Market Update 23rd February 2026

New Lunar Year, New Tariffs

Last week was busy – Chinese New Year, the Winter Olympics closed with a record number of gold wins for GB (3), Fed minutes were released, and the US Supreme Court ruled Donald Trump’s 2025 tariffs were unlawful. Let’s begin…

The January Fed minutes were released last week and showed something different than the previous few meetings, a split Fed. The decision was nearly unanimous to keep interest rates at the 3.5-3.75% level, however opinions were split over future rate cuts.

The annual US Inflation rate is currently 2.4% and unemployment is 4.3%. Unemployment fell from 4.5% and consumer price inflation was weaker than expected. In the minutes it was highlighted that progress towards the 2% inflation objective of the committee will be more uneven and slower than previously expected. Strong growth in the US as supported by government policies and the AI boom are some of the reasons why the committee are cautious. The committee members see AI as having a great potential, but also acknowledge that it comes with significant risk and could cause uncertainty.

The Fed has a dual mandate of price stability and maximising employment without generating excessive inflation. It is the dual mandate which leads to some of the split votes. Two Fed governors voted for cuts in the January meeting citing the potential for job market weakening. Although the job market has strengthened slightly in the most recent update, the overall trend over the last couple of years has been a steady increase in unemployment. In January 2024 it was 3.7%.

Inflation in the US is expected to come down, but it was quoted that the “possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels”. So, a potential for rate hikes. Others in the committee see it as prudent to hold until disinflation is evidenced.

However, all of this contrasts with what President Donald Trump is demanding. He wants to see rate cuts and soon. Jerome Powell, the Fed Chair, has pushed back, but he only has two more meetings as chair. His replacement is Kevin Warsh who was POTUS’ pick, if he is confirmed by US Senate. This will be a tricky time for the committee and new chair to see if they follow the data and are truly an independent central bank.

The market after the news seems to think the Fed will hold rates at current levels until June and then will likely see cuts as the new chair steps into the role. Currently there was little reaction to the potential for future hikes.

In other news the US Supreme Court ruled that the tariffs brought in by POTUS in April last year were illegal. The reasons given for the tariffs were “national emergencies”, and the Supreme Court looked into these to decide if they stood up. Emergencies included: public health emergency caused by Mexico, Canada, and China due to drug importation and Brazil threatening to ban X (formally Twitter). The ruling means the US government might have to refund businesses who have been importing goods under these tariffs. It has been estimated that the US government has generated $130bn from the tariffs but refund values have been quoted anywhere between $175-$300billion. There is currently no official guidance from the Supreme court on refunds.

The President was not happy, as you can imagine, and evoked something called section 122 of the 1974 Trade Act. What is that you may ask? I had the same question. Section 122 of the 1974 Trade Act allows the President to impose up to 15% tariffs on countries around the world. So all the old tariffs are now being replaced by a 15% global tariff, but this is only allowed for 150 days before the President needs congressional approval. Donald Trump originally moved tariffs to 10% on Friday but since then has announced the increase to 15%.

The market did react to this with gold and silver surging again, gold rose 2.2% and silver rose 3.5% on Friday. Gold is up 18% YTD, and silver is up near 12% YTD. There are new expectations by UBS that the gold price could reach $6,200/oz soon. Currently the price is $5,118.5/oz. The S&P closed up slightly at 0.7%.

At the end of week we entered into a new lunar year, the year of the fire horse. Great Britain won three golds, one silver, and one bronze, a record breaking winter Olympics for GB. And finally, I don’t think we’ve heard the last from tariff land, so we will keep portfolios diversified and will look to trade around market volatility.

Emily Cave – Research Analyst

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