Crazy Volatility in the Marketplace

February 6, 2026

After a week of insane financial market movement, this Friday in particular has a TGIF aura to it. At lows around $60,000, Bitcoin’s price had corrected more than 50% from its record high last October. The price of silver soared to almost $121/ounce just over a week ago but has now edged a tad below $75. Gold is more than 10% below its recent peak. Yesterday saw the tech sector lead U.S. equities sharply lower on fears that AI will do more harm than good in the near term, and that volatility extended today in the Pacific Rim, where stock markets fell 0.8% in China and Singapore and closed over 1.0% lower in Australia, Indonesia, South Korea and Hong Kong. European and U.S. pre-open futures market have experienced some bottom-fishing and turned upward, in contrast. Among 10-year sovereign debt yields while the U.S. Treasury yield has risen two basis points, the British Gilt has dropped four basis points, and the yields in Germany, France, Italy, Spain and Japan are each a basis point softer.

Sometimes America first means America alone. South Africa is the latest country to freak out about constantly changing U.S. tariffs and pursue plan B in the form of a bilateral trade accord with China. Iran reportedly has made good progress repairing the damages to its nuclear facilities from U.S. bombing last June. The dollar’s worst performance in many years in 2025 has elicited a what-we-worry reaction from U.S. officials, who reportedly declined to participate in joint intervention with Japan and also washed their hands of any responsibility for the slide in cryptocurrencies.

On the central banking front, decisions yesterday by central banks in Euroland, the U.K. and Iceland not to cut interest rates have been followed by similar revelations by monetary officials at the Czech National Bank leave their 2-week repo rate unchanged at 3.5%, the Bank of Mexico to keep the overnight interbank rate steady at 7.0%, and at the Reserve Bank of India to retain an unchanged 5.25% repo rate. Each of those rates is comfortably above current inflation of 1.6% in the Czech Republic, 3.7% in Mexico, and 1.3% in India. The U.S. federal funds target of 3.5-3.75% has a smaller margin above the inflation rate than those examples despite the fact that one of President Trump’s often-repeated arguments against the rate of Fed easing has been that other central banks have been stimulating their economies in a more timely manner.

German industrial production in December fell 1.9%, many times faster than analysts were assuming it did, and that resulted in a year-on-year drop of 0.6%. Germany’s seasonally adjusted trade surplus of EUR 17.1 billion in December was in line with the fourth quarter monthly average of EUR 16.1 billion, but the full-2025 surplus of EUR 203 billion, a 16% drop from 2024, reflected chaotic tariff conditions.

The French current account deficit likewise rebounded 47% to EUR 12.5 billion last year after imploding from EUR 28.5 billion in 2023 to EUR 8.5 billion in 2024.

Germany wasn’t the only European economy to report industrial production today. In Spain, IP fell 2.5% on month in December and posted a 0.3% slide versus December 2024, the first negative comparison in 10 months. Czech industrial production rose 0.4% in December and 3.8% on year. In Norway that same month, production rebounded 0.8% following sharp declines in both October and November and was 2.5% greater than a year earlier. A 1.8% year-on-year increase of industrial production in Hungary was the most in three years.

Japanese data released today included a decline in household spending of 2.9% in December, resulting in a 2.6% decreases from a year earlier; the largest monthly increase of international reserves ($25 billion) in eight months; a 19-month high during December in the index of leading economic indicators; but a 4-month low in the index of coincident economic indicators.

Consumer price inflation during January fell to a 5-year low of 2.8% in Chile, rose to a 7-month high of 3.8% in Armenia, and edged 0.1 percentage point higher to a mere 0.4% in Sweden. Swedish core inflation of 2.0%, however, was well-aligned with its target. Austrian wholesale price inflation stayed very low at 0.4% in January, and global food prices recorded a fifth consecutive decline.

U.S. jobs data were not reported on the first Friday of the new month as is customarily done but will instead be released next Friday due to lingering disruptions caused by the government shutdown.

Canadian labor market figures, on the other hand, arrived on time and reflected mixed results. The 6.5% unemployment rate in January reversed a 0.3 percentage point jump that had occurred in December. But the on-year growth of average hourly wages continued to slow, reaching 3.3% after 3.7% in December and 4.0% in November. Employment growth has also slowed, with an average monthly decline of 7.4k in in the most recent two months versus a monthly increase of about 60k over the prior three months of September-November.

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on Friday, February 6th, 2026 at 7:31 am and is filed under New Overnight Developments Abroad – Daily Update.
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