Spain’s five-year bond auction yield rose to 2.577% from 2.512% in the previous auction (market update)
Spain’s 5-year government bond auction yield rose to 2.577%, up from 2.512% at the previous auction.
That is an increase of 0.065 percentage points, or 6.5 basis points.
Spain’s 10-year Obligaciones auction yield falls to 3.167% from 3.223%
Spain held an auction of 10-year *obligaciones*. The yield came in at 3.167%.
The previous auction yield was 3.223%. This is a drop of 0.056 percentage points.
Spanish Yield Decline Signals Strong Demand
The drop in Spain’s 10-year bond yield points to strong demand for its debt. It also suggests investors are more confident in Spain’s economic outlook. This is generally positive for fixed-income assets. It may support long positions in Spanish Bono futures, since bond prices often rise when yields fall. This result also fits the view that European Central Bank rates may have peaked. Eurostat’s January 2026 flash inflation estimate fell to a two-year low of 2.1%. With inflation easing, the need to keep rates high is weakening. Traders may consider euro interest rate swaps positioned to receive the fixed rate, based on the view that floating rates could fall later this year. Confidence in peripheral European debt also appears to be improving. This helps calm concerns seen during the volatility of mid-2025. Credit markets reflect this shift. Spain’s 5-year credit default swap (CDS) spread has tightened by 8 basis points this month to 42 bps. Selling protection via CDS on Spanish sovereign debt is one way to try to benefit from this lower perceived risk.Equity Upside From Lower Borrowing Costs
Lower government borrowing costs can also help Spanish companies. Cheaper funding can support earnings and make equities more attractive. The IBEX 35 is already up more than 3% in February 2026, led by rate-sensitive bank and utility stocks. Buying call options on the IBEX 35 could offer exposure to further upside in the weeks ahead. Create your live VT Markets account and start trading now.Under current rules, Schleich and Currie say the Fed has little room to further shrink its $6.5tn balance sheet
National Bank of Canada’s Taylor Schleich and Ethan Currie say the Federal Reserve has limited room to shrink its balance sheet much further under current rules. The balance sheet is about $6.5 trillion after earlier quantitative tightening (QT).
They say the Fed’s liabilities determine the size of its assets. The main constraints are bank reserves and the Treasury General Account (TGA). Demand for currency also tends to rise as the economy grows, which supports a larger base of liabilities.
Constraints On Further Balance Sheet Reduction
They argue that meaningfully reducing reserve demand would likely require regulatory changes. Those changes could let banks hold more Treasuries and allow a smaller Fed portfolio. They also note a risk: if Treasuries move from a stable holder to less stable holders, market risk could increase. They do not expect QT to restart, aside from small tweaks to how the Fed reinvests maturing securities. Since QT ended, they note that outright Treasury purchases have been mostly limited to Treasury bills, which has shortened (reduced the duration of) the Fed’s holdings. Overall, the Fed appears to have very little room to shrink its balance sheet below the current $6.5 trillion level. Key liabilities—such as bank reserves, which have stabilized around $3.3 trillion, and a persistently high TGA—limit how far the Fed can go. This suggests the period of major QT that ended in 2025 is likely over. Without deregulation that reduces banks’ need to hold reserves, any further asset sales could trigger funding-market stress. The repo market spike in September 2019 showed what can happen when reserves get too scarce. The Fed will likely prefer a large balance sheet over a repeat of that kind of volatility.Implications For Volatility And Curve Positioning
For derivatives traders, this view suggests one major source of system-wide tightening is no longer in play, which could keep long-term volatility lower. The VIX has already drifted down, trading in a narrow 13–15 range through January 2026. That backdrop can favor “calm-market” strategies, such as selling strangles on major indices or shorting VIX futures. We also expect the Fed to keep managing portfolio duration by reinvesting into T-bills, a strategy it used in late 2025. This could add mild, steady steepening pressure on the yield curve. Traders could express that view with SOFR futures by positioning for longer-term rates to rise relative to shorter-term rates. Create your live VT Markets account and start trading now.During European hours, XAG/USD holds above the 50-day EMA near $79.20 after two straight sessions of gains
Silver (XAG/USD) traded near $79.20 per troy ounce during European hours on Thursday, rising for a second straight session. The 14-day RSI was 47 and trending higher, pointing to improving momentum.
Price stayed stuck between the nine-day EMA at $78.95–$78.96 and the 50-day EMA at $79.26. This kept silver rangebound around these moving averages.
A break below the nine-day EMA at $78.95 could trigger a drop toward the nine-week low of $64.08, set on February 6. The next support level sits near the lower edge of the descending wedge, around $59.10.
A daily close above the 50-day EMA at $79.26 could keep the move higher intact. The next major upside reference is the record high of $121.66, reached on January 29.
The technical analysis was produced with help from an AI tool.
As of February 19, 2026, silver is consolidating in a very tight range between its 9-day and 50-day moving averages. This “coiling” price action often comes before a breakout, so traders may want to expect higher volatility. The near-neutral RSI suggests the market is building energy for its next move.
If you are positioning for a breakout, the narrow range can make volatility strategies—such as long straddles or strangles—more appealing. These trades can profit from a sharp move in either direction, and a swing looks more likely as pressure builds around the $79.00 area. Silver’s implied options volatility has stayed relatively low this month, which can reduce the cost of these strategies.
On the upside, a firm close above $79.26 could spark a strong rally toward the late-January high of $121.66. This scenario looks more plausible with inflation still elevated: January 2026 CPI came in at 3.4%, supporting silver’s role as an inflation hedge. Traders could look at call options or bull call spreads to target this potential upside.
Fundamentals also lean supportive. Data released in late 2025 showed global solar panel installations rose another 28%, while industrial demand from electronics and electric vehicles keeps growing. This steady consumption can help put a floor under prices and supports the case for a breakout.
Still, a break below $78.95 would be a clear warning sign. It could open the door to a quick slide toward the February 6 low of $64.08. Sentiment turned bearish quickly in late 2025, and another failed push higher could trigger a similar sell-off. In that case, put options or bear put spreads could help hedge risk or position for further downside.
Forecasts were exceeded as the Eurozone’s seasonally adjusted current account hit €14.6B in December
The eurozone seasonally adjusted current account balance was **€14.6bn** in December. This was above the forecast of **€9.2bn**.
The stronger-than-expected current account surplus in December 2025 is a **bullish** signal for the euro. At **€14.6bn** versus a **€9.2bn** forecast, it suggests the eurozone’s export sector was stronger than expected at the end of last year. This strength should be an important input in our currency positioning.
This view is supported by the latest manufacturing PMI data for January 2026. PMI surprised to the upside, rising to **51.2**, above the forecast **49.8** (which implied contraction). That suggests the export strength seen in December is continuing into the new year. With core inflation still elevated at **2.6%**, the case for a stronger euro is growing.
We should consider **buying euro call options**, focused on **EUR/USD**, over the next few weeks. The data points to more resilience than the market expected after the slowdown in Q3 2025. Look at options expiring in **March or April 2026** to capture a potential move higher.
The stronger export backdrop also supports a **bullish view on European equities**, especially German and French companies that depend on global trade. We can express this by buying **Euro Stoxx 50 futures** or **call options**. In past periods of strong exports—such as during the 2021 recovery—export-heavy indices have often rallied.
This data also argues for revisiting expectations for the European Central Bank’s policy path. Market pricing for near-term rate cuts now looks too dovish and may unwind. We should adjust interest-rate derivative positions, since short-term rates such as **Euribor** may be near a floor or could move higher in the near term.
The eurozone’s non-seasonally adjusted current account rose to €34.6B in December, up from €12.6B previously.
The eurozone current account balance (not seasonally adjusted) posted a surplus of €34.6B in December. This compares with €12.6B in the prior period.
The data shows a larger surplus in December than earlier reports suggested. The statement did not include a breakdown or the main drivers.
The rise in the eurozone’s current account surplus to €34.6B is a strong positive sign for the euro. It suggests that money coming in from exports is far higher than money going out for imports. We view this as a bullish fundamental signal for the currency in the weeks ahead.
Because of this, we should consider buying call options on the euro versus the U.S. dollar (EUR/USD). The pair has been stuck in a tight range near 1.08, and this data could be the trigger for a break higher. A recent easing in U.S. inflation also supports this view, since it may cap further dollar strength.
The surplus is also positive for large European companies, especially exporters in Germany and France. We should consider buying calls on indices such as the EURO STOXX 50. Recent data backs this up: German factory orders for December 2025 beat expectations on strong foreign demand, which supports the case for solid earnings.
The European Central Bank will likely watch this strength closely. With January 2026 inflation ticking up to 2.3%, a strong economy could push the ECB to sound more hawkish. That makes trades that benefit from higher short-term rates—such as options on EURIBOR futures—more appealing.
This surplus is a major shift from 2022 and 2023, when high energy prices pushed the current account into deficit. The improvement is largely due to lower energy import costs, which reduces outflows and lifts the trade balance. This change suggests euro strength may last and could also raise implied volatility in FX markets.
Markets closely monitor geopolitics as the US dollar steadies, holding on to earlier weekly gains
The US Dollar strengthened late Wednesday after hawkish language in the Federal Reserve’s January meeting minutes. The US calendar includes December Goods Trade Balance data and weekly Initial Jobless Claims. Markets are also watching geopolitical developments.
The minutes said the Fed is not acting with a one-way bias. Several officials wanted more balanced wording for future decisions. The minutes also said more rate rises could be appropriate if inflation stays above target. The USD Index rose more than 0.5% to near 97.80, then held around 97.70.
Geopolitical Tensions And Market Pricing
CBS News reported that the US military is preparing for possible strikes on Iran as soon as Saturday. It said the USS Abraham Lincoln carrier group is already in the region, and the USS Gerald Ford is on its way to the Middle East. Gold traded above $5,000. Australia’s unemployment rate held at 4.1% in January, better than the 4.2% forecast. Employment rose by 17.8K versus a 20K estimate. AUD/USD traded above 0.7050. New RBNZ Governor Anna Breman said policy will adjust if the inflation outlook changes, to bring inflation back to target. NZD/USD rebounded to about 0.5980, up more than 0.3% after falling over 1% on Wednesday. EUR/USD fell about 0.6% on Wednesday, then traded near 1.1800 early Thursday. GBP/USD dropped over 0.5% to 1.3480, then recovered toward 1.3500. USD/JPY traded near 155.00 after rising almost 1%. At this time in 2025, a hawkish Fed boosted the US Dollar because markets feared inflation would stay high. Now the picture is different. The Fed is holding rates steady, and the latest CPI data from January 2026 shows inflation at 2.9%. This means options tied to a surprise rate cut could turn more volatile, even if the dollar stays relatively strong.Key Takeaways For Traders Right Now
A year ago, direct military threats against Iran pushed Gold to extreme highs and created a large geopolitical premium. Today, tensions remain, but the immediate threat has faded. Gold is much lower, around $2,150 an ounce. Traders should be careful about overpaying for Gold call options based on headlines, because the market is less reactive than it was in 2025. Weekly jobless claims were a key market focus then, and they still matter for judging economic strength. The latest reading shows initial jobless claims at 212,000. That is still low by historical standards and points to a resilient labor market. This strength gives the Fed room to delay rate cuts, which could weigh on equity index futures in the coming weeks. In February 2025, the dollar was rising fast against the yen and was pushing toward 155 because of the Fed’s stance. Now USD/JPY is lower, near 150. But the risk of intervention by Japanese authorities feels more immediate than it did then. Traders may want to consider cheap, out-of-the-money puts on USD/JPY as a hedge against sudden government action. Last year, the euro and sterling struggled against a broadly rising dollar. The dollar’s momentum has slowed, but recent data suggests inflation in Europe is still sticky. The Bank of England is also still signaling caution. This gap could make cross-currency trades, such as EUR/GBP, clearer than simply betting against the US Dollar. Create your live VT Markets account and start trading now.Bank Indonesia keeps policy rate unchanged at 4.75%, in line with market expectations
Bank Indonesia kept its policy rate at 4.75%, matching forecasts. This keeps monetary policy unchanged.
Borrowing costs for banks and households also stay the same. Domestic interest rates should remain steady in the near term.
Market Reaction And Rupiah Volatility
Bank Indonesia’s decision to keep its key rate at 4.75% was widely expected and points to short-term stability. With no surprise for markets, implied volatility in the Indonesian Rupiah may ease. For traders, this supports the view that the central bank is taking a steady and predictable approach. The decision fits the latest data. January inflation was 2.9%, which is within the central bank’s target range. Economic growth also remains strong, with final Q4 2025 GDP growth at 5.1%. This suggests the rate hikes in late 2024 and early 2025 helped cool inflation without derailing growth. USD/IDR has traded around 15,850 over the past month. Holding rates may help keep the pair range-bound. If conditions stay calm, selling volatility could be an option in the weeks ahead. Some traders may look at short-dated option strategies on currency pairs or Indonesian equity indices to benefit from lower expected volatility. Attention now shifts to global drivers, not domestic policy. This is a calmer backdrop than during the uncertainty around the 2024 elections. For now, the Rupiah looks more likely to stay stable or strengthen slightly.Key Risks And What To Watch
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Deutsche Bank said the UK’s January inflation data is likely to be difficult for the Bank of England. Services CPI and core CPI both came in above the Monetary Policy Committee’s (MPC) forecasts. Headline CPI was almost 0.1 percentage points higher than expected. Services CPI was about 0.25 percentage points higher at the start of the year.
The report said price momentum has eased, but not as fast as the MPC expected. That makes a March rate cut less certain.
Inflation Surprise Complicates Policy Outlook
Deutsche Bank still expects two rate cuts, in March and June. It said stronger price pressures could slow the pace of cuts, but lead to a larger total reduction over time. The note also pointed to a softer labour market. It said model-based measures of inflation expectations suggest inflation could keep falling in the next few months. The January inflation figures will leave the Bank of England uneasy. Services inflation came in hotter than expected at 5.5%, almost a quarter-point above what the MPC had pencilled in. That makes the path ahead harder and raises doubts about an early rate cut. Markets have already adjusted. In overnight index swaps, the implied probability of a March cut has fallen from over 75% last week to around 40% today. For traders, the main risk now is that the Bank holds rates steady for longer than expected.Pound Support And Curve Implications
This needs to be weighed against a cooling labour market. The latest data shows unemployment rising to 4.5% and wage growth slowing. The push and pull between sticky inflation and a weaker economy adds uncertainty. It may also increase volatility in short-term interest rate futures. In this kind of market, options strategies that benefit from price swings may work better than trades that rely on one clear direction. The reduced chance of a near-term rate cut supports the pound. This is especially true versus currencies where central banks are more clearly signalling cuts. In 2025, sterling often moved quickly as interest rate gaps shifted. A similar pattern could return, supporting long GBP positions. Overall, the view is shifting toward a slower start to easing, but potentially deeper cuts later. This could flatten the yield curve. Short-term rates may stay high, while longer-term rates may price in larger cuts over time. It highlights the difficult trade-off the MPC now faces. Create your live VT Markets account and start trading now.In January, Switzerland’s trade surplus rose sharply from 1,036M to 3,818M
Switzerland’s trade balance rose to 3,818m in January, up from 1,036m in the previous period.
The latest reading shows a larger surplus in January than in the prior period.
Switzerland’s sharp rise in the January trade surplus points to strong exports and comes in well above expectations. This suggests the Swiss Franc (CHF) could strengthen in the near term. We should consider positioning for CHF gains versus both the Euro and the US Dollar.
In derivatives, one way to express this view is to buy CHF call options. In practice, that often means buying put options on EUR/CHF and USD/CHF. Recent market data shows EUR/CHF can react strongly to economic surprises, and this release could pull it back toward the lows seen in late 2025. Another approach is to sell out-of-the-money put spreads on these pairs to collect premium.
This data also affects the Swiss National Bank’s (SNB) policy outlook. Any remaining expectations for a first-half rate cut may fade. The SNB held rates steady through much of 2025, and this report gives it even more reason to stay firm—typically supportive for the franc.
The export strength is likely focused in key industries such as pharmaceuticals and luxury watches, which are major parts of the Swiss Market Index (SMI). Q4 2025 earnings already showed these sectors holding up well, and the trade data now supports that view with official statistics. We should consider buying call options on the SMI, or on specific export-driven companies in the index.
This view is also supported by last week’s manufacturing PMI, which surprised to the upside at 52.3. That pushes into expansion for the first time since summer 2025. It suggests the trade surplus is not a one-off, but part of a broader industrial improvement. This fits with continued global demand for high-value Swiss goods.
We should still watch comments from the European Central Bank. A more dovish ECB could push EUR/CHF lower faster, but it could also raise volatility around the next meeting. The main risk to a bullish CHF view is a sudden global slowdown, which would reduce demand for Swiss exports.
