Risk premia rising: Energy, Canada growth and Japan’s policy shockwaves

February 2026

Over the last month, markets have been remarkably resilient despite being pulled in three directions: Middle East conflicts have pushed energy prices back to the centre of the inflation story; growth in Canada is softening just as commodities, including precious metals, are becoming more volatile; and Japan’s rate trajectory is reintroducing global duration risk as politics and policy uncertainty heighten the risk of a broader carry-trade unwind narrative. The common thread is that the market backdrop is shifting from “smooth disinflation” to a noisier mix of supply shocks, policy and geopolitical uncertainties, and cross-asset volatility.

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