Guardian Weekly Market Report – Issue 204

Reports of Note Due This Week

U.S. financial markets on Thursday will be eagerly awaiting the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditures (PCE) Price Index which will be released at 8:30 AM. This week also brings us new home sales, the Case Shiller home price index and pending home sales.

• Monday:
  10:30AM – Bank of Canada Market Participants Survey (Q4)
• Tuesday
  6:00AM – NFIB Small Business Economic Trends (Jan)
  8:15AM – ADP National Employment Report estimate
  10:00AM – Business Inventories (Nov)
• Wednesday:
  8:30 – U.S. Consumer Price Index (CPI) (Jan)
  1:30PM – Bank of Canada summary of deliberations
  2:00PM – US Treasury Budget
• Thursday:
  8:30AM – Initial Jobless Claims (Feb 7)
  10:00AM – Existing Home Sales (Jan)
• Friday:
  8:30 AM – US Consumer Price Index (Jan)

Geopolitics

Accusations exchanged at a global disarmament conference in Geneva underscored deepening tensions between the United States and China just as nuclear arms control entered a precarious new phase following the expiry of New START, the last treaty limiting U.S. and Russian strategic weapons. U.S. officials accused China of secretly conducting low-yield nuclear explosive tests in violation of test ban commitments, allegations Beijing firmly denied, countering that Washington was exaggerating a “China nuclear threat” while fueling a renewed arms race. The treaty’s expiration leaves Washington and Moscow without binding constraints for the first time in decades, raising fears of miscalculation and accelerated nuclear buildups, especially as China rapidly expands its arsenal. While the U.S. is pushing for a broader agreement including Beijing, China has rejected participation for now, leaving a dangerous arms control vacuum amid rising global geopolitical tensions.

U.S. forces shot down an Iranian drone after it approached the aircraft carrier USS Abraham Lincoln in the Arabian Sea, with U.S. Central Command saying the drone ignored de-escalation measures and showed unclear intent. Iran disputed the account, calling the flight a routine reconnaissance mission in international waters. The incident comes amid heightened U.S.–Iran tensions as President Donald Trump weighs possible military action, while both sides signal interest in negotiations, with senior officials expected to meet in Turkey. Iranian officials warned that any new conflict would likely become a regional war and highlighted Iran’s ability to disrupt shipping through the Strait of Hormuz, a key global oil transit route. In a separate episode, Iranian Revolutionary Guard forces harassed a U.S.-flagged merchant vessel in the strait before U.S. naval escort de-escalated the situation, underscoring the fragile security environment in the region.

President Volodymyr Zelenskyy said the United States has given Ukraine and Russia until June to reach a deal to end the nearly four-year war, warning that Washington will likely intensify pressure on both sides if the deadline is missed. Speaking as Russia launched another large-scale assault on Ukraine’s energy infrastructure-forcing nuclear power plants to cut output and deepening nationwide power shortages-Zelenskyy said the U.S. wants a clear timeline and has proposed hosting the next round of trilateral talks in the U.S., possibly in Miami. He added that Russia presented a sweeping economic proposal tied to negotiations, but major gaps remain, particularly over Moscow’s demand that Ukraine withdraw from the Donbas and unresolved disputes over the Zaporizhzhia nuclear plant. Zelenskyy said Ukraine remains open to a U.S.-proposed ceasefire on energy strikes if Russia complies, noting past pauses were quickly violated.