US 10-year Treasury yield eases as inflation softens

US headline inflation eased to 2.40% in January 2026, its lowest level since May 2025 and below the 2.50% forecast, pushing the 10-year Treasury yield down to 4.07%. Economists welcomed the moderation, noting that much of the slowdown reflects base effects, as elevated readings from the same period last year rolled out of the year-on-year comparison. Markets are now pricing in two further rate reductions later this year.

Equity futures recovered from early Friday losses, though major indices finished largely flat, with the S&P 500 and Nasdaq steady and the Dow shedding 100 points to close a 1.50% weekly decline amid ongoing artificial intelligence (AI) market volatility.

Concerns over data-centre investment weighed on megacap tech and semiconductor stocks, with Nvidia down 2.20%, Apple 2.30%, Alphabet 1.10%, Meta 1.60%, and Broadcom 1.80%. Oracle, Palantir, Microsoft and Micron remained flat following recent declines. By contrast, Salesforce rose 2.30%, while Applied Materials and Arista Networks jumped 10% each on strong earnings, bucking the wider tech weakness that marked a third consecutive weekly retreat. 

In energy markets, the United States eased sanctions on Venezuela’s oil and gas sector by issuing two general licences, allowing international energy firms to manage operations in the OPEC nation and enabling others to secure agreements for new capital inflows. According to Reuters, this marks the most significant relaxation of restrictions since US forces seized and removed President Nicolás Maduro last month, paving the way for broader foreign participation in Venezuela’s energy industry.

On the commodities front, silver rallied close to 4% on Friday, climbing above $77.50 an ounce to recover some of Thursday’s steep losses. Gold also advanced towards $5 020 an ounce, building on its rebound and trimming weekly losses.

European shares edged down marginally for a second day on Friday, dragged by heavyweight lenders that lagged behind US markets.  The STOXX 50 slipped 0.40% to 5,987, while the broader STOXX 600 dipped 0.10% to 617—marking back-to-back modest declines after Wednesday's record peak. Banks such as UniCredit, Deutsche Bank and BBVA tumbled between 3.50% and 4%, L'Oréal shed 5% on softer year-end sales despite its earnings release and Hermès dipped slightly despite surpassing profit forecasts; Safran, however, soared 8.30% after lifting its full-year revenue and earnings outlook. Eurozone employment rose 0.30%, sustaining gradual job gains and supporting prospects for stable European Central Bank (ECB) rates.

In the UK, the FTSE 100 climbed 0.30% following Thursday's 0.70% retreat, buoyed by recoveries in AI-exposed and defence shares, with RELX spearheading a 9% jump, joined by London Stock Exchange Group up over 0.50% as markets recalibrated AI-related disruption fears. Germany's DAX 40 gained 0.30%, ending a three-day skid on strength from defence, aerospace and technology names.

Asian markets closed mixed as unease around global technology shares coincided with lighter trading volumes ahead of regional celebrations close. In Hong Kong, the Hang Seng Index slipped 0.90 % to 27 032.54 as investors pared positions ahead of the Lunar New Year break. Technology counters were under pressure, with Lenovo dropping 4.60% and NetEase losing 4.10%. Alibaba Group edged 0.90% lower despite stepping up its focus on AI offerings. In Japan, the Nikkei 225 ended little changed at 57 639.84 after briefly moving above the 58 000 level earlier in the session. On the mainland, the Shanghai Composite was comparatively steady, adding 0.10% to close at 4 134.02.

Locally, the rand came under pressure on Friday following a decline in global commodity prices alongside stronger-than-expected US labour data. However, some early support emerged from precious metals markets. CNBC Africa noted that the initial uptick in commodities could curb further currency weakness, as the modest rebound in prices may help limit additional downside if sustained.

In further developments, President Cyril Ramaphosa, in his address to Parliament on Thursday, outlined plans to deploy the military to combat organised crime and indicated that legal action would be taken against municipal officials who fail to provide water services to communities. The favourable market response could further bolster investor confidence in the rand.