Global Economy Briefing — February 5, 2026
Read about Global Economy Briefing — February 5, 2026 on The Rio Times.
The Big Three
\n1. U.S. hiring stalled. ADP printed just 22K jobs (vs 46K expected), the weakest reading this cycle. Vehicle sales collapsed to 14.90M from 16.00M. Demand is finally flinching.
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\n2. Eurozone inflation fell below target. Headline CPI dropped to 1.7% y/y—comfortably under the ECB’s 2% goal—with core easing to 2.2%. The rate-cut case just got a lot easier.
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\n3. Japan’s long bond yields broke out. The 30-year JGB auction printed 3.615%, up from 3.447%. The BoJ normalization is now a global fixed income event.
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Dashboard: Key Prints vs Expectations
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| Indicator | Actual | Expected | Prior | Verdict |
|---|---|---|---|---|
| U.S. ADP Employment | 22K | 46K | 37K | Big miss |
| U.S. ISM Services PMI | 53.8 | 53.5 | 53.8 | In line |
| U.S. ISM Services Prices | 66.6 | 65.0 | 65.1 | Hot |
| U.S. Vehicle Sales | 14.90M | 15.50M | 16.00M | Miss |
| Eurozone CPI y/y | 1.7% | 1.7% | 2.0% | Below target |
| Eurozone Core CPI y/y | 2.2% | 2.3% | 2.3% | Beat (lower) |
| Eurozone PPI y/y | -2.1% | -2.3% | -1.4% | Deflationary |
| Spain Services PMI | 53.5 | 56.6 | 57.1 | Big miss |
| Italy Services PMI | 52.9 | 51.3 | 51.5 | Beat |
| UK Services PMI | 54.0 | 54.3 | 51.4 | Strong |
| Canada Services PMI | 45.8 | — | 46.5 | Deep contraction |
| Japan 30-Year JGB | 3.615% | — | 3.447% | Cycle high |
| Australia Trade Balance | A$3.37B | A$3.42B | A$2.60B | Improved |
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United States
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Soft demand, hot prices
This is part of The Rio Times’ daily global economic intelligence for the Latin American financial community.
\nThe labor market cracked. ADP nonfarm employment came in at just 22K, half the consensus. Vehicle sales missed badly at 14.90M annualized, with truck sales dropping to 12.33M from 13.33M.
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\nISM services was a split decision. The headline held at 53.8 and business activity surged to 57.4, but new orders fell to 53.1, employment slipped to 50.3, and prices paid jumped to 66.6—the hottest in months. That is the stagflationary corner the Fed does not want to be in.
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\nEnergy markets tightened further. EIA crude drew −3.455M barrels (vs −2.000M expected), distillates plunged −5.553M, and Cushing drew −0.743M.
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\nMortgage demand weakened. Applications fell −8.9% and the purchase index dropped to 165.4 from 193.3, even as rates ticked down to 6.21%.
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\nVerdict: demand is softening, but services inflation at 66.6 keeps the Fed pinned. All eyes on Friday’s NFP.
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Europe
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Inflation undershoots, services cool
\nEurozone inflation dropped decisively below target. Headline CPI fell to 1.7% y/y from 2.0%, with a −0.5% m/m decline. Core eased to 2.2% y/y.
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\nPPI remained deflationary at −2.1% y/y. Italian CPI printed 1.0% y/y. This makes further ECB cuts nearly certain. Services PMIs were more mixed. Spain was the big miss at 53.5 vs 56.6 expected—a sharp deceleration.
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\nGermany disappointed at 52.4 vs 53.3. France stayed in contraction at 48.4, though better than feared. Italy was the upside surprise at 52.9 vs 51.3. Eurozone composite settled at 51.3.
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\nThe UK jumped. Services PMI surged to 54.0 from 51.4, composite to 53.7—a meaningful reacceleration.
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\nGerman car registrations swung to −6.6% y/y from +9.7%. Portuguese unemployment held at 5.8%.
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\nVerdict: the inflation picture is unambiguously dovish for the ECB. Services softness in Spain and France is the growth concern.
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Asia-Pacific
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Yield surge, trade improvement
\nJapan’s 30-year yield hit 3.615%—a new cycle high with implications for global bond markets. Foreign bond buying surged to ¥713.7B from ¥190.4B, and foreign equity investment rose to ¥494.6B.
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\nAustralia’s trade balance improved to A$3.373B from A$2.597B post-RBA cut, with exports rebounding 1.0% m/m and imports contracting −0.8%.
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\nIndia’s composite PMI eased to 58.4 from 57.8 but remains firmly expansionary. South Africa’s PMI recovered to 50.0 from 47.7.
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\nVerdict: Japan’s yield curve steepening is the key global signal. Australia is stabilizing.
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Canada
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Services in freefall
\nServices PMI deteriorated to 45.8 from 46.5—deep in contraction and the weakest in recent months. Reserve assets ticked up to $128.7B.
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\nVerdict: Canada’s services economy is under significant stress. The BoC has more work to do.
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Latin America
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Flows return, growth doesn’t
\nBrazil’s composite PMI slipped to 49.9 from 52.1 as services decelerated to 51.3. However, FX flows surged to R$4.180B from R$2.215B—foreign capital is returning even as the real economy weakens.
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\nVerdict: Brazil’s growth-flow divergence is the story. Don’t chase the flow improvement until PMIs stabilize.
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Trades & Tilts
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→ European duration looks increasingly attractive. Inflation at 1.7% with core at 2.2% gives the ECB clear room to cut. Favor eurozone over UK where inflation is stickier.
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→ U.S. positioning is treacherous. ADP weakness argues for duration, ISM services prices argue against. Wait for NFP clarity before adding risk.
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→ Japan’s long end matters globally. The 30-year at 3.615% is repricing term premium worldwide. This is not just a JGB story.
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→ Canada is underpriced for distress. Services at 45.8 suggests more BoC cuts than markets are pricing.
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→ LATAM: improving flows in Brazil are not yet matched by growth. Stay cautious until manufacturing stabilizes.
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Related: Latin American Pulse | Brazil Morning Call
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