BoE Chief Economist Huw Pill said on Friday that he does not expect a collapse in UK economic activity. Speaking at an event hosted by Santander in London, he pointed to forward-looking indicators. He questioned whether firms’ wage and price plans are settling at levels slightly above what is consistent with a 2% CPI target. He said underlying inflation looks closer to 2.5% than 2%. He said UK growth is positive but not very strong, with a clear cyclical element. He added that forward-looking indicators do not suggest a collapse in activity. He said supply constraints may help explain the weak pace of activity. He also said much of the rise in the UK unemployment rate is likely structural rather than cyclical. The main issue appears to be that underlying inflation is settling around 2.5%, not the 2% target—and this will shape Bank of England policy. The latest CPI data for January 2026 supports this view: inflation held at 2.6% and did not fall meaningfully. As a result, derivatives markets are likely to price in fewer rate cuts, or later cuts, than previously expected for the rest of this year. This sticky inflation, together with steady (if unspectacular) growth, should keep supporting the pound. In 2025, interest rate differentials were a key driver of G10 currency pairs, and that pattern is likely to continue. Traders may treat any weakness in GBP/USD as a chance to build long positions. For UK equities, the outlook points to limited upside. The January 2026 manufacturing PMI was just below the neutral 50 level, highlighting weak momentum and the risk of pressure on earnings. This environment tends to favour FTSE 100 strategies that benefit from range-bound markets, such as selling out-of-the-money call options. Pill’s view that much of the rise in unemployment is structural is also important. The jobless rate rose through most of 2025 and reached 4.5% in Q4. It is unlikely to fall quickly, even if activity improves modestly. That gives the Bank another reason to be patient and keep rates higher for longer to ensure inflation is fully under control.

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Agnico Eagle Mines reported adjusted earnings of **$2.69 per share** for **Q4 2025**, up from **$1.26** a year earlier and above the Zacks estimate of **$2.56**. Revenue was **$3,564 million**, up **60.3%** year over year, beating the **$3,240.7 million** estimate. **Payable gold production** was **840,608 ounces** versus **847,401 ounces** a year earlier and above the estimate of **839,674 ounces**. **Total cash costs** were **$1,089 per ounce** versus **$923**, above the estimate of **$945**. **Realized gold prices** were **$4,163 per ounce** versus **$2,660**, above the estimate of **$3,593**. **AISC** was **$1,517 per ounce** versus **$1,316**, above the estimate of **$1,315**. **Cash and cash equivalents** ended at **$2,866 million**, up **21.7%** sequentially, with **long-term debt** of about **$196.3 million**. **Cash from operating activities** was **$2,112 million** versus **$1,132 million**. For **2026**, gold production is forecast at **3.3-3.5 million ounces**, with **cash costs** of **$1,020-$1,120** and **AISC** of **$1,400-$1,550 per ounce**. Guidance includes **$275-$305 million** in exploration and corporate development spending, **$1.55-$1.75 billion** in depreciation, **$230-$260 million** in G&A, **$75-$95 million** in other costs, a **34%-36%** tax rate, **$3.4-$3.6 billion** in cash taxes, **$2.2-$2.4 billion** in capex, and **$290-$330 million** in capitalized exploration. Shares rose **117%** over the past year versus a **144.4%** industry gain. Zacks ranks: **AEM #2**; **Coeur Mining** (42 cents estimate, 106.61% average surprise, #1) reports **18 Feb**; **Valmont** ($4.95, 4.38%, #2) reports **17 Feb**; **Avino** (6 cents, 150%, #2) reports **11 March**. Agnico Eagle’s **Q4 2025** results show a company that benefited from a sharp jump in gold prices. The realized price of **$4,163 per ounce** was the main reason earnings beat estimates. Results were highly sensitive to the gold spot price. The price strength also fits with the inflation and “safe haven” demand seen through 2025. The main drawback was the steep rise in costs. **AISC climbed to $1,517 per ounce.** That is not surprising given high inflation last year. For example, the U.S. Consumer Price Index averaged above **4%** in 2025, which raised labor and energy costs across the industry. The 2026 cost outlook points to more stability, but costs are still high. That leaves less room for error if gold prices fall. Because of this setup, Agnico Eagle’s **implied volatility** may stay high in the near term. The stock often trades like a high-beta bet on gold itself. Hitting the 2026 production target of **3.3 to 3.5 million ounces** matters, but gold prices will likely matter more. For traders who think the forces that pushed gold above **$4,000** will continue, **buying call options** on AEM can provide leveraged upside. The stock also lagged the industry last year (up **117%** versus **144.4%**), which may leave room to catch up if sentiment stays positive. This approach assumes strong gold prices will outweigh concerns about higher operating costs. If gold has peaked and a correction is coming, Agnico Eagle’s high cost base increases downside risk. **Buying put options** or using **bearish put spreads** could be ways to position for a pullback. Even a **10%-15%** drop in gold prices could squeeze margins and lead to a larger percentage drop in AEM’s share price.

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National Bank of Canada said the U.S. federal fiscal path is still unsustainable, even with added revenue from tariffs. It noted that the Congressional Budget Office (CBO) now forecasts larger total deficits than in its earlier outlook. The bank said the One, Big, Beautiful Bill and stricter immigration policy are adding to the deficit and debt outlook. It said this is worse than the CBO’s earlier projections from Jan-25.

Fiscal Outlook And Policy Assumptions

It said the projections suggest the primary deficit could shrink over the next decade, but only if policy stays steady. It also said trade policy remains uncertain, including whether tariffs will stay in place after the current administration. It said uncertainty about future tariff policy increases risk for the U.S. macro outlook. It also said the White House may face pressure ahead of the midterm elections to cut debt, lower costs, and reduce tariff rates. The U.S. government’s fiscal path is unsustainable, which creates a challenging setup for the U.S. dollar in the weeks ahead. Even with tariff revenue, the debt outlook has worsened compared with the projections released in January 2025. This suggests dollar-linked assets could see more volatility. This uncertainty—especially around tariff policy ahead of the midterm elections—supports the case for buying volatility. The CBOE Volatility Index (VIX) has been rising and recently touched 19, up from the calmer conditions seen in late 2025. Options premiums on major currency pairs are also rising, reflecting growing concern.

Treasury Yields And Market Positioning

It is also important to watch the Treasury market. Continued government borrowing could push yields higher. The 10-year Treasury yield has already risen to 4.35% since the start of the year, and derivatives markets are pricing in a steeper yield curve. Traders may consider strategies that benefit from higher rates, such as buying put options on Treasury bond futures. In addition, the combination of the One, Big, Beautiful Bill passed in 2025 and tighter immigration policies has worsened the outlook. The CBO’s latest update confirmed these pressures and now projects that debt held by the public will exceed 110% of GDP by 2030. With this backdrop, long-term bullish positions on the dollar look risky without meaningful hedging. For now, the Dollar Index (DXY) is stuck between opposing forces and is hovering near 104. While the long-term debt story is a clear negative, sudden global risk events could still trigger a short-term flight to safety that supports the dollar. That is why options strategies like strangles may help capture a breakout in either direction. Create your live VT Markets account and start trading now.

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Rabobank’s Philip Marey said Kevin Warsh’s nomination as Federal Reserve Chair suggests lower US policy rates in 2026. The view is for three 25-basis-point cuts in 2026. That path would take the federal funds rate slightly below the median Federal Open Market Committee estimate of the neutral rate. Marey also said Warsh may try to convince other FOMC members to lower their neutral-rate forecasts, using an argument tied to artificial intelligence.

Balance Sheet And Long Term Yields

The note said Warsh supports shrinking the Fed’s balance sheet and may want to shift the operating framework from ample reserves to scarce reserves. It also warned that longer-term yields could rise even as policy rates fall. The article linked this possible rise in longer-term rates to housing conditions, calling it a “housing recession”. It also said the piece was produced with help from an artificial intelligence tool and reviewed by an editor. Because the new Fed Chair is signaling a more dovish stance, we are positioning for lower short-term interest rates. Markets are increasingly pricing in three 25-basis-point cuts in 2026. This view is supported by January Core PCE inflation, which eased to 2.8%. Traders may want to use SOFR futures to benefit from an expected decline in the policy rate. However, the plan to shrink the Fed’s balance sheet creates a key tension that could push longer-term yields higher. This may set up an opportunity for yield-curve steepener trades: long the 10-year Treasury yield and short the 2-year. We saw the setup for this trade build through the second half of 2025 as the market absorbed this policy split.

Positioning For Higher Volatility

This mix of rate cuts and quantitative tightening could drive higher market volatility. The bond market’s MOVE index has already risen to 115, a clear jump from the calmer levels late last year. We think buying options that gain from larger price swings—especially in Treasury ETFs—is a sensible way to prepare for the next few weeks. The stated aim of this approach is to ease the housing recession that lasted through 2025. January’s existing home sales, running at a weak 3.95 million annual rate, underline the urgency. We are watching mortgage-backed securities closely, because their performance will show whether rate cuts can offset the upward pressure on mortgage rates caused by a shrinking Fed balance sheet. Create your live VT Markets account and start trading now.

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Gold (XAU/USD) ticked higher on Friday after a softer US CPI report raised expectations that the Federal Reserve will cut interest rates. Gold traded near $5,000, after sliding to around $4,880 the day before. Gold had already pulled back from record highs near $5,600, as higher volatility made traders less willing to hold aggressive long positions. On Thursday, Gold dropped about 3.5% and Silver (XAG/USD) fell nearly 11.5%. Stocks and cryptocurrencies also declined. In January, headline CPI rose 0.2% month over month. That was below expectations and down from 0.3% in December. Year over year, CPI eased to 2.4% from 2.7%, also below the 2.5% forecast. Core CPI (excluding food and energy) increased 0.3% month over month, matching expectations and up from 0.2%. Annual core inflation slipped to 2.5% from 2.6%, in line with forecasts. After the report, the US Dollar fell and Treasury yields dropped. Markets priced in more than 50 basis points of rate cuts this year. Geopolitical tensions and steady central-bank buying also supported demand. On the daily chart, price stayed above the 20-day SMA and the middle Bollinger Band at $4,969.20. The Bollinger Bands remain wide (upper $5,350.76; lower $4,587.64). RSI is 53.92. Support sits near $4,800 and $4,588, while resistance is in the $5,000 to $5,100 area. The cooler inflation data has meaningfully changed expectations for Fed policy. CME Group’s FedWatch Tool shows the market now sees more than an 85% chance of a June rate cut, up from about 60% a week ago. This shift toward easier policy makes non-yielding gold more attractive and is the main reason price has moved back toward $5,000. This move is also backed by strong underlying demand that has been in place for some time. In 2025, global central banks bought more than 1,000 metric tons of gold for a third straight year. That buying has helped put a firm floor under the market. Much of it reflects a push to reduce reliance on the US dollar, especially as geopolitical frictions continue. It also helps absorb sharp pullbacks. Still, the recent one-day drop of 3.5% from the record high near $5,600 has made traders more cautious. The Gold Volatility Index (GVZ) is near 25, well above its long-term average around 16, which makes options more expensive. That suggests traders still think prices can rise, but they are also paying up for protection against another sharp move lower. With volatility this high, derivatives traders may prefer strategies that can benefit from a large move in either direction. With price clustering around $5,000 and Bollinger Bands widening, long straddles or strangles could work well in the coming weeks. These trades would gain from a clean break above $5,100 or a sharp reversal back toward support near $4,800. If you think the recent peak was only a short-term top, high implied volatility can also favor premium-selling strategies. One approach is to use bear call spreads with strikes well above $5,400. This lets traders collect income while keeping risk defined. It is based on the view that the market may need time to consolidate before it can challenge the record highs again.

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Poland’s January CPI came in above forecasts, mainly because of technical effects and volatile items. Even so, headline inflation stayed below the National Bank of Poland (NBP) target. The flash estimate showed CPI at 2.2% year on year in January, compared with 1.9% expected, and down from 2.4% in December. This was the second month in a row with inflation below the NBP’s 2.5% target (with a tolerance band of plus or minus 1 percentage point). Disinflation was driven mostly by cheaper petrol. Fuel prices fell 7.1% year on year, after a 3.1% drop in December. Despite the upside surprise, the broader trend still pointed to lower inflation. Based on this, a 25bp policy rate cut in March was still expected. The NBP’s March macroeconomic projection was expected to show a better inflation path than the December projection. That could mean a terminal policy rate below 3.50%, a level policymakers have referenced in recent weeks. With January inflation at 2.2%—below the central bank’s target for the second straight month—we see a clear case for monetary easing. The data supports our view that disinflation is firmly in place, even if there are small monthly surprises. We expect the NBP to cut its key rate by 25 basis points at its meeting next month. Because of this, we prefer receive-fixed positions in Polish interest rate swaps, on the view that floating rates will fall. The 2-year Polish government bond yield has already dropped to 3.95% this month, suggesting the market is pricing in easing before the NBP’s formal decision. We take this as confirmation that markets agree on the direction of rates. We also expect the Polish zloty to weaken as its yield advantage fades. EUR/PLN has already risen from 4.31 to 4.34 in early February 2026, and we think it can move higher. We are buying EUR/PLN call options expiring in April to benefit from this expected depreciation. Easier financial conditions should also support Polish equities. In the past, the WIG20 index rose by more than 8% in the three months after the NBP’s last easing cycle began in late 2024. With GDP growth slowing to 2.9% in Q4 2025, we are buying WIG20 index futures in expectation that a rate cut will support the economy and lift share prices.

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Germany’s gas storage is about 25% full at the start of February. This is far below recent years. A gas shortage this winter is unlikely, unless cold weather lasts well into March. Suppliers can respond by importing more liquefied natural gas (LNG). This added flexibility helps meet demand when storage is low.

Longer Term Storage Risk

Even so, gas storage sites are expected to be less full in the coming years than they were in the past. This raises the risk of winter shortages and makes gas prices more volatile. Storage facilities are not expected to hit the 90% target before the next heating season. That means the starting point for next winter could be worse than this winter. If storage drops to critical levels, European suppliers may have to buy gas at much higher spot prices and/or limit consumption. Any limits would mainly affect industry, to protect household supply. German gas storage is now at a critically low 24.8%. That is well below the five-year average of about 50% for this time of year. This is unlikely to cause an immediate shortage in the final weeks of winter, but it creates a very weak starting point for summer refilling. The market may be too relaxed because the near-term risk looks manageable.

Positioning Further Out The Curve

Strong LNG imports have been the main buffer. European terminals ran at over 85% capacity through January to meet demand. But relying on flexible LNG also exposes Europe to global price competition and possible shipping disruptions. We expect this to make it hard to refill storage quickly or cheaply in the months ahead. The main opportunity is not in the spot market. It is further out on the curve, especially in contracts for Q4 2026 and Q1 2027. These contracts seem to price in too little risk that inventories will miss the official 90% target before the next heating season starts. We are acting on this by taking long positions in these later-dated futures. Because higher price swings are expected, buying call options on these winter contracts is also a sensible approach. This can capture upside if prices spike due to supply fears later this year, while keeping risk capped. A higher chance of shortages should also lift implied volatility, which helps options holders. We can look back to autumn 2025 for a clear example. The price rally then was driven by concerns about low storage going into winter. Today’s setup could lead to an even stronger version of that move later this year. Create your live VT Markets account and start trading now.

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EUR/USD traded near 1.1870 on Friday. It recovered some earlier losses and was almost unchanged on the day. The pair was still set for small weekly gains after softer US inflation data pressured the Dollar. US headline CPI rose 0.2% month on month in January. That was down from 0.3% in December and below expectations. Annual CPI slowed to 2.4% from 2.7%, also below the 2.5% forecast.

Us Inflation Data And Market Reaction

Core CPI (excluding food and energy) rose 0.3% month on month. That matched expectations and was up from 0.2%. The annual core rate slipped to 2.5% from 2.6%, in line with forecasts. After the data, the US Dollar gave back earlier gains and Treasury yields fell further. Markets also increased expectations for Federal Reserve rate cuts. The Dollar Index traded near 96.91, down from an intraday high of 97.15. Rate futures moved to about 61 basis points of cuts in 2026, up from around 58 basis points before the report. CME FedWatch showed about a 65% chance of a first cut in the June–July window. The European Central Bank was expected to keep rates unchanged through 2026. ECB policymaker Martins Kazaks said officials were watching euro strength. He noted that a “sizeable and pacey” rise could affect the inflation outlook and may trigger a response.

Strategy Implications For Eur Usd

US inflation is now showing signs of cooling, which supports a weaker dollar in the weeks ahead. The January CPI reading of 2.4% is a clear step down, especially after inflation stayed above 3.0% for much of 2025. This improves the case for positioning for a higher EUR/USD. One way to express this view is to buy EUR/USD call options. A lower-cost approach is a bull call spread—for example, buy the March 1.1900 call and sell the March 1.2050 call. This limits both risk and upside, and it can profit if EUR/USD rises moderately. Markets have also shifted quickly on Fed policy. They now price in more than two quarter-point cuts this year. That is a major change from late 2025, when traders were still unsure if there would be even one cut. The next non-farm payrolls report will be important. A weak jobs number below 150,000 would likely cement expectations for a mid-year cut. Still, we need to watch the ECB, which is increasingly uncomfortable with a stronger Euro. Policymakers may step up verbal warnings if EUR/USD approaches 1.2000. These comments could limit gains in the near term and create short-term pullbacks. In the past, policy gaps like this have produced strong trends—such as in 2014, when the ECB eased while the Fed tightened. That period also showed that sharp, headline-driven pullbacks can happen even in a clear trend. For that reason, dips in EUR/USD caused by ECB jawboning may be buying opportunities, not a reason to drop the bullish view. Create your live VT Markets account and start trading now.

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TD Securities strategists Ryan McKay and Daniel Ghali explain how Middle East tensions—and different outcomes involving Iran—could change oil pricing. Using 75 years of data on geopolitical risk premia, they lay out paths that range from extra supply (lower prices) to Brent rising above $100–$120/bbl if risk premia stay elevated. In a “New Deal,” successful US-Iran talks could ease sanctions and reroute commodity flows, which would likely push energy prices down. In a “Clean Break,” a quick intervention that leads to regime change could cause an initial jump, but risk premia could fade if energy infrastructure is not damaged. In “Unilateral Action,” Iran or Israel acts alone. That raises fears about the Strait of Hormuz or a broader war. TD Securities expects an initial $5–$10/bbl spike, similar to moves seen around the Twelve Day War. In an “Expanded US Conflict,” a wider US-Iran fight increases risks to the regime and raises the chance of a Strait of Hormuz disruption. Even if any disruption is brief, prices could spike by about +$15/bbl. “Domestic Action” that hits Iranian energy infrastructure could reduce supply and exports, with a roughly +$10/bbl spike. In “Regional escalation,” a wider conflict could threaten infrastructure outside Iran. That could add at least +$25/bbl and lift prices above $100–$120/bbl. After recent failed diplomacy in Geneva and skirmishes near the Strait of Hormuz, markets are pricing meaningful uncertainty. Brent is hovering near $88 per barrel. The CBOE Crude Oil Volatility Index (OVX) has climbed to 35, its highest since last fall. This backdrop calls for strategies that can handle a wide range of outcomes in the coming weeks. One possibility is a “New Deal” with Iran, which could bring a large amount of oil back to market quickly. To hedge this bearish outcome, buying out-of-the-money puts on April or May contracts could be a low-cost option. Based on tanker-tracking data from late 2025, we estimate Iran could raise exports by more than 1.5 million barrels per day within a quarter—enough to overwhelm current demand forecasts. On the other hand, the risk of “Unilateral Action” by Iran (or its proxies) and Israel remains high and could trigger a sudden spike. Long call spreads can be a sensible way to position for a $5 to $10 jump while limiting downside. This mirrors what happened in October 2025, when a temporary Red Sea disruption sparked a sharp but short-lived rally before fundamentals reasserted themselves. A more severe “Regional Escalation” that threatens energy infrastructure beyond Iran would likely create a major price shock and push Brent well above $100 per barrel. In that scenario, far out-of-the-money calls—such as $110 or $120 strikes—could act like a lottery-ticket trade with large upside. The latest EIA figures show nearly 21 million barrels of oil move through the Strait of Hormuz each day, so even a hint of a prolonged closure could exceed the supply shocks seen in 2022. Because the next major move could be up or down, trades that benefit from volatility itself may be appealing. A long straddle—buying a call and a put at the same strike—can profit from a big move in either direction. That fits the current environment, where the outcome could be either a supply surge from a new deal or a supply shock from a new conflict.

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The Pound has fallen against the US Dollar for a fourth straight day. It traded near 1.3600 on Friday after slipping from weekly highs above 1.3700. Softer risk appetite has helped the USD rebound. Trading volumes are still light ahead of the US Consumer Price Index (CPI) release. US headline CPI is expected to rise 0.3% in January. The annual rate is forecast to ease to 2.5% from 2.7% in December. Core CPI is seen falling to 2.5% year on year from 2.6% in December. GBP/USD is testing support near 1.3600. This level sits close to the lower edge of an ascending channel on the daily chart. That setup keeps the broader bias positive, even as near-term price action stays subdued. The 14-day Relative Strength Index is 51, down from overbought levels. A reading near 50 suggests range trading. A move above 60 would support more upside. We saw this same setup in February 2025. GBP/USD was testing 1.3600 while markets waited for US inflation data. Traders expected inflation to cool, which would have weakened the dollar. The call for inflation to fall to 2.5% was the main story at the time. What followed in 2025 showed how stubborn price pressures can be. US core inflation stayed much higher than expected and averaged 3.9% in the second half of the year. The Federal Reserve dropped plans for rate cuts and kept a hawkish tone into the autumn. The “stronger for longer” dollar theme later broke the chart support. At the same time, the UK economy struggled. GDP growth in 2025 came in at a weak 0.5%. The Bank of England also had to keep rates high to fight inflation. This gap in economic strength turned the early-2025 ascending channel into a bull trap. Support at 1.3600 gave way, and the pair fell sharply in the months that followed. Now, on February 13, 2026, a similar mix is appearing again. US non-farm payrolls showed a stronger-than-expected 215,000 jobs added in January. UK inflation just came in at 3.1%, still well above the Bank of England’s target. With that backdrop, derivatives traders may want to be careful around any Pound strength and consider buying GBP/USD puts to hedge against a repeat of last year’s slide.

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