Closing Recap 

After a tumultuous start to February defined by a “Sigma-10” crash in metals and a plunge in crypto, the markets staged a furious “Risk-On” reversal to close the week. Friday saw a broad-based rally with the Dow surging over 1,200 points (+2.47%) to close above 50,000 for the first time in history. The S&P 500 (+1.97%) and Nasdaq (+2.18%) roared back, while Small Caps (Russell 2000) jumped 3.6% as “dip buyers” aggressively bought the fear. Bitcoin staged a massive turnaround, pumping nearly $10,000 from overnight lows of $60k to reclaim $70,000 (+17% in 20 hours). 

Gold and Silver also bounced off their crash lows, stabilizing after the historic liquidation event. The catalyst wasn’t a single headline but a collective realization that the “Warsh Panic” and “AI Fears” were overdone, fueled by solid earnings (82% beat rate) and a resilient, albeit cooling, labor market.

Key Takeaways (The Week in 60 Seconds) 

• Stocks Rebound on “Dip Buying” Mania: After a rocky start driven by AI competition fears and mixed earnings, U.S. equities roared back Friday. The Dow surged 1,200 points to close above 50,000 for the first time, and the S&P 500 reclaimed 6,900, erasing most weekly losses. 
• Crypto “Dead Cat Bounce” or Bottom? Bitcoin surged 17% in 24 hours, reclaiming $70,000 after crashing to $60,000 earlier in the week. The rally added $304 billion to the crypto market, fueled by massive short liquidations and record ETF volume from BlackRock. 
• Yield Curve Steepens, Flashing Recession Warning: The spread between 10-year and 2-year Treasury yields hit its widest level in 4 years. Historically, such rapid steepening signals a recession is already underway, though markets are currently cheering the prospect of Fed cuts. 
• Commodities Rebound: Gold jumped nearly 2% Friday to settle near $4,980, while Silver recovered to $76.90. The moves were supported by a weaker dollar and renewed safe-haven demand after a brutal mid-week sell-off. 
• Dollar Recovers on Warsh Nomination: The U.S. Dollar outperformed major peers for the week, supported by President Trump’s nomination of Kevin Warsh for Fed Chair. Markets view Warsh as less dovish than feared, sparking a repricing of rate expectations. 
• Fed Pricing: Markets are now pricing in 58bps of cuts by year-end (up from 50bps), signaling growing confidence in a third rate cut.
• Yen Volatility Ahead of Election: USD/JPY stabilized around 157.10. Traders are bracing for Sunday’s snap election in Japan, where a landslide victory for PM Takaichi could embolden fiscal stimulus and further weaken the Yen. 
• Week Ahead Focus – Data Deluge: The calendar is packed with the Japanese Election (Sun), delayed US Jobs Report (Wed), and US CPI (Fri). 
• Data Delays: Due to the partial government shutdown, the NFP report is rescheduled to Wednesday and CPI to Friday.

Looking Ahead 

The “vibe” for next week is “Political Clarity & Data Overload.” We start with the Japanese Election results Sunday night, which could trigger a massive move in global bond markets if Takaichi secures a super-majority to spend aggressively. Then, we get the “Lost Data” dump. Because of the shutdown, we have a crammed schedule with the Jobs Report (Wed) and CPI (Fri). The narrative has shifted from “Panic Liquidation” to “Reflationary Rebound.” If CPI confirms inflation is cooling (despite the hot PPI), the path to S&P 7,000 is open. However, the rapidly steepening yield curve suggests the bond market is sniffing out trouble that equity investors are ignoring.

Weekly Market Narrative: Volatility Explodes, But Bulls survive 

• Sentiment: Euphoric Recovery. The AAII sentiment and Fear & Greed metrics are resetting after the flush. Retail demand for risk is “through the roof,” with record options volume in metals. 
• Technicals: The S&P 500 reclaimed 6,900, erasing the week’s losses. The Russell 2000’s 3.6% jump Friday suggests broadening participation, a healthy sign for the bull market.

It was a week of extreme bi-polar price action. Early in the week, markets were hammered by fears of AI overspending (Amazon, Google) and the nomination of Kevin Warsh as Fed Chair, which traders initially interpreted as a hawk signal. Bitcoin collapsed to 16-month lows, and the Nasdaq shed 4.5% in three days. But Friday changed everything. A massive wave of dip-buying—driven by retail investors whose options activity is 6.6x higher than in 2023—triggered a violent short squeeze. The Dow’s 1,200-point surge to cross 50,000 is a psychological milestone that reinforces the “buy the dip” mentality. However, the backdrop remains fragile: the yield curve is steepening aggressively, a classic late-cycle signal, and earnings guidance from tech giants suggests the AI “easy money” phase may be over.

Index	Last Closing Level	Daily Change	Daily Change %	Weekly Change %
DJ Industrials	50114	1206.21	0.0247	0.025
S&P 500	6932	133.8	0.0197	-0.001
Nasdaq	23031	490.63	0.0218	-0.0184
Russell 2000	2670	92.69	0.036	Positive

Economic Data Calendar February 9 – 13, 2026 

The week kicks off with a major political event in Japan and continues with critical U.S. data that was delayed by the partial government shutdown. 

SUN (Feb 8): Japan Election

• Japanese Snap Election: High Impact. Exit polls due ~11:00 GMT. A landslide LDP victory (300+ seats) signals fiscal expansion (Yen bearish, Nikkei bullish). A loss or weak win could see the Yen rally on hopes of fiscal restraint. 

MON (Feb 9): Sentiment & US Inflation Expectations

• US Consumer Inflation Expectations: A key input for the Fed’s inflation outlook. 
• Japanese Economy Watchers Survey: A leading indicator for service-sector momentum. 

TUE (Feb 10): NFIB Small Business 

• Data: NFIB Optimism Index.

WED (Feb 11): The Delayed Jobs Report

• US Non-Farm Payrolls (Jan) – RESCHEDULED: The Main Event. Originally due Feb 6. Consensus is for +80k jobs and 4.4% unemployment. A weak number would validate the steepening yield curve’s recession warning. A “Goldilocks” print (not too hot, not too cold) is needed to sustain the rally.
• Chinese Inflation (Jan): Expected to cool to 0.5%. Weakness here confirms China’s struggle with deflationary pressure. 
• BoC Minutes: Insight into Canada’s decision to hold rates at 2.25%. 
• OPEC Monthly report

THU (Feb 12): UK GDP

• UK GDP (Q4 Prelim): Expected to show a slight pickup (0.1% QoQ), supporting the “slow recovery” narrative. 
• Japanese PPI (Jan): Wholesale inflation data crucial for the BoJ’s rate hike path. 

FRI (Feb 13): The Delayed CPI Report

• US CPI (Jan) – RESCHEDULED: High Impact. Originally due Feb 11. The Fed expects tariff effects to peak mid-year. A hot print here would complicate the dovish pivot narrative. This is the final verdict for the “Warsh/Powell” inflation debate. If CPI is hot, the “Fed Pause” narrative strengthens.
• US Consumer Sentiment (Feb Prelim): A check on the U.S. consumer’s mood amidst political and economic volatility. 

Asset Class Spotlight: Commodities, Currencies, Crypto & Treasuries

A weekly recap in commodities and currencies performance: the week was defined by a midweek crash and a furious Friday recovery across all risk assets. Gold roared back to near $5,000, erasing much of the week’s damage. Retail appetite for metals options is at record highs, suggesting the “fear trade” is alive and well despite the equity rally. Silver bounced to $76.90. The retail frenzy in options (6.6x volume) suggests the public is buying the dip aggressively. Oil stabilized at $63.55, as geopolitics (Venezuela/Iran) are balanced against global demand fears.

Asset	Last Level	Friday’s Change	Weekly Change / Note
WTI Crude	63.55	0.26	-2.55% (Weekly Loss)
Brent Crude	68.05	0.5	Underperforming WTI
Gold (Apr)	4979.8	90.3	+1.85% (Recovering from Flush)
Silver	76.9	0.18	Stabilizing after Crash
EUR/USD	1.1812	0.0037	-0.3% approx (2nd Down Week)
USD/JPY	157.1	0.07	+1.5% approx (Election Risk)
10-Year Note	0.04206	-0.004	Yields Dip on Weak Jobs Data
Bitcoin	~$70,000	+17% Daily	Massive Rebound from $60k

The Dollar remains king, outperforming peers on the “Warsh Trade” (bets that he isn’t as dovish as Trump thinks):

• The USD/JPY is the key pair to watch. It closed near 157.10, with traders pricing in a potential landslide victory for PM Takaichi in Sunday’s election. A super-majority for her coalition could unleash fiscal spending, pressuring the Yen further toward 160.00. A Takaichi “Super-Majority” likely means massive fiscal spending, pushing USD/JPY toward 160 unless the MoF intervenes aggressively. 
• EUR/USD remains heavy, closing down for a second week as ECB officials downplay the impact of currency strength on policy. The ECB is downplaying Euro strength, but the divergence with the US economy is weighing on the pair.
• GBP/USD: Recovered to 1.3612. The BoE’s “Hawkish Hold” gave Sterling a lifeline, but it remains vulnerable if UK GDP (Thu) disappoints.

Crypto: Bitcoin survived a near-death experience. After plummeting to $60,000, it staged a violent V-shaped recovery to reclaim $70,000, adding $304 Billion in market cap in just 20 hours. Bitcoin staged a historic reversal, pumping $10,000 in a single day to reclaim $70,000. BlackRock’s IBIT ETF saw record volume ($10B), suggesting institutional ‘diamond hands’ stepped in to buy the blood at the lows. However, analysts warn that historical bear market trends point to a potential bottom closer to $38,000 if this bounce fails. The Yield Curve Steepening is the macro signal to watch. The 10Y-2Y spread is widening, which historically precedes recessions. While equities party, the bond market is bracing for impact.

What to Watch Next Week

• Japan’s Political Earthquake: Sunday’s election is binary. LDP Super-Majority = JPY 160+, Nikkei Rally. LDP Weakness = JPY Rally (Carry Trade Unwind). The result will set the tone for global markets Monday morning. 
• The Delayed Data Double-Header: Getting NFP (Wed) and CPI (Fri) in the same week is rare and dangerous. It creates a “binary” week for the Fed outlook. If jobs are weak and inflation is hot (Stagflation), stocks could surrender Friday’s gains instantly. 
• Bitcoin’s “Line in the Sand”: After bouncing from $60k to $70k, Bitcoin faces a critical test. It must hold $68k to prove this isn’t a “dead cat bounce.” Failure here opens the trapdoor to $50k. 
• Yield Curve Steepening: Watch the 2s10s spread. If it continues to widen (steepen) aggressively, it confirms the bond market is pricing in a recession/aggressive rate cuts, which historically is a headwind for equities after the initial excitement fades.
• Retail Options Frenzy: Retail traders are all-in on metals options (record volume). This creates a “Gamma Squeeze” potential in Gold/Silver but also leaves the market fragile to a pullback. If Gold breaks $4,900, retail panic could trigger another flush.