WTI crude oil futures extended their rally to $66.5 per barrel on Thursday, the highest since early August 2025 as rising tensions between the US and Iran threatened supply from the Middle East. Reports citing government officials noted that the US could begin a military operation in the Middle East soon, with Israel pushing for regime change in Tehran. The head of the United Nations nuclear watchdog warned Iran's window for a diplomatic deal is narrowing amid a US military build up. Conflict could threaten flows through the Strait of Hormuz, which sees tanker activity of a third flows for one third of seaborne oil trade. In the meantime, a fresh report from the EIA showed that oil inventories in the US plummeted by 9 million barrels on the second week of February, contrasting sharply with market expectations of a 2 million barrel build to fully erase the 8.5 million build from the previous week.

US pending home sales fell 0.8% month over month in January 2026, extending a revised 7.4% decline in December and missing expectations for a 1.3% increase. The second consecutive monthly drop highlights ongoing pressure in the US housing market, despite lower mortgage rates. Regionally, sales fell in the Northeast (-5.7%) and South (-4.5%), while the Midwest (5.0%) and West (4.3%) saw gains. On a year-over-year basis, pending home sales were down 0.4%. “Improving affordability conditions have yet to induce more buying activity,” said Lawrence Yun, Chief Economist at the National Association of Realtors. “With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates.” Yun also warned that without an increase in housing supply, new buyers entering the market could push prices even higher, intensifying affordability pressures and highlighting the urgent need for more home construction.

US equity indices were firmly lower on Thursday, trimming the gains yesterday on signs that the Federal Reserve may maintain its rates elevated for longer. The three main averages fell up to 0.5%. Rates on the longer end of the curve rebounded as hawkish remarks on the FOMC minutes were combined with the sharp increase in crude oil prices and softer initial claim counts halfway through February. The minutes indicated that a majority of policymakers were concerned that disinflation may take longer than usual, while few noted that higher rates may be necessary if inflation stabilizes above target. Banks and lenders were lower on the jump in rates, while tech giants inched down on risks to the elevated levels of capital expenditure pledges for datacenters. Nvidia and Metal dropped 0.5%, while JP Morgan and Bank of America fell over 1%. Meanwhile, Walmart jumped 2% after beating Q4 revenue estimates and raising its dividend, while Deere added 7% after its earnings.

The yield on the US 10-year Treasury note rose for a third consecutive session to above 4.1% on Thursday, reaching its highest level in a week, as solid US economic data and a hawkish tone from the Federal Reserve reduced expectations for multiple rate cuts this year. At the same time, rising tensions between the US and Iran have pushed oil prices higher, fueling concerns about additional inflationary pressures. Minutes from the latest FOMC meeting showed that Fed officials are divided over the next move on rates, with some raising the possibility of further hikes if inflation remains persistently high. Meanwhile, initial jobless claims fell more than expected to 206K last week, while the US trade deficit for 2025 remained among the largest on record, with data going back to 1960. Traders slightly trimmed expectations for Fed rate cuts this year but still see two 25 bps reductions before year-end.

Canada’s trade deficit narrowed to C$1.31 billion in December 2025 from a C$2.58 billion deficit in November and beating expectations for a C$2.1 billion deficit. Exports rose 2.6% m/m to C$65.63 billion, with metal and non-metallic mineral exports up 18.0% as unwrought gold and related shipments rebounded, while aircraft and other transportation equipment and parts jumped 20.5% to a record high. These gains were partly offset by a 1.0% decline in energy product exports. Exports to the US increased 1.1%. Imports increased 0.6% to C$66.93 billion, led by higher imports of motor vehicles and parts (+5.1%) and metal and non-metallic mineral products (+7.7%), even as consumer-goods imports fell 4.5%. As a result, Canada’s surplus with the US narrowed to C$5.7 billion, while the deficit with countries other than the US narrowed to C$7.0 billion.

Initial jobless claims in the US fell by 23,000 from the previous week to 206,000 on the second week of February, well below market expectations of 225,000, to swing back to levels that are well below the average through the start of last year. In turn, continuing claims, which serve as a proxy for outstanding unemployment in the US, inched higher by 17,000 to 1,869,000 on the first week of February. The data continued to reflect a stable labor market with a slow firing momentum offsetting a soft hiring momentum, consistent with view from the Federal Reserve. Initial claims filed by federal employees, which have been under scrutiny as markets measure the impact of the US government shutdown, rose by 80 to 695.