Market update - February 13th, 2026

The US economy is slowing: all eyes on the Fed

This week’s data continue to reinforce a theme that has been building for several months: the US economy is slowing at the margin, but it is not stalling. Headline nonfarm payrolls rose by 130k, modestly above consensus near 110k, and the unemployment rate edged down to 4.3%. On the surface, that looks resilient. But the revisions matter more. Prior months were revised lower by a combined 175k, and on a rolling three-month basis average job gains are now closer to 95k versus roughly 220k at the same point last year. Strip out private healthcare and government, and the private economy has been broadly flat to negative in job creation. Wage growth at 0.3% month on month and 3.9% year on year remains firm, but it is no longer accelerating. This is late cycle deceleration rather than renewed expansion.

Retail sales tell a similar story. Headline sales flatlined month on month against expectations for a 0.4% gain, and the control group, which feeds directly into GDP, fell 0.1%. Real consumption is not collapsing, but households are becoming more selective, particularly in discretionary categories. The excess savings impulse has faded and higher real rates are increasingly binding.

US inflation hits 8-month low

Inflation dynamics are also shifting. Core CPI came in at 2.4% year on year, and CPI more broadly has been on a clear downward trend since September 2025, just as the Fed began cutting rates. That is important. It suggests monetary policy remains restrictive in real terms. Inflation is cooling even as nominal rates have started to fall, implying real rates are still exerting downward pressure on demand. In other words, the easing cycle has begun, but policy is not yet easy.

For the Federal Reserve, the message is nuanced but tilting dovish. Growth momentum is cooling and inflation is trending lower. While consensus still embeds two cuts, the balance of risks now leans toward the Fed potentially doing more if labour market softness broadens. The probability of renewed tightening has faded materially.

For Bitcoin, this macro mix matters. Slower growth and a sustained disinflation trend reduce the risk of further hikes and increase the probability that real yields drift lower over time. Historically, Bitcoin has responded positively to easing liquidity conditions and falling real rates. The fact that inflation continues to trend down despite initial rate cuts reinforces the view that policy is still restrictive, which provides room for further easing if required. That dynamic may help establish a floor under Bitcoin prices.

Near term, however, positioning remains relevant. On-chain data show fresh selling from the whale cohort holding more than 10k BTC. While whale selling had slowed in recent weeks, this suggests their selling is not fully exhausted. Fund flows support that caution. Bitcoin ETPs recorded US$423M of inflows earlier in the week, but the last two trading sessions saw US$636M of outflows. The market remains sensitive.

Add in political uncertainty, including the potential for a targeted shutdown of the Department of Homeland Security if lawmakers fail to reach agreement, suggests volatility is likely to persist in the near term.

Stepping back, the structure is clearer. The US economy is cooling, inflation has been trending down for several months, and policy remains restrictive even as cuts have begun. The debate is likely to how far and how fast it ultimately eases. In that environment, Bitcoin remains primarily a function of liquidity and real yields. If the path ahead is slower growth and gradually easier policy, the medium term backdrop could become incrementally more constructive, even if short term noise continues.