Market Update - January 2026

Heavy Metals, Heavy Rotation: January’s Markets Beneath the Headlines

Markets in the first month of 2026 were positive, but January was anything but quiet.

From inflation and Fed policy to geopolitical flashpoints and a sharp shift in market leadership, 2026 opened with volatility hiding just below the surface.

Here’s a snapshot of the headlines shaping markets right now:

January 2026 Headline Roundup

US policy and political risk

• Inflation held at 2.65%, with core steady but food prices jumping
• The Fed held rates at 3.50–3.75%, signaling patience despite political pressure
• Chair Powell’s term ends in May 2026, adding uncertainty to the policy outlook
• Immigration enforcement tensions escalated, raising shutdown risk
   

Geopolitics and global growth

• A brief US/Greenland/NATO tariff standoff cooled after an Arctic security framework deal
• The US detained Venezuelan President Nicolás Maduro, heightening regional tensions
• China reaffirmed 5% growth for 2025 as the IMF upgraded its 2026 outlook
• Global growth expectations rose to 3.3%, even as tariffs sit at their highest levels since the 1930s
• The Bank of Japan held rates at 0.75%, while fears of currency intervention caused a sharp rise in yields

Markets reacted with rotation, not retreat

• Leadership shifted sharply from Growth to Value, and from mega caps to small caps
• International markets outpaced the US, led by emerging markets
• Gold and silver surged on safe haven demand before a dramatic late-month reversal
• Technology lagged despite continued investment in AI

The S&P 500 finished January modestly higher, but the real story was underneath the surface. Market breadth broadened, leadership rotated, and investors began repositioning for a slower, more uncertain rate environment.

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