Global Economy Briefing — February 19, 2026
Read about Global Economy Briefing — February 19, 2026 on The Rio Times.
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\nFOMC minutes from the January 27–28 meeting revealed a hawkish committee beneath the unanimous hold at 3.50%–3.75%. “Several” participants would have supported a two-sided statement keeping rate hikes explicitly on the table if inflation remains above target. Progress toward 2% was described as likely “slower and more uneven than generally expected.” Tariff effects were noted but treated as transitory.
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\nUS industrial production surged 0.7% MoM in January — the strongest gain in nearly a year — crushing the 0.4% consensus. Manufacturing output rose 0.6%, the best since February 2025, with widespread gains across industry groups. The “no-landing” narrative for the US economy got fresh ammunition.
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\nUK CPI fell to 3.0% YoY in January from 3.4% — the lowest since March 2025 — matching consensus. Core CPI dropped to 3.1%, its lowest since August 2021. Transport and food drove the decline. However, services inflation remained sticky at 4.1% in restaurants and hotels. NIESR projects inflation could fall below 2% by April.
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| INDICATOR | ACT | EST | PREV | VERDICT |
|---|---|---|---|---|
| UK CPI YoY (Jan) | 3.0% | 3.0% | 3.4% | IN LINE |
| UK Core CPI YoY (Jan) | 3.1% | 3.0% | 3.2% | SLIGHT MISS |
| French CPI YoY (Jan) | 0.3% | 0.3% | 0.8% | AS EXPECTED |
| US Indust. Prod. MoM (Jan) | 0.7% | 0.4% | 0.2% | BEAT |
| US Mfg Output MoM (Jan) | 0.6% | 0.4% | 0.0% | BEAT |
| US Capacity Utilisation (Jan) | 76.2% | 76.6% | 75.7% | SLIGHT MISS |
| US Durable Goods MoM (Dec) | −1.4% | −1.8% | 5.4% | LESS BAD |
| US Core Durables MoM (Dec) | 0.9% | 0.3% | 0.4% | BEAT |
| US Housing Starts (Dec) | 1.404M | 1.310M | 1.322M | BEAT |
| US Building Permits (Dec) | 1.448M | 1.400M | 1.388M | BEAT |
| RBNZ Rate Decision (Feb) | 2.25% | 2.25% | 2.25% | HOLD |
| Japan Core Machinery MoM (Dec) | 19.1% | 5.1% | −11.0% | RECORD BEAT |
| US 20Y Bond Auction | 4.664% | — | 4.846% | LOWER YIELD |
| MBA 30Y Mortgage Rate | 6.17% | — | 6.21% | EASING |
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Europe
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UK CPI falls to 10-month low, French inflation collapses, Lagarde exit speculation
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UK CPI fell to 3.0% YoY in January from 3.4% in December, matching the consensus. On a monthly basis, prices fell 0.5%, the sharpest January drop in years. Transport inflation halved to 2.7% from 4.0% as petrol prices fell and airfares dropped post-holiday. Food and non-alcoholic beverage inflation eased to 3.6% from 4.5%. NIESR projects inflation could fall below 2% by April when last year’s base effects wash out.
This is part of The Rio Times’ daily global economic intelligence for the Latin American financial community.
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However, core CPI came in fractionally above expectations at 3.1% versus 3.0% consensus, though still down from 3.2%. Services inflation remains a concern — restaurants and hotels accelerated to 4.1% from 3.8%. The BoE had predicted 2.9%, so the slight overshoot gives hawks marginal cover. Nevertheless, combined with Tuesday’s dismal wage and employment data, the disinflation trend is intact. Gilt yields fell across the curve and swap rates hit 30-day lows.
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French CPI confirmed at 0.3% YoY for January, sharply down from 0.8% in December and matching expectations. HICP at 0.4% also aligned. Meanwhile, the day’s most unexpected development was the Financial Times reporting that ECB President Christine Lagarde plans to leave her position early, ahead of France’s 2027 presidential election. ECB board member Schnabel said she would stay for her full term. The Stoxx 600 rallied 1.2%, the FTSE 100 climbed 1.23% to a record, and the DAX gained 1.12%.
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The German 10-year Bund auction cleared at 2.730%, well below the prior 2.850%. The UK House Price Index surprised to the upside at 2.4% YoY versus 1.8% expected, suggesting monetary loosening is filtering through despite the employment gloom. In South Africa, CPI eased to 3.5% from 3.6%, while retail sales decelerated to 2.6% YoY from 3.6% and business confidence slipped to 131.4 from 133.2.
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\nVerdict
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The UK inflation picture is now decisively dovish when combined with Tuesday’s wage and jobs data. Core at 3.1% is a fraction hot but the trajectory is unmistakable. The BoE’s May cut looks increasingly nailed on. The Lagarde exit story is the wildcard for ECB governance — leadership succession speculation will create noise around Euro rates through 2027. French inflation at 0.3% underscores the growing divergence between core Europe and the UK.
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United States
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FOMC hawks resurface, IP surges, housing and durables beat, TIC flows collapse
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The FOMC minutes from January 27–28 carried a distinctly hawkish tone. “Almost all” participants backed the hold at 3.50%–3.75%, judging policy to be broadly neutral. Crucially, “several” participants would have supported a two-sided statement keeping rate hikes on the table if inflation stays above target. The staff revised up growth forecasts, with real GDP expected to outpace potential through 2028. Tariff effects were treated as “one-time” price hikes expected to fade by mid-2026.
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On the activity side, the data was uniformly strong. Industrial production surged 0.7% MoM — the best since February 2025 — with manufacturing output up 0.6%. Utilities jumped 2.1% while mining dipped 0.2%. Capacity utilisation rose to 76.2%, though this missed the 76.6% consensus and remains 3.2 percentage points below its long-run average. In addition, December housing starts beat at 1.404M versus 1.310M expected, building permits at 1.448M topped 1.400M, and core durable goods orders rose 0.9% versus 0.3% consensus.
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The headline durable goods figure fell 1.4% but beat the −1.8% estimate, with the decline driven by volatile transport orders. Core capital goods orders rose 0.6% versus 0.5% expected — a clean read on business investment. MBA mortgage applications rose 2.8% as the 30-year rate eased to 6.17%. The 20-year bond auction cleared at 4.664%, sharply below the prior 4.846%.
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Consequently, Treasury yields rose after the minutes. The 10-year climbed over 3bps to 4.087%, the 2-year rose to 3.468%, and the 30-year hit 4.711%. TIC data showed a dramatic reversal — foreign buying of US Treasuries swung to −$41.6B in December from $78.2B, and overall net capital flows plunged to $44.9B from $204.4B. The S&P 500 rose 0.56% to 6,881 and the Nasdaq advanced 0.78%, driven by Nvidia (+1.6%) and Amazon (+2%).
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\nVerdict
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The “no-landing” scenario just got stronger. Industrial production, housing starts, and core capex all beat in a single session. The FOMC minutes are the key signal: “several” wanting rate hikes on the table is a material hawkish shift from December’s dovish lean. Markets priced out the possibility of a March cut and are now pricing only 57bps of easing this year. The TIC data collapse is the sleeper story — a $120B swing in foreign Treasury demand in a single month warrants close monitoring for dollar and funding market implications.
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Asia-Pacific
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Japan machinery orders hit 18-year high, RBNZ holds, China and Korea remain closed
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Japan’s core machinery orders surged a record 19.1% MoM in December, obliterating the 5.1% consensus and rebounding from November’s 11.0% slump. The value hit ¥1,052.5 billion — the highest since January 2008 — driven by large one-off orders for chemical equipment from refineries and nuclear power facilities, alongside persistent demand for computers as firms invest in automation and digitisation to address labour shortages.
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On a yearly basis, orders jumped 16.8%, well above the 3.9% forecast. Manufacturing orders leapt 25.1% while non-manufacturing rose 8.2%. Q4 2025 machinery orders were up 7.9% QoQ. However, Cabinet Office guidance for Q1 2026 projects a 4.5% quarterly decline, suggesting the December spike was partly driven by lumpy project orders. Bloomberg noted this was the strongest gain since the series began in 2005.
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The RBNZ held the Official Cash Rate at 2.25%, as unanimously expected. The committee signalled policy would remain accommodative “for some time” with inflation projected to return to the 2% midpoint within a year. NZ unemployment has risen to 5.4% but is stabilising. Annual CPI is slightly above the 1–3% target at 3.1% but RBNZ expects it already back within the band in Q1 2026. China and South Korea remained closed for holidays.
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\nVerdict
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Japan’s machinery orders headline is extraordinary but context matters — the Cabinet Office itself flagged large one-off orders as the driver. Combined with Tuesday’s record export data, however, the picture of robust Japanese corporate investment holds. The RBNZ hold was a non-event; the real question is whether Wellington resumes cutting in April or keeps powder dry as the recovery strengthens. Bloomberg’s description of the RBNZ facing the “anathema” of growing economy with slowing inflation captures the policy dilemma perfectly.
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Latin America & Africa
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Argentina budget surplus, South Africa data mixed, Brazil closed for Ash Wednesday
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Argentina posted a budget surplus of ARS 3,126M in January, a dramatic swing from the ARS 2,876M deficit in December. President Milei’s fiscal austerity programme continues to deliver headline consolidation, though the sustainability of spending compression remains debated. The BCB Focus Market Readout from Brazil was scheduled but the country remained closed for Ash Wednesday.
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South African data painted a mixed picture. CPI eased to 3.5% YoY in January from 3.6%, with core CPI ticking up to 3.4% from 3.3%. Retail sales decelerated to 2.6% YoY in December from 3.6%, while business confidence slipped to 131.4 in January from 133.2 in December. The rand showed minimal reaction as markets focused on the global risk-on tone driven by European and US equity rallies.
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\nVerdict
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Thin calendar day for the region with Carnival and Ash Wednesday keeping Brazil and several LatAm markets shuttered. Argentina’s fiscal surplus headline looks good but January is traditionally a strong revenue month so the trend matters more than the level. South Africa’s consumer story is weakening — retail sales decelerating from 3.6% to 2.6% suggests load-shedding relief alone isn’t enough to sustain momentum.
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