Market drivers and catalysts
Equities: Equities rise as US hits records on softer jobs, Europe rallies on miners and chips, and Asia steadies on China inflation.
Volatility: VIX remains low, but CPI, bank earnings, and political headlines raise event risk; downside skew persists
Digital Assets: Bitcoin and ethereum steady; IBIT and ETHA softer as macro caution weighs on listed vehicles
Fixed Income: US treasury yield curve flattened Friday. Choppy trading in US treasury futures on Monday on threats to Fed independence.
Currencies: USD weakened Monday on threats to Fed independence. JPY even weaker.
Commodities: Gold and silver jumps on Fed independence concerns; crude holds firm; cocoa slumps
Macro events: US Treasury to auction 3-year and 10-year notes.
Macro headlines
Federal Reserve Chair Jerome Powell said the Fed has been hit with Justice Department grand jury subpoenas threatening criminal charges linked to his June testimony on the Fed’s headquarters renovation. He said the move reflects an escalation of President Trump’s long-running feud with the central bank and pressure from the President to cut rates and vowed to continue doing his job “with integrity and in the public interest” despite the investigation.
Japan’s Prime Minister Takaichi may consider calling snap elections to reclaim the LDP’s traditional parliamentary majority, a move that may come as early as February, as she may seek to capitalise on strong approval ratings.
US job growth slowed further in December, with payrolls rising by 50,000, below both November’s revised 56,000 and the 60,000 forecast, as gains in food services, healthcare and social assistance were partly offset by a 25,000 drop in retail jobs. Revisions cut October–November payrolls by 76,000, leaving 2025 job growth at just 584,000, or an average 49,000 per month, down sharply from 2 million in 2024. Despite weaker hiring, the unemployment rate fell to 4.4% from 4.5% as unemployment dropped by 278,000, helped by a smaller labour force.
On Iran, Trump said that the US is mulling potential options in response to reports of deadly crackdowns in the third week of nationwide protests but added that Tehran’s leadership also reached out to seek talks.
US year-ahead inflation expectations stood at a near one-year low of 4.2% in January, unchanged from December, according to preliminary University of Michigan data. Meanwhile, the five-year outlook increased to 3.4% from December's 3.2%.
US added 50K jobs in December, less than November's revised 56K and below the 60K forecast. Employment grew in food services (27K), healthcare (21K), and social assistance (17K), while retail lost 25K jobs. Federal employment and several other sectors saw little change. Revisions reduced October and November totals by 76K. For the year, payrolls increased by 584K, averaging 49K monthly, a drop from 2024's 2 million gain.
US unemployment rate dropped to 4.4% in December from 4.5% in November, below forecasts. Unemployment decreased by 278,000 to 7.50 million, and employment rose by 232,000 to 163.99 million. The labor force shrank by 46,000, reducing the participation rate to 62.4%. The U-6 rate fell to 8.4% from 8.7%, indicating improved labor market conditions.
Michigan's consumer sentiment in January increased to 54.0, surpassing forecasts and September levels, with gains among lower-income groups. It remains 25% below January 2025 as concerns over prices and the labor market persist. Year-ahead inflation expectations held at 4.2%, above last year's 3.3%, while long-term expectations rose to 3.4% from December's 3.2%.
Canada's unemployment rate rose to 6.8% in December from 6.5%, above the expected 6.6%, due to more people entering the job market. The number of unemployed grew by 73,000, and the labor force expanded by 81,000, raising the participation rate to 65.4%. Net employment increased by 8,200, led by a 50,200 rise in full-time jobs, which offset a 42,000 decline in part-time work.
Macro calendar highlights (times in GMT)
1630 – US to sell USD 58 billion 3-year notes
1700 – USDA Quarterly Grain Stocks & WASDE
1800 – US to sell USD 39 billion 10-year Notes
2330 – Australia Jan. Westpac Consumer Confidence
Earnings this week
Tuesday: Delta Airlines, JPMorgan Chase, Citigroup
Wednesday: Bank of America, Wells Fargo
Thursday: TSMC, Morgan Stanley, Goldman Sachs, Blackrock
Friday: Reliance Industries
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: Wall Street closes higher, with the S&P 500 up 0.6% to 6,966.28, the Dow up 0.5% to 49,504.07, and the Nasdaq up 0.8% to 23,671.35, all at fresh records. December payrolls rise 50,000 and unemployment edges down to 4.4%, which supports the view that growth cools without breaking and keeps rate-cut hopes alive. Intel jumps 10.8% after President Trump praises a meeting with CEO Lip-Bu Tan, Lam Research climbs 8.7% on an analyst target hike, Broadcom gains 3.8% as artificial intelligence (AI) chip demand stays in focus, and Vistra rises 10.5% after a long-term power deal with Meta. Next up, investors watch inflation data and the first big-bank earnings.
Europe: European shares finish strongly, with the Euro STOXX 50 up 1.6% to 5,997.47 and the STOXX 600 up 1.0% to 609.67, both near record levels. Miners and chip stocks lead as Rio Tinto and Glencore revive early merger talk, while Taiwan Semiconductor’s update keeps confidence firm in the AI supply chain. Glencore jumps 9.6% on the renewed talks, Rio Tinto slips 3.0% as investors weigh the odds, ASML gains 6.8% on upbeat chip signals, and Infineon rises 2.3% on the same theme, next week’s focus turns to U.S. data and legal news on tariffs.
Asia: Asia ends the week steadier, with Hong Kong’s Hang Seng up 0.3% to 26,231.79 and China’s Shanghai Composite up 0.9% to 4,120.43, a decade high. The tone improves after China’s consumer price index (CPI) rises 0.8% year on year in December and producer prices (PPI) fall 1.9%, easing deflation worries without declaring victory. Kuaishou climbs 3.6% and CK Hutchison adds 3.6% as sentiment improves, while Zhaojin Mining rises 3.6% and Zijin Gold International gains 2.6% with metals in favour; investors now watch for the next policy steps and early 2026 earnings.
Volatility
Volatility remains low on the surface, with VIX at 14.49 and even calmer short-dated measures (VIX1D 8.49, VIX9D 10.86), despite global equities pushing higher. That calm may be tested this week. The key scheduled risk is US CPI for December on Tuesday, followed by retail sales and PPI on Wednesday, which together can quickly shift interest-rate expectations. Earnings season also begins in earnest with major US banks reporting, putting the spotlight on credit conditions, margins, and guidance.
Beyond the economic calendar, headline risk is elevated. Markets are digesting renewed political pressure on the Federal Reserve, after Chair Powell confirmed the DOJ has issued subpoenas, raising questions around institutional independence. At the same time, geopolitical rhetoric around Greenland adds an additional layer of uncertainty. Even with volatility indicators subdued, investors are clearly not complacent.
SPX expected move (to Fri 16 Jan): options pricing implies roughly ±73 points, or ±1.04%, for the week.
Skew check: SKEW at 146 and the options chain show downside protection still priced at a premium, suggesting investors continue to pay for insurance despite the low VIX.
Digital Assets
Digital assets are modestly firmer, with bitcoin near $91,700 and ethereum around $3,150, while higher-beta tokens such as solana (~$142) outperform. XRP lags slightly. Despite the stabilisation in spot prices, listed vehicles are softer: IBIT (-0.7%) and ETHA (-1.1%) are lower on the day, reflecting sensitivity to broader risk sentiment rather than crypto-specific news.
That cautious tone is clearer in crypto-linked equities. Coinbase and MicroStrategy are weaker, while miners trade mixed, suggesting investors remain selective rather than broadly bullish. With US CPI, renewed Trump–Fed tensions, and ongoing geopolitical headlines in focus, crypto continues to trade as a macro-sensitive risk asset. For now, price resilience is holding, but conviction remains measured.
Fixed Income
US short treasury yields rose sharply on Friday, while longer yields were steady, flattening the US treasury yield curve. The 2-year benchmark treasury yield was more than four basis points higher on the Friday close, trading above 3.53%, while the 10-year benchmark treasury yield was steady after a probe of the multi-month highs above 4.20%, ending the week at 4.17%.
US Treasury futures traded in choppy fashion Monday on the revelation that Fed Chair Powell is being sued by the Department of Justice, a move that most see as an attempt to punish Powell for not lowering rates more quickly.
Commodities
Gold and silver pushed to fresh record highs in early Monday trading after Trump and his administration intensified their attack on the Federal Reserve by serving it with DOJ subpoenas, fuelling concerns about central bank independence, inflation and safety of US bonds. Gold approached USD 4,600, and silver spiked to USD 84.50 as tight supply dynamics persist. Safe-haven demand has been underpinned by escalating unrest in Iran, where ongoing protests continue to challenge the regime and stoke geopolitical risk premia.
Oil prices held firm amid the same unrest in Iran, which has raised the prospect of supply disruption from one of OPEC’s larger producers, triggering fresh momentum buying and short covering from wrong-footed short sellers. At the same time, the US oil industry has shown limited appetite to commit to rebuilding Venezuela’s energy sector after its recent political upheaval. Monthly oil reports from OPEC and the IEA later in the week are likely to draw additional attention.
Cocoa tumbled 12% on Friday as front-running longs, positioned for a rebalancing-driven squeeze, were forced to unwind when exporters used the index-related liquidity to sell. It is a timely reminder that there are no free lunches in markets, and that well-telegraphed events often fail to deliver the price impact implied by headline trade flows.
Currencies
The US dollar ended last week on a firm note, but traded weaker Monday as the market views the US Justice Department subpoena of Fed Chair Powell for possible criminal indictment as an attempt by the Trump administration to interfere more directly in the Fed’s rate setting policy. EURUSD traded as low as 1.1618 Friday, but had rebounded to near 1.1670 in the Monday session in Asia.
The Japanese yen remained broadly weak, possibly on the notion that PM Takaichi calling snap elections soon could strengthen her more fiscally aggressive agenda. USDJPY traded as low as 157.52 in the Monday session in Tokyo, but rebounded to 158.00+ in later hours, while EURJPY pulled back well above 184.00 after posting the all time high of 184.92 three weeks ago.
