Daily Market Report – February 20, 2026
The trading day of February 20, 2026, was marked by a legal sensation: The Supreme Court (www.supremecourt.gov/opinions/25pdf/24-1287_4gcj.pdf) declared the far-reaching "emergency tariffs" under IEEPA to be unlawful. Initially, there was relief in the markets: The ruling is expected to lower import costs and inflation; at the same time, a significant refund risk arises as companies examine refunds for tariffs already paid – Reuters/Penn-Wharton estimates the potential refund volume at over $175 billion. The Supreme Court has not commented on possible refunds. The second effect is political in nature: The White House will now seek alternative legal grounds for its tariff policy. Uncertainty regarding U.S. tariff policy remains high.
The U.S. economy (www.bea.gov/sites/default/files/2026-02/gdp4q25-adv.pdf) grew by only 1.4% (annualized) in the fourth quarter of 2025. The positive contributions came mainly from consumption and investment, while government spending, foreign trade, and the government shutdown hindered growth. The Fed's preferred price index came in higher than expected: The PCE price index (www.bea.gov/sites/default/files/2026-02/pi1225.pdf) for December 2025 rose by +0.4% compared to the previous month and was +2.9% higher than the previous year.
On Friday, the stock markets rose while bonds and the U.S. dollar declined. The S&P 500 TVC:SPX increased by 0.69%. The yield on the 10-year U.S. Treasuries TVC:US10Y trended higher, as the ruling could prove to be a burden on public finances. The muted market reaction suggests that market participants do not expect Trump to fundamentally change the course of his economic policy (“America first,” “MAGA”). He has already announced a new global tariff of 10%.