $7 billion,’ Mamdani said…”

February 9 – Bloomberg (Anna J Kaiser): “Miami real estate brokers spent last fall hoping for a ‘Mamdani effect’ — the possibility that New York’s new, socialist mayor would send droves of wealthy Manhattanites fleeing south. It never happened. The city is getting rich Californians instead. The Golden State’s proposed ‘billionaire tax’ has so rattled wealthy residents that many are now scouring South Florida for high-end homes… ‘They’re here, and they’re writing offers,’ said Dina Goldentayer, a luxury broker with Douglas Elliman. Many California shoppers, she said, are focused on ‘trophy properties’ ranging from $30 million to $150 million. Others, however, are looking for lower-priced options that would allow them to establish residency quickly, rather than waiting for the perfect property.”

Crypto Watch:

February 12 – Reuters (Hannah Lang and Elizabeth Howcroft): “Crypto liquidity provider and lender BlockFills has halted client deposits and withdrawals amid a downturn in bitcoin prices, in a sign of knock-on impact from the latest crypto market drop. BlockFills… said… it halted withdrawals last week and has been working to restore liquidity to its platform. The company is in active dialogue with its clients, which include crypto hedge funds and asset managers, a spokesperson said… The company has more than 2,000 institutional clients and facilitated more than $61.1 billion in trading volume in 2025…”

February 9 – Bloomberg (Muyao Shen): “Crypto venture capital funds are confronting an identity crisis. Plummeting digital-asset prices and a wave of market consolidations are exposing the fragility of an industry that boomed on speculation but has struggled to build sustainable, revenue-generating businesses. Retail traders have continued to drift away from digital art and memecoins, while token prices have crashed — a casualty of the rug pulls and day-trader blowups that followed last year’s market crash.”

February 10 – Bloomberg (Matt Wirz): “Wall Street’s first public bitcoin-backed bond sale hit a snag after the cryptocurrency’s recent plunge. Bankers at Jefferies have been pitching big investors for months on a $188 million bond sale backed by thousands of loans that crypto lender Ledn made to individuals. Ledn’s customers put up cryptocurrency as collateral for one-year loans… But Ledn recently had to liquidate about one-quarter of the loans meant to back the deal… The forced sales happened after the price of bitcoin plunged by 27% since mid-January, triggering margin calls on the loans.”

Inflation Watch:

February 9 – ABC News (Elizabeth Schulze): “President Donald Trump’s tariffs cost the average American household $1,000 last year, according to… the nonpartisan Tax Foundation. The cost is set to go even higher this year to $1,300 per household, assuming the existing tariffs stay in place, the research said. The research called Trump’s tariffs ‘the largest U.S. tax increase as a percent of GDP since 1993’.”

February 12 – New York Times (Ana Swanson and Sydney Ember): “President Trump has frequently claimed that foreign countries were paying for his tariffs, not Americans. But as economists predicted, that is largely turning out not to be the case. Research… by economists at the Federal Reserve Bank of New York and Columbia University suggests that, through November 2025, 90% of the economic burden of the president’s tariffs fell on U.S. companies and consumers… In an op-ed in The Wall Street Journal on Jan. 30 defending his tariffs, Mr. Trump wrote, ‘the data shows that the burden, or ‘incidence,’ of the tariffs has fallen overwhelmingly on foreign producers and middlemen, including large corporations that are not from the U.S’.”

February 9 – Bloomberg (Naureen S. Malik): “Electricity costs on the largest US grid more than doubled in January as a deep freeze drove up heating demand and operators shored up supplies to keep the lights on. Total wholesale power costs on the grid operated by PJM Interconnection LLC, which serves about a fifth of Americans, jumped to $15.38 billion in the first month of the year, up from $7.34 billion in January 2025, according to… Monitoring Analytics LLC.”

February 12 – CNBC (Spencer Kimball): “Families won’t see relief from rising electricity prices anytime soon, as demand from artificial intelligence data centers soars while power supply grows slowly, according to Goldman Sachs. Electricity prices jumped 6.9% in 2025 year over year, more than double the headline inflation rate of 2.9%, Goldman analysts told clients… Prices will continue to rise through the end of the decade, as data centers make up 40% of electricity demand growth, the analysts said.”

February 11 – Reuters (Che Pan and Brenda Goh): “China’s Lenovo Group warned… about mounting pressure on PC shipments as a ‌worsening memory-chip shortage grips the industry. Chief Executive Yang Yuanqing told ‌Reuters after the company released third-quarter results that the world's largest PC maker has raised prices to offset surging memory costs…”

February 10 – Axios (Los Angeles Times): “Los Angeles, Long Beach and San Diego are among the world’s least affordable cities for homebuyers… When the price of a regular home is compared to regular local salaries, Los Angeles, Long Beach, San Diego and San José were among the five least affordable cities in the world, according to a survey from… Remitly… Relative to local pay scales, the cities are more expensive for homebuyers than New York, Paris and Singapore… In Los Angeles, a single buyer earning the local average salary could afford a home worth only 28% of the average property in the region… Residents of San José can afford to buy a home worth only about a quarter of the average.”

February 9 – Bloomberg (Philip Aldrick): “President Donald Trump’s trade wars are contributing to UK inflation as China raises prices on exports to Britain to recover the cost of US tariffs, Bank of England policymaker Catherine Mann said… Mann dismissed arguments that the UK will benefit from disinflation as China diverts trade from the US… One of the reasons why US inflation has not risen sharply despite a near $300 billion increase in import duties ‘is because import prices going into the US have been falling,’ Mann, an external member of the BOE’s Monetary Policy Committee, said... ‘In contrast, everybody else is paying more. That is true for the UK as well’.”

February 9 – Bloomberg (Erin Hudson and Amanda L. Gordon): “The top private schools in New York City plan to charge more than $70,000 this year for tuition, an amount exceeding that of many elite colleges, as they pass on the costs of soaring expenses including teacher salaries. Spence School, Dalton School and Nightingale-Bamford School on Manhattan’s Upper East Side are among at least seven schools where the fees now exceed that threshold… Fees among 15 private schools across the city rose a median of 4.7%, outpacing inflation.”

Federal Reserve Watch:

February 12 – CNBC (Kevin Breuninger): “Sen. Thom Tillis… rejected a proposal aimed at ending the Department of Justice’s controversial criminal probe into Federal Reserve Chair Jerome Powell and clearing a path for his successor, Kevin Warsh, to be confirmed. The proposed off-ramp…, would see the Powell investigation handed off from the DOJ to the Senate Banking Committee. The idea is an attempt to thread a political needle: It would drop the threat of criminal prosecution against Powell… while still satisfying President Donald Trump, who supports the DOJ probe. But Tillis poured cold water on that proposal... ‘I’m not going to have an investigation out there,’ Tillis told reporters... ‘We have to have an independent Fed. And we can’t finesse this’.”

February 9 – Bloomberg (Alex Harris): “Federal Reserve Chair nominee Kevin Warsh is likely to take a gradual approach to shrinking the central bank’s $6.6 trillion portfolio to avoid rekindling money market tensions, according to… Citigroup... Any attempt by the central bank to resume unwinding its balance sheet… could revive pressures in the $12.6 trillion repurchase market… The Fed abandoned the process in December after rates in the repo market… surged. ‘The bar for restarting QT is quite high given the large volatility that repo markets experienced last year,’ strategists Alejandra Vazquez Plata and Jason Williams wrote. ‘Presumably, the FOMC would prefer to avoid a repeat of October 2025 and instead opt to take a gradual approach to balance sheet management’.”

February 10 – Bloomberg (Alexandra Harris): “The Federal Reserve’s transition to a smaller balance sheet will require significant coordination between the central bank and Treasury Department to prevent excess market volatility, according to Barclays... The process will result in tighter financial conditions, which Chair nominee Kevin Warsh — who has called for dramatically paring back the $6.6 trillion portfolio — may have to offset with a lower policy interest rate, they wrote. ‘Balance sheet normalization will be a multiyear process,’ Barclays strategists Anshul Pradhan, Samuel Earl and Demi Hu wrote. ‘Given Warsh’s desire to shrink the balance sheet, and the fact that the Fed and Treasury’s goals need not always be in sync, investors are likely to demand a risk premium during the transition process’.”

February 10 – Bloomberg (Jonnelle Marte): “Federal Reserve Bank of Cleveland President Beth Hammack said interest rates could be on an extended hold while officials evaluate incoming economic data. ‘Rather than trying to fine tune the funds rate, I’d prefer to err on the side of patience as we assess the impact of recent rate reductions and monitor how the economy performs,’ Hammack said…"

February 10 – Bloomberg (Catarina Saraiva and Alex Harris): “Federal Reserve Bank of Dallas President Lorie Logan said she’s hopeful inflation will continue to come down, though it would take ‘material’ weakness in the labor market for her to support more interest-rate cuts. ‘We will learn in coming months whether inflation is coming down to our target and whether the labor market will remain stable… If so, this would tell me that our current policy stance is appropriate and no further rate cuts are needed to achieve our dual mandate goals,’ she said. ‘If instead we see inflation coming down but with further material cooling in the labor market, cutting rates again could become appropriate’.”

February 11 – Wall Street Journal (Matt Grossman): “Kansas City Fed President Jeffrey Schmid reaffirmed his resistance to further interest-rate cuts, arguing that further Fed easing would risk allowing inflation to remain too high… Schmid said that the economy is entering 2026 on strong footing, and cited persistent inflation as a signal that demand may be outpacing supply… ‘In my view, further rate cuts risk allowing high inflation to persist even longer,’ Schmid said… ‘We must remain focused on our headline inflation objective, otherwise I believe there is a real risk that inflation will get stuck closer to 3% than 2% in the long run,’ he added… ‘It is the actions of monetary policy that determine whether a price shock is transitory or not,’ he said.”

February 11 – Bloomberg (Catarina Saraiva): “Federal Reserve Bank of Kansas Cit President Jeff Schmid said the US central bank should hold rates at a ‘somewhat restrictive’ level, as he expressed continued concerns over inflation that remains too high. ‘In my view, further rate cuts risk allowing high inflation to persist even longer,’ Schmid said… He added that interest rates should still be putting some pressure on the economy, but that may not be the case. ‘With growth showing momentum and inflation still hot, I’m not seeing many indications of economic restraint,’ Schmid said.”
February 9 – Bloomberg (Enda Curran): “Federal Reserve Governor Stephen Miran said the central bank’s balance sheet needs to be smaller, but that shouldn’t preclude policymakers from opting for large-scale asset purchases during an economic crisis… ‘Expanding our balance sheet when you’re at the zero-lower bound, at the middle of a financial crisis, is the right move,’ Miran said... ‘But you should keep your powder dry for when you need to make a move like that’.”

U.S. Economic Bubble Watch:

February 9 – Bloomberg (Josh Wingrove): “President Donald Trump said his pick to lead the Federal Reserve can stoke the economy to grow at a rate of 15%... Trump… said Warsh was the ‘runner up’ in his last search and that it was a big mistake to pick Fed chair Jerome Powell. If Warsh ‘does the job that he’s capable’ of, then ‘we can grow at 15%, I think more than that,’ Trump told host Larry Kudlow… ‘I think he is going to be great, and he’s a really high quality person’.”

February 11 – New York Times (Kailyn Rhone): “The U.S. economy is growing, but not evenly. What began as an uneven rebound from the Covid-19 pandemic has hardened into what many economists describe as a ‘K-shaped’ economy, in which higher-income households pull ahead while lower-income households fall further behind... ‘We are returning to a typical pattern of extremely high income inequality, and it now stands at a 60-year peak,’ Beth Ann Bovino, chief economist at U.S. Bank, wrote… ‘The worry is not just where we stand now, but also whether ongoing developments will worsen the situation.’ The net worth of the top 1% of households climbed to a record share of nearly 32% of the national total in the third quarter of 2025… Spending patterns have also split: Households earning under $75,000 a year are spending less on discretionary categories like travel and experiences than they did in 2019, while those making more than $150,000 are spending more, according to Bank of America Institute.”

February 11 – Associated Press (Paul Wiseman): “U.S. employers added a surprisingly strong 130,000 jobs last month, but government revisions cut 2024-2025 U.S. payrolls by hundreds of thousands. The unemployment rate fell to 4.3%... The report included major revisions that reduced the number of jobs created last year to just 181,000, a third the previously reported 584,000 and the weakest since the pandemic year of 2020. The job market has been sluggish for months… But the January numbers were much stronger than the 75,000… expected. Healthcare accounted for nearly 82,000, or more than 60%, of last month’s new jobs. Factories added 5,000, snapping a streak of 13 straight months of job losses. The federal government shed 34,000 jobs. Average hourly wages rose a solid 0.4% from December to January.”

February 12 – Associated Press (Matt Ott): “The number of Americans applying for unemployment benefits fell last week, remaining within the historically healthy range of the past few years. Applications for jobless aid for the week ending Feb. 7 fell by 5,000 to 227,000 from the previous week… The total number of Americans filing for jobless benefits for the previous week ending Jan. 31 increased by 21,000 to 1.86 million…”

February 10 – Associated Press (Anne D’Innocenzio): “Shoppers unexpectedly paused their spending in December from November… The report… surprised economists who were looking for growth… And it raised questions about shoppers’ ability to spend after they have remained resilient for months despite souring consumer confidence, economists said. Retail sales were flat in December from November, when business was up 0.6%... Economists were expecting a 0.4% increase for December. The report was delayed because of the 43-day government shutdown. Sales in October fell 0.1%, rose 0.1% in September, but jumped 0.6% in July and August and 1% in June…”

February 10 – Bloomberg (Jarrell Dillard): “Sentiment among US small-business owners edged down in January for the first time in three months… The National Federation of Independent Business optimism index slipped 0.2 point to 99.3… Seven of the 10 components that make up the gauge decreased, while three increased. The net share of owners who expect business conditions to improve fell 3 points to 21% after climbing to a four-month high in December. An easing in hiring plans and a smaller share of companies reporting job openings also weighed on the index. At the same time, a net 16% of owners said they expect… sales to improve in the next three months, up 6 percentage points from December and the largest share in a year. Also, 15% of owners reported that now would be a good time to expand their business, a six-month high.”

February 7 – Bloomberg (Julia Fanzeres): “US consumer borrowing increased in December by the most in a year, reflecting a pickup in both revolving and non-revolving credit. Total credit outstanding rose $24 billion following a $4.7 billion gain in the prior month, Federal Reserve data showed... The reading topped all estimates… Non-revolving credit, such as loans for vehicle purchases and school tuition, increased $10.2 billion in December, the most in seven months. Meantime, credit-card and other revolving debt outstanding jumped $13.8 billion, the biggest monthly gain in over two years.”

February 12 – CNBC (Diana Olick): “High home prices, faltering supply and weaker consumer confidence in the economy all continue to weigh on the U.S. housing market. The chief economist for the National Association of Realtors, Lawrence Yun, is calling it ‘a new housing crisis.’ Sales of previously owned homes in January dropped a much wider-than-expected 8.4% from December to a… annualized rate of 3.91 million... Sales were 4.4% lower than January 2025. That is the slowest pace since December 2023 and the biggest monthly drop since February 2022… Inventory came down in January from December but was still up 3.4% year over year. There were 1.22 million homes for sale at the end of January, which at the current sales pace is a 3.7-month supply. A six-month supply is considered a balanced market…”

February 9 – Axios (Sami Sparber): “U.S. homeowners are staying in their houses for the longest time in at least 25 years… That — along with still-high home prices and tight inventory — is keeping the housing market on ice. Sellers at the end of 2025 had owned their homes for an average of 8.6 years — a record in data going back to early 2000… Homeowner tenure has increased steadily in almost every major metro area over the past two decades, according to ATTOM... The ‘trend is especially pronounced in coastal and Northeast metros, where tenure often exceeds a decade, while many Sun Belt and Midwest markets continue to see comparatively shorter ownership periods,’ CEO Rob Barber tells Axios.”

China Watch:

February 9 – Bloomberg (Nectar Gan, Shawna Kwan and Laura Davison): “A Hong Kong court sentenced former media mogul Jimmy Lai to 20 years in prison, handing the pro-democracy advocate the heaviest penalty ever meted out under a Beijing-imposed national security law. Three judges hand-picked by the government… ordered the 78-year-old to effectively spend the rest of his life behind bars for two counts of conspiring to collude with foreign forces and a separate sedition conviction. ‘Lai was no doubt the mastermind of all three conspiracies charged and therefore he warrants a heavier sentence,’ the judges said...”

February 8 – Bloomberg: “The People’s Bank of China is boosting the supply of money available to banks to ensure they can meet the surge in demand for cash during the Lunar New Year holidays. The central bank injected a total of 600 billion yuan ($86.4bn) via 14-day repurchase agreements late last week… Industrial Securities forecasts the PBOC to add as much as 3.5 trillion yuan of funds via similar tools before the holidays kick off on Sunday.”

February 9 – Bloomberg: “Chinese government bonds’ recent recovery is drawing more traders into derivatives, reflecting stronger demand for safety and hedging as confidence in the debt market grows. The number of open futures contracts tied to China’s 10‑year government bonds rose on Monday to 344,171, the highest since they started trading in 2015… That’s a 46% jump since the beginning of the year, outpacing the 24% rise seen in all of 2025.”

February 10 – CNBC (Anniek Bao): “China’s consumer inflation rose less than expected in January… The consumer price index rose 0.2% in January from a year earlier…, below economists’ forecast of 0.4% increase... That followed a 0.8% growth in December, its highest level in nearly three years. Prices rose 0.2% month-on-month, below economists’ forecast of a 0.3% increase. Core CPI, which strips out volatile food and energy prices, jumped 0.8% from a year earlier, easing from the 1.2% in December.”

Central Banker Watch:

February 10 – Wall Street Journal (James Glynn): “Australia’s inflation rate is too high and the costs of allowing it to remain elevated don’t bear thinking about, RBA’s Deputy Gov. Andrew Hauser said… ‘That’s we acted last week to raise the official cash rate by 25 bps, and why I wanted to say we will continue to do to do whatever is necessary to ensure that inflation does return to the target band,’ he told a business luncheon. The rise in the official cash rate last week reversed a cut delivered in August… Both core and headline inflation have moved above the RBA’s 2% to 3% target band… The RBA decided to reverse the direction of monetary policy from easing last year to tightening this month because ‘the facts changed’ on several fronts, with the strength of the world economy a key factor, he said. ‘I don’t think anyone thought that we would be sitting here in 2026 with the global economy powering ahead,’ he said.”

Europe Watch:

February 10 – Financial Times (Euan Healy): “Billionaire Andrea Pignataro’s heavily indebted fintech empire is under increasing pressure in credit markets, as concerns over AI’s impact on software companies hit one of Europe’s largest sellers of junk bonds. The sell-off in bonds issued by Ion Group, a debt-fuelled roll-up of financial data companies including Mergermarket, Fidessa and Dealogic, has accelerated in the past week…”

February 12 – Bloomberg (Zoltan Simon): “Hungarian opposition leader Peter Magyar said he was secretly taped having sex with his former partner in 2024, preempting a potential release of a video that he called a ‘Russia-style’ attempt to blackmail him before pivotal elections in April.”

EM Watch:

February 12 – Bloomberg (Zijia Song): “Bitcoin’s crash has hit few places as hard as El Salvador, exposing the risks of President Nayib Bukele’s high-stakes embrace of crypto and whipsawing the country’s debt markets. Bukele, an ardent advocate who made the token legal tender alongside the dollar, has kept buying one Bitcoin a day even as the latest rout erased hundreds of millions of dollars from the government’s holdings and complicated talks with the International Monetary Fund over a $1.4 billion loan. The focus is now catching up with him in financial markets, where investors have pushed credit default swaps to the highest level in five months, signaling growing unease over the country’s crypto-heavy strategy.”

February 10 – Bloomberg (Vinicius Andrade and Giovanna Bellotti Azevedo): “It’s just two companies. But their escalating financial strains have sent bondholders racing to the exits and sown fear that more Brazilian businesses will be driven to the brink by the nation’s highest interest rates in two decades. The worries were thrown into sharp relief on Monday, when Raízen SA was hit by back-to-back downgrades that knocked it from investment grade to deep into junk status… The reaction was swift: Investors unloaded the securities, extending a selloff that’s slashed the price of some bonds nearly in half over the past week to around 46 cents on the dollar.”

Leveraged Speculation Watch:

February 8 – Bloomberg (Iris Ouyang): “China’s low-interest rate environment is driving a surge in interbank borrowing, as financial institutions take advantage of cheap funding to buy bonds. The daily volume of overnight repurchase contracts rose to a record 8.2 trillion yuan ($1.2 trillion) on Friday… Financial institutions are increasingly using this tool to fund leveraged bond purchases. Trading has surged after the People’s Bank of China injected liquidity, driving interbank borrowing costs to multi-year lows as it cushions banks against higher demand for cash during the Lunar New Year holidays.”

Social, Political, Environmental, Cybersecurity Instability Watch:

February 11 – Bloomberg (Mark Gongloff): “The Trump administration will soon make it the official policy of the US government that greenhouse gases don’t endanger Americans’ well-being and therefore don’t need federal regulation. Insurance companies, meanwhile, live in a parallel universe where greenhouse gases are heating the atmosphere and intensifying natural disasters, harming human health, destroying property and raising insurance costs. The US government’s universe is an increasingly lonely fantasy world. You’re trapped in the real one. The oxymoronically named Environmental Protection Agency will this week formally renounce its 2009 ‘endangerment finding,’ which gives it regulatory power over emissions from cars, power plants, factories and more. This move, which the climate-change deniers running the White House call a ‘total victory,’ is for now mostly symbolic.”

February 7 – Axios (Nathan Bomey): “Gambling culture is enveloping American sports, politics, media and trading, bringing betting out of the shadows and into the mainstream in a way that disturbs some and exhilarates others. What was once a fringe vice is fast becoming a mass-market habit — raising urgent questions about addiction, fairness and who should regulate the business of betting on almost anything. ‘Wanna bet on that?’ That age-old contemplation has become more realistic than ever with the explosion of online sportsbooks and prediction markets… The American Gaming Association projects that $1.7 billion will be legally wagered on the Super Bowl… News media orgs like CNBC, CNN, Yahoo Finance and Dow Jones have struck partnerships to showcase prediction market data to viewers and readers.”

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