Morning Brief | Feb. 23, 2026

Overnight price action was subdued in rates & FX markets, with hard assets firming and equities turning lower as geopolitical headlines continue to accumulate and trade re-turns tumultuous.

The US equity market is moving firmly red ahead of the open -0.45%, likely pushed most by the US Supreme Court decision to strike down the White House's IEEPA tariffs, re-jolting an already volatile trade area. The European market also ticked down after its open -0.16%, while Japanese stocks are rallying +0.41%.

ON THE TAPE

US/Iran talks and strike chatter. EU says it won't accept increase in US tariffs after SCOTUS decision. Hungary to block EU sanctions against Russia. Destabilization in Mexico as economy stalls and cartel violence explodes.

US Dollar Index: +0.03%
US 2-year/10-year: -0.0%, +0.27%
EUR/USD: -0.03%
USD/CHF: +0.12%
USD/CNH: -0.12%
Brent, WTI: +0.22%/+0.26%
Gold: +1.78%
S&P 500 Futures: -0.45%

(All data as of 7:49 a.m. ET)

IMMEDIATE TELLS

• Rates are not repricing aggressively despite geopolitical noise.
• Gold is the cleanest expression of risk repricing (+1.78%).
• Copper soft, equities soft — growth impulse not improving.

Oil: Fundamentals oversupplied but risk premium remains complex

Crude is only modestly higher, but the narrative has shifted — especially in light of fundamentals. Goldman Sachs’ Daan Struyven raised the firm's Q4 price targets to $60 Brent / $56 WTI, up from $54/$48, arguing the surplus story remains intact but visible inventories are tighter than assumed.

At the same time: Russian crude is trading at its deepest discount since 2023 under Western sanctions, West African grades are being hammered by freight spreads, and Iran disruption potential continues to cushion prices.

As I reported this weekend for Yahoo Finance, the consensus view among oil analysts coming into 2026 was that the crude market was entering a period of deep oversupply, likely to keep depressing prices throughout the year. In 2025, oil prices fell by roughly 20% as the glut widened.

Instead, oil prices have seen an unexpected rally through the start of the year on a combination of geopolitical shocks and stronger-than-expected demand. Prices are now higher than they were six months ago, leaving traders "focused on why a large global surplus ... has not translated into a sustained Brent price decline in 2026 year-to-date," Goldman Sachs strategists wrote in a note to clients.

Futures on Brent crude (BZ=F), the international pricing benchmark, have gained roughly 15% since the start of the year, while those on US benchmark West Texas Intermediate (WTI) crude (CL=F) are up a slightly smaller 14%.

Iran: Negotiation and coercion, simultaneously

Headlines overnight are bifurcated:

• US and Iran are set to meet Thursday.
• Tehran signals willingness for nuclear concessions if US demands are met.
• Reporting from WSJ & NYT suggests the White House is weighing targeted strikes followed by potential escalation.

This dual-track posture — negotiation plus coercive signaling — creates asymmetric oil risk. Talks cap upside, while strike chatter prevents a full risk premium collapse.

The signal to watch is not rhetoric but sequencing: force posture in the Gulf, tanker insurance costs, and Brent time spreads. Until those move decisively, crude trades as optionality, not trend.

Global Trade: "A deal is a deal"

Markets initially welcomed the Supreme Court’s ruling challenging tariffs imposed under emergency powers, but that relief was brief as the administration moves to replace IEEPA tariffs with a 15% universal tariff under Section 122, capped at 150 days. Markets are in disarray this morning on the back of the US Supreme Court's decision on Friday to rule illegal the tariffs the White House had set using IEEPA. This morning:

• The EU says it will accept no increase in US tariffs, "A deal is a deal."
• Hungary is threatening to block additional EU sanctions on Russia.
• A Bank of England rate-setter argues Trump tariffs are “here to stay.”
• Headlines describe renewed global trade confusion as Washington overhauls its tariff toolkit.

Copper down 0.47% alongside softer equities suggests growth anxiety is creeping back in. USD/CNH is slightly firmer for the yuan — no sharp devaluation signal yet — but trade is re-entering the risk calculus. Gold up nearly 2% while copper fades is a classic hedge-versus-growth divergence.

Position data from Goldman Sachs shows:

• Bond and money market inflows strong YTD.
• Equity flows still positive, but momentum fading.
• Rotation from US to non-US equities accelerating.
• Downside hedging more expensive.
• Hedge fund gross exposure rising, net flat — dispersion trade environment.

Implications:

• The average tariff burden remains elevated.
• Policy uncertainty returns immediately.
• Negotiating leverage dynamics shift.

Elsewhere...

Mexico’s economy barely grew in 2025, while security risk surged through the weekend as a US-backed raid reportedly killed cartel leader “El Mencho,” triggering revenge violence, arson, and highway blockades. This is not systemic — but it intersects uncomfortably with US industrial strategy and North American supply chain integration.

Political instability adds friction to a region central to re-shoring ambitions. The USD is up stiffly +0.28% against the Mexican peso this morning.

And in eastern Europe, Russia struck Ukrainian energy infrastructure again ahead of the war anniversary. Hungary’s stance underscores EU political fractures. However, EUR/USD remains flat this morning — signals continuation, not escalation.

For now, nothing on the tape screams crisis, but the directional pressure is pushing toward fragmentation: Surplus oil balances are layered with geopolitical premiums, while trade architecture is wobbling. European unity remains strained, and Middle East tensions continue to tick higher. Gold is quietly repricing risk while US & Euro equities tick down on uncertainty.