The Big Three
Economic Dashboard
| INDICATOR | ACT | EST | PREV | VERDICT |
|---|---|---|---|---|
| Ifo Business Climate (Feb) | 88.6 | 88.4 | 87.6 | ▲ Beat |
| Ifo Current Assessment (Feb) | 86.7 | 86.1 | 85.7 | ▲ Beat |
| CPI YoY (Jan) | 1.0% | 1.0% | 1.2% | ● In-line |
| HICP YoY (Jan) | 1.0% | 1.0% | 1.2% | ● In-line |
| Factory Orders MoM (Dec) | −0.7% | −0.4% | 2.7% | ▼ Miss |
| Durables Ex-Transport MoM (Dec) | +1.0% | — | 0.9% | ▲ Solid |
| Chicago Fed Nat’l Activity (Jan) | 0.18 | — | −0.21 | ▲ Rebound |
| Dallas Fed Mfg Index (Feb) | 0.2 | — | −1.2 | ▲ Positive |
| GDP QoQ (Q4) | 0.9% | 0.8% | −0.3% | ▲ Beat |
| GDP YoY (Q4) | 1.8% | 1.6% | −0.1% | ▲ Beat |
| Economic Activity MoM (Dec) | 0.4% | 0.2% | −0.1% | ▲ Beat |
| Consumer Confidence (Feb) | 112.1 | — | 110.8 | ▲ Up |
| PPI YoY (Jan) | 1.9% | — | 1.9% | ● Steady |
| PBoC Loan Prime Rate (Feb) | 3.00% | 3.00% | 3.00% | ■ Hold |
| 3-Month BTF Auction | 2.008% | — | 2.004% | ● Stable |
Europe
Ifo recovery signal meets tariff turbulence
Germany’s Ifo Business Climate Index rose to 88.6 in February, its highest reading since August. The beat was broad-based: manufacturing improved to −11.3 from −12.3, services flipped positive at 0.1 from −2.6, and construction climbed to −11.5 from −14.3.
Ifo President Clemens Fuest declared the economy is showing “first signs of recovery.” Deutsche Bank’s Robin Winkler added that “increasingly clear signs” point to economic momentum. The data followed Friday’s PMI print showing Germany’s first manufacturing expansion in over three-and-a-half years.
However, Italy’s final January CPI confirmed 1.0% YoY headline inflation — down from 1.2% — while the HICP fell 1.0% MoM on seasonal factors. Italian price pressures remain well below the ECB’s target, reinforcing the case for further easing.
European equities sold off despite the upbeat Ifo data. The Stoxx 600 fell roughly 0.5% as Trump‘s 15% tariff escalation spooked risk appetite. The EU suspended ratification of its trade deal with Washington, demanding “full clarity” on the new tariff regime. EUR/USD traded near 1.1810, supported by dollar weakness.
Verdict
Cautiously bullish. The Ifo beat confirms Germany is turning a corner after three-plus years of manufacturing contraction. However, the entire European recovery narrative depends on whether Trump’s new tariff regime sticks — and the EU’s trade deal suspension signals a hard road ahead.
United States
Waller’s coin flip as tariff chaos drives sell-off
Fed Governor Waller delivered a pivotal speech at the NABE conference, calling a March rate cut a “coin flip.” His decision hinges entirely on the February jobs report due March 6. If hiring confirms January’s 130K surprise, Waller favours holding at 3.50%–3.75%. If the data evaporates, he backs a 25bp cut.
Factory orders fell 0.7% MoM in December, worse than the −0.4% consensus, as durable goods dropped 1.4% on a plunge in nondefense aircraft. Nevertheless, orders excluding transportation rose 1.0% and core capital goods orders (the CapEx proxy) climbed 0.6%, suggesting underlying business investment remains intact.
Meanwhile, the Chicago Fed National Activity Index swung to +0.18 in January from −0.21, and the Dallas Fed Manufacturing Index turned positive at 0.2 from −1.2. Both readings point to a US economy that refuses to roll over despite the tariff drag and the weakest hiring year since the pandemic.
Equities sold off hard. The Dow plunged 822 points (−1.66%) to 48,804, the S&P 500 fell 1.04% to 6,838 — turning negative for 2026 — and the Nasdaq dropped 1.13%. IBM cratered 13% on AI disruption fears after Anthropic launched new coding tools. The 10-year yield fell to 4.03%, a three-month low, as bonds rallied on the flight to safety. Gold surged above $5,150.
Verdict
Bearish near-term. The tariff whiplash — SCOTUS striking down IEEPA on Friday, 10% Section 122 the same day, 15% by Saturday — has destroyed policy predictability. Waller’s coin-flip framing removes the rate-cut safety net. The March 6 jobs report and Nvidia earnings this week are the next catalysts.
Asia-Pacific
Holiday calm masks tariff exposure
Japan and China were closed for Emperor’s Birthday and Chinese New Year respectively, thinning regional liquidity. The PBoC held its Loan Prime Rate steady at 3.00% (1-year) and 3.50% (5-year) as expected, keeping powder dry as trade uncertainty intensifies.
South Korea’s consumer confidence rose to 112.1 in February from 110.8, the highest since early January, despite the global tariff turmoil. Producer prices held steady at 1.9% YoY while the MoM reading accelerated to 0.6% from 0.4%, hinting at emerging pipeline pressures.
The SCOTUS ruling scrambles the APAC trade picture. Japan’s negotiated deal had set US tariffs at specific rates under IEEPA — now replaced by a blanket 15% under Section 122. The Nikkei, which had hit 58,000 earlier this month, faces reopening risk as markets digest the new regime on Tuesday.
China stands to benefit in the near term: its IEEPA rate was 35% (25% Section 301 plus two 10% IEEPA layers), now reduced to an effective 35% under the new structure (25% Section 301 plus 10% — though the White House says the full rate holds). As a result, Beijing urged Washington to drop unilateral tariffs entirely after the SCOTUS decision.
Verdict
Neutral with downside risk. Holiday closures masked what will be a volatile reopening. Japan’s export-heavy economy is exposed to the tariff reset, and the PBoC‘s hold leaves it without fresh ammunition. Korea’s confidence reading is a bright spot, but PPI acceleration bears monitoring.
Latin America & Africa
Mexico GDP beats as revised data lifts 2025 growth
Mexico’s Q4 GDP expanded 0.9% QoQ, beating the 0.8% consensus and marking the sharpest quarterly growth in over a year. Year-on-year growth came in at 1.8% versus the 1.6% estimate. The rebound was driven by services and industry, each growing 0.9%, while primary activities contracted 2.7%.
INEGI also revised full-year 2025 GDP growth up to 0.8% from 0.7%. December economic activity grew 0.4% MoM, doubling the 0.2% estimate and rebounding from −0.1% in November. The data showed surprising resilience despite the US tariff headwinds that battered manufacturing earlier in the year.
Paradoxically, Mexico could be a short-term winner from the SCOTUS ruling. Countries without negotiated trade deals — like Brazil, which had faced a 40% IEEPA tariff — now see their rate drop to 15% under Section 122. Mexico’s CUSMA status insulates much of its trade, though the upcoming review adds uncertainty.
Verdict
Constructive. Mexico’s Q4 beat and upward growth revision suggest the economy absorbed the tariff shock better than feared. The CUSMA review and potential Section 301 expansion remain risks, but the 12% peso appreciation in 2025 and nearshoring tailwinds continue to support the outlook.