Week Ahead: SCOTUS Decision On Tariffs? 8 Fed Officials Speak As The Market Discounts Almost 65 Bp Of Cuts This Year

2026-02-15 03:20:00 ET

Last week began with the LDP's stunning victory in Japan. However, rather than sell-off as the market expected, the yen and JGBs rallied. It appears that the yen's use as a levered funding leg for carry trades had already been adjusted. At the start of the week, reports circulated that Chinese officials were encouraging local financial institutions to de-risk from US Treasuries. Yet despite it and the better-than-expected January US employment data, the 10-year Treasury yield fell nearly 15 bp last week, the most in five months. The yield slipped below 4.05% ahead of the weekend, the lowest in more than two months. The greenback fell against the G10 currencies last week, but consolidation seemed to be the main feature. At the end of the week, the futures market discounted nearly 65 bp of Fed cuts this year, up from almost 56 bp at the end of the previous week. This is to say, the derivatives market is discounting two Fed cuts fully and about a 60% chance of a third....

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