Global Economy Briefing — March 10, 2026

Germany’s factory orders delivered the day’s sharpest European shock, falling 11.1% month-on-month in January — the steepest decline since January 2024 and more than double the −4.2% consensus forecast. The headline figure was heavily distorted by a 39.4% collapse in fabricated metals orders, which reversed a 29.7% surge in December when large-scale contracts inflated the base. Excluding those lumpy orders, the underlying fall was a far more modest −0.4%, offering some reassurance that Germany’s order pipeline has not structurally deteriorated.

Industrial production compounded the gloom, declining 0.5% MoM in January against a 1.0% consensus gain. Metal products output slid 12.4%, dragging the broader manufacturing index below expectations for a second consecutive data point. Consequently, Germany’s economy ministry issued a blunt warning that the risk of an industrial setback had increased materially given the Iran war, which is not yet captured in January’s figures. Analysts at Hauck Aufhaeuser Lampe noted that fuller order books have “not yet ignited production,” suggesting the transmission lag may extend further into Q1.

The Eurozone Sentix Investor Confidence reading for March came in at −3.1, in line with consensus but representing a dramatic reversal from February’s 4.2 reading — the largest one-month swing in recent data. This sharp deterioration reflects the outbreak of the Iran conflict and the oil shock that has swept energy assumptions sharply higher across the eurozone. Furthermore, the Eurogroup convened in Brussels on Monday, with energy security and war-contingency fiscal measures expected to dominate the agenda.

French Treasury bill auctions cleared at elevated rates, with the 12-month BTF printing 2.339% versus 2.097% prior and the 6-month at 2.217% versus 2.065%, reflecting a modest repricing of short-term sovereign risk. ECB board member Frank Elderson also spoke during the session, though his remarks were limited to supervisory matters rather than monetary policy guidance. Markets are increasingly pricing in a more cautious ECB posture, given that oil-driven inflation may complicate any further easing this cycle.

Verdict

Germany’s double miss on orders and production is a soft-landing threat for the Eurozone’s largest economy, though the large-order distortion limits the panic. The Sentix collapse confirms that business confidence has cracked on war risk. Watch for ECB communication to shift cautiously hawkish given energy inflation.

Wall Street executed one of 2026’s most dramatic single-session reversals on Monday. The Dow fell as many as 900 points at the open as oil surged past $101 per barrel and WTI briefly touched $119 overnight — its highest since mid-2022. However, after President Trump told reporters that the Iran war was “very complete, pretty much” and signalled Strait of Hormuz reopening, crude began retreating sharply, dragging the risk-off sentiment with it. By the close, the S&P 500 had gained 0.83% to 6,795.99, the Dow rose 0.50% to 47,740.80, and the Nasdaq surged 1.38% to 22,695.95.

The Conference Board’s Employment Trends Index ticked up to 105.37 in February from 105.18, offering a mild counterpoint to Friday’s devastating −92,000 nonfarm payroll print. Consumer inflation expectations for February held at 3.0%, easing slightly from 3.1% prior and coming in below where some feared — a constructive signal for the Fed amid escalating energy costs. Furthermore, short-term bill auctions cleared near unchanged levels, with the 3-month at 3.605% and the 6-month at 3.535%, indicating no stress in the Treasury funding market.

The 10-year Treasury yield swung sharply during the session, briefly touching 4.22% intraday before settling back near 4.13–4.15%, as oil’s retreat alleviated some of the stagflation premium. Semiconductor stocks provided the strongest tailwind, with Broadcom and AMD each surging more than 4.6%, while the energy sector faded as crude reversed. Cruise line stocks bore the brunt of early selling — Carnival fell more than 6% and Norwegian dropped nearly 5%, both deep in correction territory for March.

Looking ahead, investors are focused on Wednesday’s February CPI report and Friday’s PCE price index — the week’s dominant macro catalysts. A 10-year Treasury note auction on Wednesday will also test demand for US debt amid elevated inflation fears. Consequently, the Fed’s rate-cut trajectory remains under scrutiny, with markets now pricing just one 25-basis-point reduction in 2026, likely in September, down from two cuts expected before the conflict began.

Verdict

The peace signal from Trump delivered a tactical rally, but the macro damage from Friday’s payroll miss and surging oil is not erased. Stable inflation expectations and a calm bill market provide breathing room, but CPI on Wednesday will be pivotal. One Fed cut in 2026 is now the base case.

Japan delivered the session’s most unambiguous positive surprise, with Q4 GDP printing +1.3% annualised — crushing the +0.2% consensus and sharply reversing the prior period’s −2.3% contraction. Capital expenditure rose 1.3% QoQ, well above the 0.2% forecast, while private consumption held at 0.3% QoQ. Furthermore, average cash earnings accelerated to 3.0% YoY in January, beating the 2.5% consensus and extending the wage-growth trend that has underpinned the Bank of Japan’s gradual normalization path. The Coincident Indicator also strengthened to +2.5% MoM from −0.5% prior, signalling broad-based economic momentum.

However, Japan’s January household spending data struck a discordant note, falling 1.0% YoY against a 2.4% consensus gain and declining 2.5% MoM. This divergence between rising wages and falling household outlays may reflect precautionary saving in the face of energy price uncertainty, rather than a structural weakening of consumer demand. The Economy Watchers Current Index for February improved to 48.9, modestly beating its 48.1 consensus, suggesting service-sector sentiment remains cautiously optimistic.

China’s February trade data was the most dramatic global print of the session. Exports surged 21.8% YoY versus a 7.1% consensus — the strongest reading in years — as manufacturers rushed shipments ahead of anticipated US tariff escalations. Consequently, the trade surplus ballooned to a record $213.6 billion for the month, far above the $177.4 billion consensus. Imports also beat strongly at 19.8% YoY versus 6.3% expected, though analysts cautioned that lunar new year timing distortions partially inflate both figures.

South Korea’s preliminary Q1 GDP contracted 0.2% QoQ, slightly better than the −0.3% consensus, while the YoY reading of 1.6% also came in marginally below the 1.7% forecast. The sequential contraction — following a strong 1.3% Q4 print — underscores the external demand headwinds facing Korea’s export-heavy economy. Australia’s Westpac Consumer Sentiment rebounded 1.2% in March from −2.6% prior, and building approvals matched the −7.2% MoM consensus, though the 15.7% YoY drop signals continued construction pressure.

Verdict

Japan’s GDP beat is the region’s standout and strengthens the case for further BoJ normalisation. China’s export surge signals aggressive front-loading that could flatter near-term data but masks vulnerability to tariff retaliation. Korea’s mild contraction and Australia’s housing weakness are manageable risks rather than crises.

Mexico’s February inflation data came in hotter than expected on all key measures, reinforcing the Banxico’s cautious easing posture. Headline CPI rose 4.02% YoY against a 3.94% consensus, while MoM CPI printed 0.50% versus a 0.43% forecast. Core CPI MoM eased to 0.46% from 0.60% prior and broadly matched its 0.47% consensus, providing a mild silver lining. Annual core inflation held steady at 4.50%, in line with expectations and essentially unchanged from the prior reading of 4.52%.

The hotter headline prints are partly attributable to energy pass-through from oil’s surge during the Iran conflict — a factor that complicates the rate-cut calculus for Banxico even as the peso has come under pressure. Consequently, markets have trimmed expectations for near-term easing, particularly given the Fed’s own hawkish recalibration. PPI also firmed modestly, rising 0.20% MoM from 0.10% prior and 1.10% YoY, down from 1.50%, indicating some producer-level disinflation that may offer downstream relief.

Chile’s trade data showed February exports of $9.08 billion, well below the prior month’s $10.68 billion, while imports fell to $6.30 billion from $6.87 billion. The trade surplus consequently narrowed to $2.79 billion from $3.81 billion — a significant sequential deterioration driven by weaker commodity export volumes. Furthermore, copper exports specifically reached $4.70 billion, above the prior $4.55 billion reading, suggesting copper prices supported value even as overall export volumes softened amid global growth uncertainty.

The BCB Focus Market Readout from Brazil provided no new directional catalysts, with rates and inflation expectations broadly anchored. Across the region, the Iran conflict’s energy shock is a meaningful inflation wildcard — oil-importing emerging markets face margin pressure, while commodity-exporting nations like Chile benefit partially from elevated energy prices but face demand uncertainty from slower global growth. The divergence across LatAm economies is likely to widen if the oil shock is sustained.

Verdict

Mexico’s hotter-than-expected inflation closes the door on near-term Banxico cuts and tightens the policy bind given slowing growth. Chile’s narrowing surplus reflects trade softness rather than copper demand collapse. The Iran conflict’s energy pass-through remains the dominant regional macro risk through Q2.