Housing Starts

• Housing starts rose 6.2% in December to a 1.4M annualized pace, the highest since July, signaling a late-year rebound in new-home construction
• The pickup was concentrated in single-family starts, helped by easing mortgage rates, while building permits rose 4.3% to 1.45M, pointing to continued momentum
• The rebound still faces headwinds from elevated mortgage rates, prior overbuilding, and persistent labor shortages, which could cap how fast construction accelerates

Trade Deficit

• The U.S. trade deficit slipped just 0.2% in 2025 to $901.5B even as imports rose nearly 5% to a record high, showing tariffs didn’t meaningfully shrink the gap
• Tariffs mainly rerouted supply chains instead of reducing demand, with U.S. imports from China down 28% while Vietnam and Taiwan gained share as firms sourced from lower-tariff countries
• The mix shifted toward AI-related tech imports, and the December deficit jumped 33%, which could weigh on GDP

PCE Index

• Core PCE rose 0.4% in December and 3.0% year on year, coming in a bit hotter than expected and reinforcing a Fed pause
• The data suggests disinflation momentum stalled late in 2025, matching the Fed’s January minutes that set a higher bar for 2026 cuts and left the door open to staying restrictive longer
• The macro mix is getting less friendly, with GDP growth slowing to 1.4% annualized in Q4 2025 and savings still low, raising the risk of sticky inflation alongside cooling growth

U.S. Tariff & Trade

• A 6–3  Supreme Court decision ruled that the sweeping tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceeded presidential authority.  The case will now return to the Court of International Trade, which will have to decide the appropriate remedy, including whether and how refunds should be processed 
• In response, the White House signed an executive order on Friday imposing a temporary 10% global tariff under Section 122 of the Trade Act of 1974. However, on Saturday, President Trump posted on social media that the tariff would be increased to 15%.  Under the statute, the tariff can remain in effect for up to approximately 150 days before requiring congressional action

‍

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., decreased to 206,000 in the week ended February 13, down 23,000 from the prior week.
• The four-week moving average was 219,000 down 1,000 from the prior week.
• Continuing claims - those filed by workers unemployed for longer than a week - increased at 1.869 million in the week ended February 6. This figure is reported with a one-week lag.

Fed’s Balance Sheet

• The Federal Reserve's assets totaled $6.613 trillion in the week ended February 20 down $9.0 billion from the prior week.
• Treasury holdings totaled $4.299 trillion, up $8.2 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $2.02 trillion in the week, up $0.1 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $38.74 trillion as of February 20, an increase of 7.0% from the previous year.
  
• Debt held by the public was $31.11 trillion, and intragovernmental holdings were $7.60 trillion

GDP

• The latest annualized U.S. GDP stands at $31.49 trillion as of December 31, 2025, an increase of 1.26% from the previous quarter , & an increase of 5.58% from the previous year
• The total public debt-to-GDP ratio is at 122.31% as of December 31, an increase of 0.87% from the previous year

Inflation Factors

CPI:

• The consumer-price index rose 2.4% in January year over year
• On a monthly basis, the CPI increased 0.2% in January on a seasonally adjusted basis, after increasing 0.3% in December
• The index for all items less food and energy (core CPI) rose 0.3% in January, after rising 0.2% in December
• Core CPI increased 2.5% for the 12 months ending January

Food & Beverages:

• The food at home index increased 2.2% in January from the same month a year earlier, and increased 0.2% in January month over month
• The food away from home index increased 4.0% in January from the same month a year earlier, and increased 0.1% in January month over month

Commodities:

• The energy commodities index decreased (3.3%) in January after decreasing (0.3%) in December
• The energy commodities index fell (7.3%) over the last 12 months
• The energy services index rose 1.4% in January after increasing 1.1% in December
• The energy services index rose 7.2% over the last 12 months
• The gasoline index fell (7.5%) over the last 12 months
• The fuel oil index fell (4.2%) over the last 12 months
• The index for electricity rose 6.3% over the last 12 months
• The index for natural gas rose 9.8% over the last 12 months

Supply Chain:

• Drewry’s composite World Container Index decreased to $1,918.72 per 40ft container for the week of February 20
• Drewry’s composite World Container Index has decreased by (31.3%) over the last 12 months

Housing Market:

• The shelter index increased 0.2% in January after increasing 0.4% in December
• The rent index increased 0.2% in January after increasing 0.4% in December
• The index for lodging away from home increased 2.7% in January after increasing 1.2% in December

Federal Funds Rate

• The effective Federal Funds Rate is at 3.64%, flat 0.00% year to date

Middle East

• President Trump is weighing an initial limited strike on Iranian military or government targets as a pressure tactic to force a nuclear deal, with a decision potentially coming within the next 10 days
• The risk is rapid escalation, as U.S. planners are also discussing larger follow-on campaigns and Iran has warned it would retaliate hard, with a growing U.S. military buildup in the region raising the stakes
• The U.S. is withdrawing all of its roughly 1,000 troops from Syria over the next two months, ending a decade-long mission that helped fight Islamic State and shifting more responsibility to Syria’s new government
• Officials and analysts warn the pullout could create room for an Islamic State resurgence and weaken leverage over the fragile cease-fire with Kurdish forces, even as the administration says it can still strike terrorist threats from elsewhere in the region

Europe

• Hungary and Slovakia threatened to halt diesel and electricity exports to Ukraine unless Kyiv restores flows on the Druzhba oil pipeline, which Ukraine says was disrupted by a Russian attack
• The standoff risks worsening Ukraine’s winter power crunch because the two countries provide most of its imported electricity and critical diesel for generators, while also exposing the broader political rift over Russian energy and Ukraine’s EU path
• German investor sentiment dipped in February as the ZEW expectations index fell slightly and missed forecasts, underscoring that the recovery is still fragile even with confidence near multi-year highs
• Optimism is being supported by a rebound driven by large infrastructure and defense spending and improving order trends in export-heavy industries like chemicals, pharma, and metals

China

• Xi Jinping’s arrest of top general Zhang Youxia, a longtime confidant dubbed his “big brother,” marks a dramatic escalation in China’s military purges and further cements one-man control over the PLA
• The purge shows Xi is prioritizing loyalty over stability, risking weaker military decision-making as tensions rise
• A major U.S. arms-sales package for Taiwan is stalled after Xi pressed Trump to be cautious, with some advisers worried approval could derail Trump’s planned early-April Beijing trip
• The delay fits a broader push to keep U.S.-China relations stable ahead of the summit, as both sides quietly explore trade and diplomatic “deliverables” while Taiwan remains the core flashpoint

Congo

• Eastern Congo is sliding toward mass hunger not from a lack of food, but because M23’s control around Goma has disrupted farming, blocked imports and aid routes, and driven prices sharply higher for civilians

Venezuela

• The U.S. issued a broad license allowing major global energy companies to resume and expand oil and gas investments in Venezuela following reforms to its hydrocarbon law, with revenues structured through U.S.-supervised channels

Japan

• Prime Minster Sanae Takaichi won a landslide victory in parliamentary elections, securing a two-thirds majority in the lower house

Cuba

• Cuba’s President Miguel Diaz-Canel said his government is willing to engage with the Trump administration. The announcement comes during the country’s worst crisis since the fall of the Soviet Union

Egypt

• The Rafah border between Egypt and Gaza reopened, allowing limited two-way traffic. Israel proposed allowing 150 Palestinians to leave and 50 to enter the checkpoint daily

Russia

• Lt. Gen. Vladimir Alekseyev, deputy head of Russia’s GRU intelligence agency, was shot multiple times while in Moscow

Canada

• President Donald Trump threatened to ground Canadian-made aircrafts and impose tariffs on Canadian imports after Canada delayed certification of U.S.-made Gulfstream jets, escalating trade tensions between Washington and Ottawa

Taiwan

• Taiwan pledged $250 billion to stand up semiconductor factories in the United States. In exchange, the U.S. agreed to cut tariffs on Taiwanese goods from 20% to 15%

Israel

• Israel formally recognized Somaliland to gain intelligence cooperation and secure strategic Red Sea shipping lanes near the Bab al-Mandab Strait, marking a bold diplomatic move that expands its influence into the Horn of Africa despite international condemnation

Oil Prices

• WTI: $66.39 per barrel
• +5.57% WoW; (11.39%) YTD; (8.11%) YoY
• Brent: $71.61 per barrel
• +5.70% WoW; (8.83%) YTD; (6.37%) YoY

US Production

• U.S. oil production amounted to 13.7 million bpd for the week ended February 13, up 0.5 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 551, flat from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 419.8 million barrels, down (2.4%) YoY
• Refiners operated at a capacity utilization rate of 91.0% for the week, up from 89.4% in the prior week
• U.S. crude oil imports now amount to 6.805 million barrels per day, down 10.2% YoY

Gasoline

• Retail average regular gasoline prices amounted to $2.93 per gallon in the week of February 20, down (6.9%) YoY
• Gasoline prices on the East Coast amounted to $2.95, down (5.9%) YoY
• Gasoline prices in the Midwest amounted to $2.77, down (9.6%) YoY
• Gasoline prices on the Gulf Coast amounted to $2.58, down (9.1%) YoY
• Gasoline prices in the Rocky Mountain region amounted to $2.87, down (9.3%) YoY
• Gasoline prices on the West Coast amounted to $4.18, down (3.4%) YoY
• Motor gasoline inventories were down by 3.2 million barrels from the prior week
• Motor gasoline inventories amounted to 255.8 million barrels, up 3.1% YoY
• Production of motor gasoline averaged 9.44 million bpd, up 2.9% YoY
• Demand for motor gasoline amounted to 8.749 million bpd, up 3.5% YoY

Distillates

• Distillate inventories decreased by -4.6 million in the week of February 20
• Total distillate inventories amounted to 120.1 million barrels, down (0.3%) YoY
• Distillate production averaged 4.887 million bpd, down (5.3%) YoY
• Demand for distillates averaged 4.753 million bpd in the week, up 16.0% YoY

Natural Gas

• Natural gas inventories decreased by 144 billion cubic feet last week
• Total natural gas inventories now amount to 2,070 billion cubic feet, up 12.5% YoY

High-yield:

High yield bond yields increased 1bp to 6.71% and spreads widened 9bps to 313bps. Leveraged loan yields decreased 3bps to 8.18% while spreads increased 5 bps to 494bps. WTD high yield bond returns were positive 4bps. WTD leveraged loan returns were positive 1bps. The 10yr treasury yield decreased 3bps to 4.07%. High yield spreads edged wider following hawkish FOMC minutes, though solid earnings and firmer manufacturing data helped temper the move. Leveraged loans posted modest gains, supported by light issuance and continued modest inflows, despite ongoing weakness in software credits.

Week ended 02/20/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (trading in excess of 1,000 bps)²

Total HY Defaults

Leveraged loans:

Week ended 02/20/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (loan price below $80)¹

Total Leveraged Loan Defaults

Default activity: 

Most recent defaults include: Trinseo ($390mn, 02/17/2026), Beasley Broadcasting Group ($189mn, 02/01/2026), Nine Energy Service ($300mn, 02/01/2026), Multi-Color ($4.5bn, 01/29/2026), Pretium Packaging ($201mn, 01/28/2026), Saks Global Enterprises ($2.7bn, 12/30/2025), United Site Services ($2.6bn, 11/30/2025), New Fortress Energy ($3.5bn, 11/15/2025), Packers Sanitation Services ($1.2bn, 11/5/2025), and Office Properties Trust ($1.7bn, 10/31/25).

CLOs: 

Week ended 02/20/2026

New U.S. CLO Issuance²

New U.S. CLO YTD Issuance²

Note: High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index

² Source: JP Morgan

Ratings activity: 

S&P and Moody’s High Yield Ratings

Appendix:

Diagram A: Leveraged Loan Trading Levels

Diagram B: High Yield and Leveraged Loan LTM Price  

Diagram C: Leveraged Loan and High Yield Returns 

Diagram J: New Issue - Leveraged Loan and High Yield

Diagram K: Leveraged Loan + HY Defaults by Sector – LTM 

Diagram L: CLO Economics 

Diagram M: Developed Country Govt. Bond Yields (%)

Diagram N: S&P 500 Historical Multiples

Diagram O: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Diagram P: U.S. Large Cap M&A Valuations (EV/EBITDA)

Diagram Q: Dry Powder for All Private Equity Buyouts ($B)

Diagram R: Dry Powder for All US Debt ($B)

Diagram S: Structured Credit Spreads

Diagram T: Structured Credit Yield

Diagram U: SOFR Curve

Diagram V: CMBS Spreads 

ZCGC Real Estate

• Big Tech is rapidly shifting capital allocation away from shareholder returns and toward AI infrastructure investment.
• Combined buybacks by Amazon, Alphabet, Microsoft, Meta, and Oracle fell to $12.6B in Q4 2025, the lowest since 2018 and down 74% from the ~$48B peak in 2021.
• Amazon has not repurchased shares since Q2 2022, while Meta and Alphabet have sharply reduced buybacks versus prior years.
• At the same time, combined CapEx from Amazon, Alphabet, Microsoft, and Meta is projected to reach ~$610B in 2026, up roughly 70% YoY.
• This spending level is nearly 3x 2024 CapEx and over 4x 2023 levels, reflecting an unprecedented infrastructure buildout cycle.
• Amazon, Alphabet, Meta, and Microsoft are each on track to set new records for annual corporate CapEx, underscoring the scale of the AI investment race.

Freight Rates

Drewry World Container Index

China-Global & Shanghai Export Container Freight Index