Written Commentary
ADM Reports Q4 and Full-year 2025 Results
February 3, 2026
US CPI may offer some distractions from focus on Middle East conflict, oil market buffeted by confused and misleading comments from officials, rush of AI and other credit issuance.
- US CPI seen broadly steady as downward pressure from housing, autos & clothing offset upward pressure on electronics and leisure goods & Services; debatable whether Feb data relevant given energy price surge.
- USD corporate issuance records.
EVENTS PREVIEW
Statistically, we move from yesterday’s feast to today’s relative famine, though US CPI will have some capacity to distract markets at least temporarily from a steely eyed focus on the Middle East conflict.
Event-wise, UK Chancellor Reeves testifies to the House of Commons Treasury Select Committee on last week’s Spring Budget Statement, though it is difficult to see how this will offer any fresh insights after last week’s statement over-achieved in telling us nothing that was not already known.
As far as the conflict with Iran goes, the intensified bombing of military and other infrastructure on Tuesday is incongruous with the idea of a rapid end to hostilities, though a sharp fall (estimated to be between 80 and 90%) in Iranian drone and missile attacks on GCC countries since the start of the conflict does suggest that attacks have rapidly depleted Iran’s defensive capabilities. Oil and energy continue their roller coaster ride, with the level of ambiguous or downright misleading commentary from the US administration seemingly knowing no bounds. Commentary from various ECB officials imparts a medium-term hawkish bias for rates, though for the time being, they are erring on the side of arguing that any upward inflationary pressures will likely be ‘transitory’. In part, this reflects weak underlying growth trends and wanting to discourage markets from discounting a rate hike before H2 2026, but also appears to rest a lot on hope that the conflict will not be long lasting. However, the bigger challenge is trying to work out what level of disarray and chaos in Iran will ensue from any end to the conflict, given the likelihood that a very unaligned group of militias and separatist groups to seize the opportunity of challenging the authority of a weakened IRGC looks to be substantial.
** U.S.A. – February CPI **
- CPI is expected to remain subdued, with headline seen up 0.3% m/m for an unchanged 2.4% y/y, with core CPI up a very ‘average’ 0.2% , leaving the y/y unchanged at 2.5% y/y. In the detail, OER (housing), used cars and clothing are expected to exercise downward pressure, and offset upward pressure on electronics (above all due to the sharp rise in memory chip prices), leisure and recreation services. This is likely to contrast with the older January PCE deflators on Friday, which are seen at 2.9% y/y headline and 3.1% y/y core. But in both cases, the surge in energy prices since the start of the conflict with Iran renders them rather irrelevant to the short-term inflation outlook, and by extension, the Fed’s rate path.
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