{"id":58633,"date":"2026-02-17T03:38:26","date_gmt":"2026-02-17T07:38:26","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/uk-labor-market-softens-boosting-rate-cut-bets-bofa-survey-warns-of-ai-bubble\/58633\/"},"modified":"2026-02-17T03:38:26","modified_gmt":"2026-02-17T07:38:26","slug":"uk-labor-market-softens-boosting-rate-cut-bets-bofa-survey-warns-of-ai-bubble","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/uk-labor-market-softens-boosting-rate-cut-bets-bofa-survey-warns-of-ai-bubble\/58633\/","title":{"rendered":"UK Labor Market Softens Boosting Rate Cut Bets; BofA Survey Warns of AI Bubble"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>UK unemployment rose to 5.2%<\/strong> in the three months to December, exceeding estimates of 5.1%, while <strong>average weekly earnings growth cooled to 4.2%<\/strong>, triggering a surge in Bank of England (BoE) rate cut bets.<\/li>\n<li><strong>Traders have now fully priced in two interest rate cuts<\/strong> from the BoE this year as labor market tightness eases more rapidly than anticipated.<\/li>\n<li><strong>Bank of America&#39;s (<a href=\"\/stock\/BAC\">BAC<\/a>) latest Fund Manager Survey<\/strong> flagged an <strong>&quot;AI Bubble&quot; as a key tail risk<\/strong>, even as earnings optimism reached its highest level since August 2021.<\/li>\n<li><strong>Antofagasta (<a href=\"\/stock\/ANTO\">ANTO<\/a>) reported FY 2025 revenue of $8.68 billion<\/strong>, beating analyst estimates, though pretax profits of <strong>$3.16 billion<\/strong> slightly missed the $3.19 billion consensus.<\/li>\n<li><strong>German inflation remained stable at 2.1% YoY<\/strong> in January, matching expectations and providing a steady backdrop for the European Central Bank&#39;s policy considerations.<\/li>\n<\/ul>\n<h2>UK Labor Market Cooling Shifts BoE Outlook<\/h2>\n<p>The UK labor market showed significant signs of cooling in the final quarter of 2025 and early 2026. The <strong>ILO Unemployment Rate climbed to 5.2%<\/strong>, up from the previous 5.1%, while <strong>Employment Change for the three months to December came in at 52,000<\/strong>, far below the <strong>108,000<\/strong> analysts had expected.<\/p>\n<p>Wage pressures are also receding, with <strong>Average Weekly Earnings (including bonuses) slowing to 4.2%<\/strong> compared to the previous 4.7%. This combination of rising unemployment and slowing pay growth has led markets to <strong>fully price in two 25-basis-point rate cuts<\/strong> by the Bank of England before the end of 2026. <em>Traders are increasingly betting that the central bank will need to pivot sooner to support a flagging economy.<\/em><\/p>\n<h2>BofA Survey: AI Bubble Fears and &quot;Crowded&quot; Gold Trades<\/h2>\n<p>The February Bank of America (<a href=\"\/stock\/BAC\">BAC<\/a>) Fund Manager Survey (FMS) revealed a complex sentiment landscape. While <strong>earnings optimism is at a multi-year high<\/strong>, institutional investors are growing wary of a potential <strong>AI bubble<\/strong>, citing it as a top tail risk alongside high private credit risk.<\/p>\n<p>The survey also noted that the <strong>&quot;Long <a href=\"https:\/\/stockmarketwatch.com\/metal\/gold\" data-internallinksmanager029f6b8e52c=\"4\" title=\"gold price today\">Gold<\/a>&quot; trade has become increasingly crowded<\/strong>, as investors seek hedges against geopolitical instability. Despite these concerns, fund managers have pushed <strong>cash levels down to 3.4%<\/strong>, rotating heavily into <strong>commodities and equities<\/strong>, which have reached multi-year overweight highs. <em>The record levels of overinvestment concerns suggest a market that is leaning heavily into risk despite underlying structural fears.<\/em><\/p>\n<h2>Corporate Highlights and Global Macro Data<\/h2>\n<p>Mining giant Antofagasta (<a href=\"\/stock\/ANTO\">ANTO<\/a>) released its FY 2025 results, posting a <strong>60.3% EBITDA margin<\/strong> on revenues of <strong>$8.68 billion<\/strong>. The company issued 2026 copper production guidance of <strong>650,000 to 700,000 tons<\/strong>, signaling a steady outlook for the copper market. Meanwhile, Deutsche Bank (<a href=\"\/stock\/DB\">DB<\/a>) raised its price target for Sobi to <strong>SEK 450<\/strong>, reflecting positive sentiment in the European biotech sector.<\/p>\n<p>In Europe, <strong>Germany&#39;s Harmonized CPI remained unchanged at 2.1% YoY<\/strong> for January, suggesting that the disinflationary trend in the Eurozone&#39;s largest economy is stabilizing. In Turkey, the <strong>House Price Index saw a monthly jump of 3.7%<\/strong>, though the year-on-year growth slowed slightly to <strong>27.7%<\/strong>.<\/p>\n<h2>Geopolitical Tensions in the Strait of Hormuz<\/h2>\n<p>Geopolitical risks remain on the radar as <strong>Russia, Iran, and China<\/strong> reportedly dispatched naval vessels to the <strong>Strait of Hormuz<\/strong>. The ships are participating in the <strong>&quot;Security Belt 2026&quot;<\/strong> joint maneuvers, a move that could heighten tensions in one of the world&#39;s most critical oil transit chokepoints. <em>Market participants are closely monitoring these developments for potential impacts on energy prices and global trade stability.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways UK unemployment rose to 5.2% in the three months to December, exceeding estimates of 5.1%, while average weekly 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