A tenuous truce has taken hold after over a month of bombing in Iran, with Tehran claiming victory while its people fear a harsher regime crackdown. Meanwhile, a Finnish analyst criticized the US for not informing allies about the attack on Iran and European allies for rejecting aid requests.

An analysis explores how Donald Trump's hostility has inadvertently united Europeans, who are acknowledging a transatlantic divorce and the risk of NATO's fragmentation, even causing nationalists to distance themselves.

Reports indicate that former NATO chief Jens Stoltenberg considered engaging in talks with Russia, potentially excluding Eastern European allies from the discussions.

According to NATO's latest annual report, the share of defense investments from European allies and Canada has significantly increased since 2022, leading to a more equitable distribution of military spending within the alliance. This rebalancing reflects a greater commitment to collective defense.

Political allies of the MAGA movement in Europe have experienced a challenging week, with some analysts viewing these setbacks as a potential omen for future political trends.

European allies are exploring France's nuclear deterrence amid concerns about U.S. reliability, prompting Canada to consider whether to join or remain non-nuclear.

While European allies advocate for non-involvement in opening the Strait of Hormuz, the NATO Secretary General, a former Dutch Prime Minister, holds a differing view, suggesting a more active role.

During a visit, the Irish leader gently pushed back against Donald Trump's belittling remarks towards European allies, amidst broader discussions on international relations.

Bart De Wever, the Belgian Prime Minister, has faced criticism both domestically and from European allies after stating that relations with Russia need to be normalized.

European allies are reportedly riled by the United States' decision to loosen sanctions on Russian oil, a move that could impact the unified front against Russia and global energy markets.

French President Macron has revealed a new deterrence strategy involving eight European allies and France's nuclear capabilities.

France has proposed extending its nuclear deterrence to other European countries, a move that has drawn comments from former US ambassadors and is being discussed in the context of broader European security.

Marine Le Pen, leader of France's National Rally party, stated that European allies must purchase French military equipment if they wish to be protected by France's nuclear umbrella, calling the purchase of American F-35 jets contradictory.

Cyprus is strengthening its defense capabilities with support from France, Germany, and Britain, in addition to Greece, marking one of its largest operational movements in recent years.

EUROPEAN allies, accustomed to Donald Trump's provocative interventions, now face a new, perhaps even bigger problem: the risk of completely losing his attention.

Trump reportedly disappointed in U.K.'s hesitation on Iran campaign as European allies show mixed support for U.S.-Israel military operations against Tehran.

French President Emmanuel Macron announced that France could send aircraft with nuclear weapons to allied states and invited eight European countries to participate in military exercises with French troops for deterrence purposes.

French President Emmanuel Macron announced plans to enhance France's nuclear arsenal and extend its deterrence capabilities to eight European allies, while maintaining Paris's sole decision-making power.

Spain has declined to provide military support for a US attack on Iran, distancing itself from other European allies and leading to the withdrawal of US tanker planes from a Spanish air base.

The head of Polish diplomacy admitted that Warsaw and European allies had certain information before the US and Israeli attacks on Iran. However, he refuses to disclose details.

4 Ukrainian defense companies sign partnership deals with European allies valued at nearly $950 million  The Kyiv Independent

Rubio’s speech to European allies takes a softer tone but sticks to Trump’s firm stance  AP News

Aleksei Kolosovsky, a 42-year-old former taxi driver, is reportedly central to the Kremlin's escalating sabotage campaign targeting European allies of Ukraine.

The US government is reportedly planning to launch a website, freedom.gov, to display content banned by foreign governments, including alleged hate speech and terrorist propaganda. This initiative, led by Undersecretary Sarah Rogers, could strain relations with European allies and be perceived as an attempt to undermine national laws, despite past US efforts to promote free information access globally.

California Governor Gavin Newsom has appealed to US allies in Europe, encouraging them to perceive a potential future Trump presidency as a temporary phase.

The UK and its European allies are reportedly exploring options to seize ships belonging to Russia's 'shadow fleet' as part of ongoing measures.

NATO is reportedly grappling with an unprecedented crisis of confidence, with General Mandon suggesting that Europeans can no longer fully trust the United States' commitment to their security.

European allies are reportedly losing hope of maintaining America's commitment to NATO, following strong remarks from Donald Trump, including a social media post calling allies 'COWARDS'.

An article delves into how European allies of the US may have sought 'revenge' for America's refusal to support them during the 1956 Suez Crisis, when Washington declined involvement and backed a UN resolution condemning the invasion.

Former President Donald Trump's strategic objective behind Ukraine peace negotiations is reportedly to counter China, aiming for a 'different balance of power' despite his often critical stance towards European allies and Ukrainian President Zelensky.

A US Defense Secretary (likely misattributed to Pit Hegset, a Fox News personality) stated that the world, Middle East, and European allies should thank Trump for the Iran war not escalating like previous conflicts.

Russia's special representative for investment and economic cooperation with foreign countries has stated that the United States should impose sanctions on its European allies for refusing to assist in a war against Iran, and lift sanctions on Russia.

Danish shipping companies express skepticism about Donald Trump's proposal for military escorts in the Strait of Hormuz, doubting its effectiveness given Iran's closure of the waterway, as European allies continue to reject immediate military action.

Britain and Ukraine will agree a military-industrial partnership to develop and export drone technology during a visit to London by President Volodymyr Zelenskiy on Tuesday, as European leaders push…

A report summarizes key developments in US-China relations, touching on the Iran war, Trump's trade plans, and advancements in AI, highlighting Trump's recent comments on European allies and China.

Estonian Prime Minister Kaja Kallas has accused the United States of attempting to 'drive a wedge' between European allies on issues such as trade and relations with China, stating that the US wants to divide Europe.

Indian refiners have purchased 30 million barrels of Russian oil following a US waiver, to address supply disruptions amid the ongoing conflict in West Asia.

Germany announced it has no intention of sending additional military support to the Middle East, following European allies' plans to move forces to the eastern Mediterranean after a drone attack on a British airbase.

Differences among European allies over the war in Iran are focusing attention on the network of American military bases located across the continent, as Washington presses partners to allow their use…

The Cypriot government suspects the Iran-backed group Hezbollah in Lebanon targeted the UK's RAF Akrotiri base in Cyprus.

European allies are doing everything possible to support the United States and Israel in their operation against Iran without directly taking part in the fighting, but support for Ukraine in its defensive war against Russia must remain a priority.

France plans to enhance its nuclear arsenal and integrate European allies into its deterrence strategy.

NATO Secretary General Mark Rutte praises President Trump for eliminating Khamenei and degrading Iran's capabilities as he claims European allies are supporting the effort.

French President Emmanuel Macron announced plans to strengthen France's nuclear arsenal and offer its nuclear deterrence to eight European allies, while maintaining sole decision-making authority.

The attack on Iran presents Europe with a new test in already-strained ties with the U.S., as appeals for restraint clash with Trump’s assertion that force will succeed.

The UK's military spending is expected to account for a smaller share of its GDP by 2027-28, a trend that contrasts with the rearmament efforts of many European allies.

Former UK Prime Minister Boris Johnson urged London and European allies to immediately send non-combat troops to Ukraine, believing it would send a clear signal to the Kremlin about Western support for Ukraine's independence.

Antonia Pup, an assistant professor at Georgetown University, expressed concern that the meeting between Nicușor Dan and Donald Trump in Washington might be merely a courtesy visit, hoping Dan consulted European allies beforehand.

Futures, Global Markets Rise With US Markets Closed For President's Day Stocks gained, bitcoin tumbled and bonds steadied after Friday's cool CPI data reinforced expectations that the Fed will cut interest rates on multiple occasions this year. With US markets closed for the Presidents’ Day holiday and mainland China’s markets closed for Lunar New Year holidays, trading was muted on Monday. As of 9:00am ET, futures on the S&P 500 added 0.4% and Europe’s Stoxx 600 index rose 0.4% as banking shares rebounded from a sharp decline last week. German bunds and Treasury futures were steady after US yields touched the lowest since December on Friday. The path of US interest rates remains in focus following Friday’s slower-than-expected US inflation print as traders fully price a Fed cut in July and the strong chance of a move in June.   “The backdrop for equities is positive post CPI,” said Andrea Gabellone, head of global equities at KBC Securities. At the same time, there could be “more dispersion ahead as sentiment around key AI-exposed sectors is still very critical,” he added.  That sentiment was echoed by other strategists seeking to distinguish between AI losers and winners. A JPMorgan Chase & Co. team led by Mislav Matejka urged caution on stocks at risk of AI-driven “cannibalization,” including software, business services and media companies. Meanwhile, banks are developing baskets to capitalize on the divergence: as we first reported last Thursday, Goldman launched a new basket of software stocks that goes long firms that will benefit from AI adoption, while shorting the companies whose workflows could be replaced. With AI disruption rippling through markets, a lot will come down to earnings resilience, in particular in the US.  “When you look at the current earnings season, the companies are showing 13% of growth,” Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan, told Bloomberg TV. “Overall, this is the reason why we continue to be positive on the S&P.” Later this week, traders will be watching for ADP private payrolls numbers on Tuesday and the minutes from the Fed’s January meeting on Wednesday for a fresh read on the economy. European stocks gained with bank shares rebounding, after posting their biggest weekly decline since April on worries about disruption from artificial intelligence. The basic resources sector lags, with Norsk Hydro among Europe’s worst performers as both Goldman Sachs and RBC downgrade the stock. Stoxx 600 rises 0.4% to 620.26 with 253 members down, 336 up, and 11 unchanged. Here are some of the biggest movers on Monday:  NatWest shares rise as much as 4%, the most since October, as Citi analyst Andrew Coombs raises his price target on the UK bank to a Street-high. Seraphim Space shares rise as much as 9.2%, briefly hitting a new all-time high, after the space tech investment firm said the valuations of its four largest holdings increased over the final months of 2025. AECI shares rally as much as 6.1%, the most since July, after the South African commercial-explosives maker shared improved 2025 headline earnings per share guidance. Orsted shares rise as much as 3.8% after analysts at Kepler raise the recommendation to buy from hold over the Danish renewable energy firm’s outlook, despite ongoing uncertainty for the industry in the US. Norsk Hydro shares fall as much as 4.4%, extending Friday’s 5.9% earnings-triggered drop, after being downgraded at Goldman Sachs and RBC over disappointments and pricing pressures in the Norwegian aluminum company’s downstream business. Galderma shares slip as much as 2.2% after naming Luigi La Corte as its new chief financial officer following the news back in July that Thomas Dittrich was departing. Pinewood Technologies shares tumble as much as 32%, the most since April 2024, after Apax Partners said on Friday it will not proceed with a possible cash offer for the car dealership software provider. FlatexDEGIRO shares drop as much as 7.2% after BNP Paribas downgraded the online brokerage firm to neutral from outperform, saying the price reflects too much optimism about its market position in Germany. Maurel & Prom shares slump as much as 12%, pulling back after ending last week at a 2015-high, after announcing it is not currently authorized to resume oil and gas operations in Venezuela. Barratt Redrow shares fall as much as 3.7%, leading a drop in British homebuilders after Rightmove said house prices are stalling. Asian stocks slipped for a second day, led by declines in Japan as traders booked profits after last week’s post-election rally. Several markets were closed or held shortened trading sessions for the Lunar New Year holiday. The MSCI Asia Pacific Index was down 0.1%. Japan’s Topix Index fell 0.8%, with Mizuho Financial Group Inc. and Toyota Motor Corp. among the companies contributing to the index’s losses.In Hong Kong, AI model developer Minimax Group Inc. surged as much as 30% to more than four times its original listing price, while competitor Knowledge Atlas JSC Ltd. ended 4.7% higher. The market will be closed until Thursday. As investors across the region begin to reevaluate their bets on its artificial-intelligence-driven rally, traders in Japan cashed in gains driven by expectations of Prime Minister Sanae Takaichi’s proactive spending policies last week.Trading in Singapore ended early Monday and will be shut until Wednesday. Equity markets in mainland China, South Korea, Indonesia and Vietnam were closed.  In FX, the yen is the notable mover in currencies, weakening 0.5% against the dollar and pushing USD/JPY back above 153. The offshore yuan is one of the better performers against the greenback. The Bloomberg Dollar Spot Index rises 0.1%. There is no cash trading in Treasuries due to the Presidents’ Day holiday. European government bonds are little changed In commdities, gold dipped below $5,000 an ounce, as traders booked profits from a gain in the previous session. Bitcoin tried anf ailed to stage a modest rebound; it last traded around $68,275 after posting its fourth consecutive weekly loss, with the cryptocurrency struggling to find clear direction as a weekend rally fizzled once the momentum ignition algos emerged.  WTI crude futures tread water near $62.90 a barrel.  Top Headlines President Trump said there will be voter ID rules in the mid-term elections this year, whether Congress approves it or not, and they will present a legal argument in an Executive Order. Furthermore, Trump said he has searched the depths of legal arguments not yet articulated nor vetted on this subject, and they will be presenting an irrefutable one in the very near future. Iran says potential energy, mining and aircraft deals on table in talks with US: RTRS Pentagon threatened to cut its ties with Anthropic over the company’s insistence that some limitations are kept on how the military uses its AI models: RTRS UK eyes rapid ban on social media for under 16s, curbs to AI chatbots: RTRS Rampant AI Demand for Memory Is Fueling a Growing Chip Crisis: BBG Warner Bros. Weighs Reopening Sale Negotiations With Paramount: BBG Companies Are Replacing CEOs in Record Numbers—and They’re Getting Younger: WSJ Europe aims to rely less on US defence after Trump's Greenland push: RTRS DOJ Tells Lawmakers Epstein File Redactions Complied With LawL BBG For College Applicants, Pressure to Make Summers Count Has Gotten Even Worse: WSJ Fed's Goolsbee (2027 voter) said on Friday that they are still seeing pretty high services inflation, and he hopes they have seen the peak impact of tariffs, while he added that the job market has been steady, with only modest cooling.  The Break Is Over. Companies Are Jacking Up Prices Again: WSJ Trade/Tariffs USTR Greer said the US and Ecuador expect to sign a trade agreement in the coming weeks. China will waive import value-added taxes on selected seeds, genetic resources, and police dogs through to 2030 to increase agricultural competitiveness and breeding capacity. It was also reported that China will grant zero-tariff access to 53 African nations from May 1st, according to Bloomberg. Chinese Foreign Minister Wang Yi told his French and German counterparts that China and the EU are partners, not rivals, while he added that China and the EU should manage differences, deepen practical cooperation and work together on global challenges. A more detailed look at global markets courtesy of Newsquawk APAC stocks began the week in the green but with gains limited following a lack of major fresh catalysts from over the weekend and amid thinned conditions owing to holiday closures in the region and North America. ASX 200 traded marginally higher with upside led by tech, although gains are capped by underperformance in the utilities, mining, materials and resources sectors, while participants also digested a slew of earnings releases. Nikkei 225 traded indecisively with the index constrained by disappointing Japanese preliminary Q4 GDP data, which showed the economy returned to growth but failed to meet expectations with GDP Q/Q at 0.1% (exp. 0.4%), and annualised GDP at 0.2% (exp. 1.6%). Hang Seng finished higher in a shortened trading session on Chinese New Year's Eve but with upside limited by tech weakness amid some confusion after the Pentagon added several companies including Baidu, Cosco, BYD, Huawei, Nio, SMIC, Tencent, and more to a list of Chinese firms aiding the military on Friday, but then withdrew the updated list shortly after it was posted. Furthermore, price action was also restricted by the closure of mainland markets and the absence of stock connect flows, which will remain shut for more than a week. US equity futures kept afloat in quiet trade amid the absence of drivers and participants. European equity futures indicate a mildly positive cash market open with Euro Stoxx 50 futures up 0.1% after the cash market closed with losses of 0.4% on Friday. Asian Headlines Chinese President Xi called for the anchoring of economic growth around domestic demand as its main driver, in a speech during a key policy meeting late last year that was released on Sunday. China is to establish a permanent financial support framework to promote rural revitalisation and prevent a slide back into poverty, which represents a shift from transitional aid to long-term support. China’s market regulator summoned major online platform companies on Friday, including Alibaba, Douyin and Meituan, while it directed them to comply with laws and regulations, and rein in promotional practices, according to Bloomberg. US Secretary of State Rubio and Japanese Foreign Minister Motegi reaffirmed their commitment to deepen bilateral ties. Disney (DIS) sent a ‘cease and desist’ letter to ByteDance over Seedance 2.0 and alleged that ByteDance has been infringing on its IP to train and develop an AI video generation model without compensation, according to Axios. It was later reported that ByteDance said it would curb its AI video app following Disney's legal threats, according to the BBC. RBI tightened rules for loans provided to brokers and proprietary firms in an effort to reduce market speculation FX DXY eked slight gains in rangebound trade after a lack of major catalysts and with US participants away on Monday. EUR/USD was little changed amid the absence of any major macro catalysts and with light newsflow from the bloc, while comments from ECB President Lagarde and news that the ECB is to make its repo backstop available to other central banks across the world, did little to spur price action. GBP/USD held on to most of Friday's spoils but with price action contained by resistance around 1.3650 and following comments from BoE's Mann that the UK economy is sluggish and tepid, with consumers spending less due to being scarred by high inflation. USD/JPY edged higher and returned to above the 153.00 level in the aftermath of the weaker-than-expected preliminary Q4 GDP data for Japan. Antipodeans were mixed with little fresh macro drivers and a lack of tier-1 data from either side of the Tasman. Fixed Income 10yr UST futures traded little changed and held on to last week's spoils after returning above the 113.00 level in the aftermath of the softer US inflation data, while price action was contained to start the week by the closure of US cash markets for Washington's Birthday. Bund futures lacked demand in the absence of any major catalysts and with light newsflow from the bloc. 10yr JGB futures were marginally higher following disappointing preliminary GDP data for Q4, but with gains limited after failing to sustain a brief reclaim of the 132.00 level. Commodities Crude futures were rangebound amid light energy-specific newsflow from over the weekend and after last Friday's indecisive performance, where attention was on a source report that noted OPEC+ is leaning towards resuming oil output hikes from April, but with no decision made. Slovak PM Fico said he has information that the Druzhba pipeline has been fixed after damage in Ukraine, although he believes that supplies to Hungary and Slovakia have become a part of political blackmail. Spot gold took a breather after edging higher in the aftermath of the recent softer-than-expected US inflation data, with price action also contained by the holiday closures across Asia and North America. Copper futures were subdued, with their largest buyer away for more than a week due to the Chinese New Year/Spring Festival holiday. Texas venture-backed startup Hertha Metal vowed mass production of steel with 25% cost savings, which could reduce US reliance on imports. Geopolitics: Middle East US military is preparing for potential operations against Iran that could last for weeks if US President Trump orders an attack and the US fully expects Iran to retaliate, according to sources cited by Reuters. US President Trump told Israeli PM Netanyahu during a meeting in December that he would support Israel striking Iran’s ballistic missile program if the US and Iran are not able to reach a deal, according to CBS. Iran confirmed that indirect talks between the US and Iran will resume in Geneva on Tuesday under the mediation of Oman, while Iranian Foreign Minister Araghchi left for Geneva on Sunday. Iranian diplomat said Iran is open to nuclear deal compromises if the US discusses lifting sanctions, while it was also reported that Iran said potential energy, mining and aircraft deals are on the table in talks with the US. Israel’s cabinet approved the proposal to register West Bank lands as ‘state property’, while Palestinians condemned the ‘de facto annexation’ which Peace Now said likely amounts to a ‘mega land grab’. Geopolitics: Ukraine US President Trump said on Friday that Ukrainian President Zelensky is going to have to get moving and that Russia wants to get a deal. US Secretary of State Rubio said they don’t know if Russia is serious about finding an end to the war in Ukraine and will continue to test it, while it was reported that he met with Ukrainian President Zelensky on security and deepening defence and economic partnerships. Ukrainian drones targeted Russia’s Taman seaport and fuel tanks in the Black Sea region. UK and European allies were reported on Friday to be weighing seizing Russian shadow fleet ships and tightening curbs on Russia's economy. French Foreign Minister Barrot said some G7 nations have expressed a willingness to proceed with a maritime services ban on Russian oil, which they hope to include in the 20th sanctions package that they are actively preparing. Geopolitics: Other European Commission President von der Leyen said that they face the very distinct threat of outside forces trying to weaken their union, while she added that mutual defence is not an optional task for the European Union; it is an obligation within their own treaty, and it is their collective commitment to stand by each other in case of aggression. Pentagon said the US military struck an alleged drug cartel boat in the Caribbean, which killed three people. DB's Jim Reid concludes the overnigt wrap I hope you all had a good weekend. To stay in Winter Olympics mood the family watched "Cool Runnings" last night. I haven't seen it for 32 years. Please don't tell anyone but I had a few tears in my eyes at the end. I blamed it on the hay fever that has now started. There will be a lot of tears out there in markets for other reasons at the moment. Just two weeks ago, the idea of AI-driven disruption still felt like an abstract, almost academic thought experiment—something we could safely revisit once we had clearer evidence of how AI would be deployed and integrated across the economy. Fast forward 14 days, and markets have wiped out well over a trillion dollars of global equity value on the fear that AI could fundamentally reshape business models and compress profitability across a wide range of industries, including software, legal services, IT consulting, wealth management, logistics, insurance, real estate brokerage and commercial real estate. Some of the sell off in “old economy” sectors feels overdone to me. But as I argued in our 2026 World Outlook back in November, the real challenge is that even by the end of this year we still won’t have enough evidence to identify the structural winners and losers with confidence. That leaves plenty of room for investors’ imaginations—both optimistic and pessimistic—to run wild. As such big sentiment swings will continue to be the order of the day. My instinct is that the reaction in things like commercial real estate, for example, has been particularly exaggerated. Markets seem to be extrapolating a scenario in which vast numbers of white collar workers are made redundant almost overnight, leading to a dramatic collapse in office demand. If that view turns out to be correct, we’ll be facing societal challenges far larger than anything currently being priced into equities. While trying to catch a falling knife may be too risky for many, beginning to cushion the descent could be sensible in many old economy sectors. Markets can’t sustain a disruption narrative across multiple sectors for months or quarters without concrete evidence — and that evidence is likely to take much longer to emerge. Fascinating times. As for this week, today is a US holiday but inflation will remain in the spotlight at a global level after Friday's slightly softer US CPI which helped contribute to a decent rates rally to end the week. Prints are due in the US (PCE - Friday), the UK (Wednesday), Canada (Tuesday) and Japan (Friday). Other economic highlights will include the FOMC minutes (Wednesday), Q4 GDP in the US (Friday), as well as the global flash PMIs (Friday). Earnings reports will feature Walmart (Thursday), Nestlé (Thursday) and BHP (today). It's the earnings calm before next week's Nvidia storm. In the US, this holiday shortened week (President's Day today) features a data calendar dominated by releases that were pushed back by last year’s government shutdown. The most consequential updates will land on Friday, when the advance estimate of Q4 GDP arrives alongside December’s personal income and consumption figures—key inputs for shaping expectations for the early part of this year. For markets assessing the underlying pulse of demand heading into 2026, private final sales to domestic purchasers (PFDP) will carry more weight than the headline GDP print. This indicator—closely monitored by Fed Chair Powell—is expected by our economists to slow to 2.0% from 2.9% in Q3, though risks appear tilted upward. One swing factor: Wednesday’s durable goods report, where modest gains outside of transportation could soften the deceleration. On the consumer front, real PCE growth is expected to cool to 2.5% after two quarters of outsized strength but should still signal ample momentum heading into the new year. Friday’s income and spending report will also offer the latest reading on core PCE, the Fed’s preferred inflation gauge. Our economists expect another 0.4% monthly increase for December, lifting the year over year rate to 2.9%. Updated seasonal factors from last week’s CPI release suggest some mild downward pressure on inflation trends in the second half of 2025. Still, January’s CPI data, although softer than we anticipated, do not translate into equivalent relief for core PCE—in fact, our team currently sees another 0.4% gain for January's release (delayed until March 13th). Depending on the strength of medical services, airfare, and portfolio management components in the upcoming PPI report, a 0.5% monthly rise cannot be ruled out, which would push the year over year rate toward 3.1%. So don't get too excited about the softer CPI last week and the huge rates rally. Additional releases this week will help clarify whether recent severe winter weather has disrupted factory sector activity. January industrial production, due Wednesday, should benefit from a jump in utility output, while weather effects may weigh on the Empire State Survey tomorrow and the Philadelphia Fed survey on Thursday. Labor market data will also be in focus, particularly Thursday’s jobless claims, which line up with the survey week for the February employment report. As our economists have pointed out, private nonfarm job gains have averaged 103k over the past three months, slightly above the pace at this point in 2025 and matching the start of 2024. See their latest US employment chartbook here. This week will also feature a dense lineup of Federal Reserve speakers which you can see alongside all the key global data in the day-by-day week ahead calendar at the end as usual. Moving away from the US, inflation will also be in focus in Japan (Friday) and Canada (tomorrow). For the former, our Chief Japan Economist sees the January nationwide CPI showing a slowdown in both core CPI inflation ex. fresh food to 2.1% YoY (+2.4% in December) and core-core CPI inflation ex. fresh food and energy to 2.7% (+2.9%). Also important will be the global flash PMIs due on Friday as a health check on global growth. In Europe, the spotlight will be on UK inflation (Wednesday), with labour market data due tomorrow and retail sales on Friday. Our UK economist expects headline CPI inflation to drop to 3.0% YoY (3.4% in December) and core CPI also landing at 3.0% YoY (3.2% YoY). See more in his full preview here. In terms of key rate decisions, the RBNZ are expected to remain on hold on Wednesday. Finally, the Munich Security Conference wrapped up over the weekend, where key topics included Ukraine, Russia, and the fate of Greenland. And while US Secretary of State Marco Rubio’s speech was nothing like Vice President JD Vance’s at last year’s conference, which triggered a “wake-up” call for European leaders, Rubio reiterated the administration’s view that Europe needed to leave behind its focus on energy policies, trade and mass migration. Recapping last week now, the tech volatility that has dogged markets since the start of the month broadened into a far more indiscriminate sell-off. The trough came on Thursday, marked by a sharp drop in software stocks, but the weakness extended well beyond tech. Companies across wealth management, real estate and financials suffered double digit declines, underscoring how widespread the pullback has become. Market breadth confirmed this shift as the equal weighted S&P 500 fell -1.37% on Thursday, though it managed to finish the week up +0.29% (+1.04% on Friday). Ultimately, the sell-off left the major US indices on the back foot: the S&P 500 slipped -1.39% (+0.05% on Friday), the Nasdaq lost -2.10% (-0.22% on Friday), and the Magnificent 7 slid -3.24% (-1.11% on Friday). Although the AI scare dominated sentiment, a heavy slate of US data also shaped the market narrative. Early in the week, softer prints—including flat December retail sales, a dovish Q4 Employment Cost Index, and slower Q4 growth expectations from the Atlanta Fed—pushed Treasury yields lower across the curve. That picture shifted midweek after a stronger than expected January jobs report, which delivered the largest gain in nonfarm payrolls (+130k vs. +65k expected) since December 2024 and reinforced confidence that the US economy carried solid momentum into 2026. Then on Friday, January CPI came in below expectations, adding another dovish note. Although the data offered mixed signals at times, the overall takeaway was sufficiently dovish for traders to increase the number of expected rate cuts by December 2026 to 63.4bps (+7.7bps on the week). This helped drive the largest weekly drop in the 10 year Treasury yield since August 2025, down -15.8bps (-5.0bps on Friday) to 4.05%. The 2 year yield also moved sharply lower, falling -8.9bps to 3.41% (-4.8bps on Friday), its lowest level since 2022. European markets, meanwhile, delivered a comparatively resilient performance. The STOXX 600 (+0.09%, -0.13% Friday), DAX (+0.78%, +0.25% Friday) and FTSE 100 (+0.74%, +0.42% Friday) all posted modest gains for the week. European sovereign bonds rallied as well, with the 10 year bund yield dropping -8.7bps—its steepest weekly decline since April 2025. That move was outpaced by gilts, which fell -9.8bps (-3.6bps on Friday) despite a sharp early week sell-off triggered by renewed questions surrounding Prime Minister Keir Starmer’s position. Elsewhere, performance was mixed. Brent crude edged down -0.44% (+0.34% on Friday), while gold extended its upward run, rising +1.56% (+2.43% on Friday). Will London’s half term week finally give us a quiet week in 2026? You’d probably have to guess at ‘unlikely’. Tyler Durden Mon, 02/16/2026 - 09:40

Labour leader Keir Starmer argues that recent tensions involving Iran serve as a warning for Britain to build greater resilience in its energy, defence, and social policies, both domestically and with European allies.

NATO chief says some European allies were tested and failed in Iran war  Reuters

Today, many in Europe recognize the threat of Iran, but were not willing to launch a sudden offensive operation against it without due consultation and giving diplomacy a chance.

War Secretary Pete Hegseth has again stated that President Trump will ultimately decide on the United States' commitment to NATO's collective defense under Article 5, citing a perceived lack of support from European allies and emphasizing the alliance's foundational principle.

NATO Secretary General Mark Rutte confirmed that the United States is continuing to provide Ukraine with essential intelligence and weapons, channeled through its European partners.

Canada, Japan, and European allies have expressed willingness to use 'appropriate efforts' to reopen the Strait of Hormuz, emphasizing its importance for global trade.

When Trump asked for help opening the Strait of Hormuz, he was rebuffed by European allies

Former Romanian President Traian Băsescu criticized US President Donald Trump's statements about NATO, noting that Trump requested support from European allies in the Middle East without consulting major European states.

Fresh hostilities have emerged between the US president and European allies, who have rejected his calls for help with his war in Iran, before a high-profile meeting where the Taoiseach will press…

The war in Iran, which is deeply unpopular in Europe, has put Trump’s closest European allies, a constellation of right-wing and populist leaders, on the defensive.

French President Emmanuel Macron has announced a significant shift in the country's nuclear policy, stating France will increase its nuclear weapons and offer closer cooperation with European allies to bolster continental security.

A French frigate has been deployed off the coast of Cyprus, with the French general staff stating their commitment to supporting Cyprus in coordination with European allies following an attack on the island.

Far-right leader Marine Le Pen stated that France's European allies should purchase French equipment if they wish to benefit from Paris's nuclear deterrence force, while refraining from commenting on Macron's policy.

Britain, France, and Greece are deploying air-defence forces to Cyprus following a drone strike on the Royal Air Force Akrotiri base, prompting a broader regional military response from European allies.

In the wake of the U.S. bombing of Iran and its dismissal of European allies, an anxious continent’s best chance at security runs through its largest economy.

French President Emmanuel Macron has ordered an increase in France’s nuclear warheads and outlined plans to involve European allies more closely in the country’s deterrence strategy, speaking from the Île Longue naval base.

French President Emmanuel Macron announced plans to expand France’s nuclear arsenal and could deploy nuclear-armed aircraft to allied nations like Germany and Poland.

France has announced plans to enhance its nuclear arsenal and integrate European allies into its deterrence strategy, as reported by Reuters.

NATO Secretary General Mark Rutte encouraged European allies to focus on meeting their commitments for higher defense spending, rather than questioning Washington's role in the alliance.

Secretary of State Marco Rubio delivered a speech at the Munich Security Conference in Germany amid growing tensions between the U.S. and its European allies.

After four years of war, Ukraine can only count on Europe for military support, as the Trump Administration is set to end bilateral US assistance in 2025, shifting the responsibility to European allies.

As part of FRANCE 24’s and Talking Europe’s coverage of the fourth anniversary of the war in Ukraine, we host veteran diplomat Vsevolod Chentsov, Ukraine’s ambassador to the European Union. He highlights the critical assistance the EU is providing for the country’s military, budgetary, and energy needs, saying that the solidarity shown by Ukraine’s European allies "cannot be underestimated".

Senator Marco Rubio has described the United States, as the 'child of Europe,' as a critical friend to its allies, emphasizing the US role in international relations.

At the Munich Security Conference, Senator Marco Rubio outlined former President Trump's expectations for European allies, emphasizing their need to increase defense spending and shoulder more responsibility.