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Posted February 4, 2026 at 12:24 pm
Central bank decisions will be interesting to watch in the next few months, especially in consideration of the first major economy, Australia, starting 2026 with a hike yesterday. For tomorrow, the monetary policy institutions in Europe and Mexico are expected to keep their rates unchanged with elevated, 95% degrees of confidence, even as the former saw its inflation drop well below its 2% target this morning to 1.7%, and the latter reduced its benchmark in the 12 consecutive meetings through December. The European Central Bank (ECB) is managing slowing price pressures, expansionary conditions and a stronger euro, which may compel a risk management adjustment towards easing at a meeting in the near future. Banxico, meanwhile, faces a landscape that narrowly avoided recession last year amidst cost forces that are at 3.7%, exceeding its 3% objective. Indeed, the organization is dealing with a tough balancing act similar to that of the Bank of England, as policymakers are at least temporarily trading off inflation and currency protection mandates with a heavier focus on avoiding job losses and economic downturns.
The 190K threshold for initial unemployment claims has failed to be exceeded only one time in the past six years and in just 33 occurrences in the 3,082 observations that have transpired since 1967. In percentage terms this means that a number of 190k or lower has happened in approximately 1% of the cases. In consideration of the historical analysis, the “Yeses” at 180k and 190k are significantly undervalued at $0.90 and $0.84, in my opinion. But also, the indicator hasn’t arrived ahead of 270k going back to October 2021, roughly four and a half years ago, and the “No” is attractive there as well at $0.98, from my perspective. As far as what Wall Street is expecting, the 35 forecasters in the weekly Reuters poll carry a median of 212k, against the backdrop of minimum and maximum projections of 205k and 220k.
Participants price a 63% chance that the Dallas Fed’s Weekly Economic Index (WEI) will surpass 2.4% tomorrow, a number that has been exceeded in the past two out of three readings and in the last three out of five prints. Meanwhile, the averages over 8, 16 and 24 week periods are at 2.29%, 2.25% and 2.28%, meaning that forecast traders anticipate a continued acceleration in activity.
Source for images: ForecastEx
Note: Prices are highest bids as of the morning of Feb. 4, 2026. Red circles around the thresholds were inserted by J. Torres to highlight “Yes” and “No” answers throughout different levels.
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This material is from IBKR Macroeconomics, an affiliate of Interactive Brokers LLC, and is being posted with its permission. The views expressed in this material are solely those of the author and/or IBKR Macroeconomics and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
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