Macroeconomics: The Day Ahead for 20 February 2026

A busy day for data to end the week, with Japan’s National CPI and UK Retail Sales & PSNB to digest ahead of the run of ‘flash’ PMIs, with Eurozone Negotiated Wages, US Q4 GDP, Personal Income, PCE and final Michigan Sentiment. Otherwise the focus will be on the latest US Supreme Court public non-argument session, which may or may not rule on Reciprocal Tariffs, along with a few Fed speakers. While the rising rhetorical tensions between the US and Iran remain, if not the key focal point, the shift in tone from Fed arch dove Miran, acknowledging both the recovery in labour demand and the ‘stubborn’ level of goods inflation underscores a very steady outlook for US rates in coming months, and it will be interesting to see if the other dissenter Waller falls into line with the majority in his speeches on Monday and Tuesday.

 Next week is heavy on monthly activity surveys (e.g. German Ifo, US Consumer Confidence, French Business Confidence) with US PPI, CPI from Germany, France, Japan and Australia, Indian Q4 GDP, Australian Q4 CapEx and Construction Output providing the data highlights. China holds its monthly Loan Prime Rate fixings, while rates are seen on hold in South Korea, down 25 bps in Hungary and Israel, and there will also be a plentiful slate of ECB, Fed, BoE and BoJ speakers.

** U.K. – Jan Retail Sales, PSNB **

– Once again UK data continue to surprise on the upside, underlining that much of the Q4 GDP weakness was more a function of what turned out to be a much more benign budget than had been anticipated. Given the poor weather in January, the 1.8% m/m rebound in Retail Sales gets Q1 Personal Consumption off to a solid start (even if the weather will likely on services spending). While PM Starmer’s position remains parlous, the record £30.4 Bln budget surplus, paced by a surge in capital gains tax receipts and lower interest payments offers a lot of relief in terms of the UK’s well documented fiscal challenges.

** G7/India – February ‘flash’ PMIs **

– Japan and India saw similar outturns with Manufacturing picking up significantly, while Services PMIs were broadly steady at solid levels, while the Eurozone PMIs posted a a welcome return to growth in Manufacturing, and a solid pace of expansion in Services, though France continues to be a laggard. UK PMIs are seen easing from unexpected strength in January but remaining solid at 51.5 for Manufacturing and 53.5 on Services. In the US both Manufacturing and Services are expected to signal a steady expansion relative to January at 52.3 and 52.9 respectively, with risks looking skewed to the upside in light of other anecdotal evidence and surveys.

** U.S.A. – Q4 prov. GDP, Dec Personal Income/PCE **

– Q4 GDP has to be seen in the context of the drag from the record long government shutdown, with the consensus looking for 3.0% SAAR, following Q3’s 4.3%, with Personal Consumption easing to 2.6% from 3.5%, and core PCE deflator to 2.6% y/y from 2.9%. As ever Final Sales to Domestic Buyers (effectively GDP ex-Trade & Inventories) will offer a more sanguine view of growth trends, likely slowing to below 2.0% from Q3’s 2.8%, with the shutdown disruption to govt defence spending likely accounting for much of that decline, along with some moderation in Business Investment in Equipment from a ‘hot’ 5.2% SAAR in Q3. Monthly Personal Income and PCE data for December will unusually be released at the same time, though forecasters see only a modest dip in PCE to 0.4% m/m from 0.3%, with Personal Income steady at 0.3% m/m, while headline and core PCE Deflators are expected to pick up to 0.3% m/m from 0.2%, with y/y rates little changed at 2.8% and 2.9%.