2026 Weekly Update

Market update

The S&P 500 closed the week at 6,740.02, -2.02% lower. The Dow Jones closed at 47,501.55, -3.01%, with the Nasdaq lower by -1.24%. The volatility index VIX closed the week at 29.49, up from 19.86. The Euro Stoxx 600 fell -5.55%. 

The 10-year UST closed at 4.14%, up from 3.94% a week before. The yield curve is upward sloping with the yield spread between the 3-month and 10-year UST at 47bps. US Corporate Bond spreads: Investment Grade spreads widened +4bps at 87bps and High Yield spreads widened +14bps at 354bps. German 10-year Bunds yield closed at +2.86% up from +2.64% a week before. In Europe, Corporate Investment Grade spreads widened +2bps at 92bps and High Yield widened +5bps at 318bps. 

The US Dollar Index (DXY) appreciated +1.41% last week and closed at 98.99. The Euro closed at 1.1618 (-1.64%); the Yen depreciated -1.11%, closing at 157.78 and the Swiss Franc depreciated -0.87%, closing at 0.776. Gold closed at $5,171.74, depreciating -2.03%. Oil was higher, Brent closed at $92.69 (+27.88%) and WTI at $90.9 (+35.63%).

Macroeconomy

Jobs report

The Establishment Survey jobs report for February was very weak, showing a 92k decline in payrolls, far softer than the Street forecast of +55k. Private payrolls declined 86k, also much weaker than anticipated (analysts were modeling +60k). Investors were preparing for an upside report given labor-linked economic data earlier in the week (including ADP) were generally healthy. Establishment survey revisions were negative: employment in December and January combined is 69k lower than previously reported. Employment in health care decreased in February (-28k), reflecting strike activity. Employment in information continued to trend down in February (-11k). The industry had lost an average of 5,000 jobs per month over the prior 12 months. In February, federal government employment continued to decline (-10k). Since reaching a peak in October 2024, federal government employment is down by 330k, or 11%. According to the Household survey, the number of employed people fell by 185k during Feb while the number of unemployed people rose 203k. Hourly earnings ran a bit hot, including +0.4% m-o-m (vs. consensus at +0.3%) and +3.8% y-o-y (vs. consensus at +3.7%). The workweek was in line with the Street and flat m-o-m at 34.3 hours. The unemployment rate ticked up to 4.4%, up 10bps m-o-m and ahead of the Street forecast of 4.3%.

Oil and gas

Gulf oil producers supply 20% of the oil consumed in the world. Their exports are essentially transported by tanker through the Strait of Hormuz. The oil spare capacity is concentrated within OPEC and mostly in Gulf countries. Therefore, there is no alternative as the world needs Gulf oil. If a blockade of the Strait lasts for weeks, oil prices are expected to skyrocket. Gulf producers are already reducing their production as they are running out of storage capacity. In terms of exposure, Asian countries are the most exposed (89% of Gulf oil exports go there). Reopening the Strait, at least to 60%–80% of its normal flow, is expected to become one of the top priorities of the US. To achieve this, the administration needs to address two things: security and cost. Another victim of the war is gas. Qatar supplies 20% of the world’s liquified natural gas (LNG), transported by gas tankers through the Strait. Again, Asia is the most exposed: 65% of Qatari exports go to Asia, while only 7% go to the EU. Nevertheless, European gas prices jumped by 70% at the beginning of the week; since then, they have cooled to a 52% increase. However, these spikes still appear limited compared with the levels reached after Russia’s invasion of Ukraine. Central banks are likely to remain in a wait-and-see mode, but the risk is that they turn more hawkish if inflation expectations drift higher. Depending on the duration of the conflict, the Fed and the BoE may delay their next rate cuts, while some ECB officials may signal a tightening bias. Crucially, the risk of second-round effects on wage growth looks low, including in the US, where the labor market has loosened substantially since last year.

China targets

Chinese PM Li announced key economic targets for 2026, which are broadly in line, and two most important are GDP and fiscal. GDP growth target was set as a range between 4.5% and 5%, which is more flexible than last year’s “around 5%”. The Bloomberg consensus sat around 4.5%. Fiscal support is still decent, with stronger support in investment from higher share in government bonds and policy banks. On PMIs, China official PMIs moderated in January and February and suggest a weak start in growth momentum early this year, after a rebound in December last year, and demand moderated more than supply side. Unofficial PMIs sent conflicting signals which is not unusual.

UK spring statement

Chancellor Reeves delivered her spring statement this week, alongside the latest forecasts from the UK’s fiscal watchdog, the office for budget responsibility (OBR). Unlike last year, the event did not include any new significant measures from the government. The OBR’s latest projections show a modest improvement in the long-term fiscal outlook, with fiscal headroom against the target rising from £21.7bn to £23.6bn, from stronger public finances and lower-than-expected debt interest costs. The net debt to GDP ratio has also been revised slightly lower.

Highlights

Equities

This week saw a shift in market leadership. After a move away from tech and growth names earlier this year, the Nasdaq emerged as the best performer, up 0.2% this week. In contrast, markets that had led earlier in the year—Korea, Japan, and EM—experienced sharper pullbacks. At the sector level, early winners such as Industrials, Materials, and Consumer Staples also saw the most pronounced profit-taking. Overall, this reflects a broader de-risking of portfolios. The current correction remains modest. The recent drawdown in global equities (ACWI) stands at just 3% from the prior 6-month high—well below historical norms. Excluding the US, the correction is more pronounced at 6%, but still far from levels typically seen during periods of market stress. There is little evidence of panic in metrics such as the VIX index or the put/call ratio. The move has been a bit more pronounced in EMU implied volatility, which rose more but not to extreme levels. Overall, there is no sign of panic, but we can wonder whether markets are being resilient or too complacent. The correction in valuation has been limited so far, with most markets trading near the upper end of their 12-month P/E ranges. Japan has eased back slightly but remains above its median, while the rotation out of tech has left the sector trading below its 12-month median P/E. Emerging Markets stand out, with P/E ratios at the low end of their range as earnings expectations have been revised up more quickly than prices. The market entered this sell-off with a solid economic backdrop, which provides a cushion for equities. Also, analyst revisions remain net positive globally, with more upgrades than downgrades to analysts’ forecasts. In conclusion, while equity markets have shown some resilience this week, further volatility is likely until we see clear signs of de-escalation.

What to watch

• Monday: US New York Fed 1Y Inflation Expectations; Germany Industrial Production; Japan Cash Earnings; China CPI, PPI and New Loans; Taiwan Exports

• Tuesday: US NFIB Small Business Optimism & ADP Weekly Employment; Germany Exports; South Korean and Japan's Q4 GDP; China Exports

• Wednesday: US CPI, Hourly Earnings; South Korea's March Exports

• Thursday: US Initial Jobless Claims

• Friday: US PCE (Personal Consumption Expenditure), Q4 GDP, U. of Michigan Sentiment and JOLTs Job Data; UK January GDP; Indian Exports