Market drivers and catalysts
Equities: U.S. stocks rose ahead of the Federal Reserve, Europe edged up, Asia mixed as Japan fell and Hong Kong held.
Volatility: Vix stable, short-dated stress fades, skew elevated, Fed decision in focus
Digital assets: Bitcoin rangebound; altcoins steady; IBIT resilient; ETHA softer; macro-driven sentiment
Currencies: JPY comeback has stalled after steep rally. US sideways after sharp weakening Monday.
Commodities: Gold holds above USD 5,000; silver’s wide range highlights growing unease and potential rally fatigue; nat gas retreats after doubling
Fixed Income: Japan’s yields rise again, US benchmark 10-year treasury yield quiet after retreating to important level
Macro: US Jan Conference Board Consumer Confidence
Macro headlines
Trump announced tariffs on South Korean goods would rise from 15% to 25%, affecting products like cars and pharmaceuticals if its legislature failed to sign the trade deal agreed back in July. The timing of the new tariffs is unclear.
US durable goods orders jumped 5.3% in November 2025, rebounding from a 2.1% October drop, driven by a 97.6% surge in civilian aircraft orders. Other increases included electrical equipment, metals, machinery, and electronics. Excluding transportation, orders rose 0.5%; excluding defense, they surged 6.6%. Non-defense capital goods orders, excluding aircraft, increased 0.7%.
The Chicago Fed National Activity Index rose to -0.04 in November 2025 from -0.42 in October, showing improving economic growth (the number is relative to trend growth). Production contributed +0.08, up from -0.26; employment improved to -0.07 from -0.11; sales and inventories held at -0.03; and consumption and housing ticked up to -0.02. The CFNAI Diffusion Index rose to -0.24 from -0.43.
Focus is on Wednesday’s Fed decision amid speculation of the announcement of Trump’s choice for Fed Chair and a possible partial government shutdown from Democratic opposition to Homeland Security spending. Trade uncertainty remains with Trump’s tariff threat on Canadian imports linked to a China deal, though Ottawa downplays it.
Macro calendar highlights (times in GMT)
1315 – US Weekly ADP Employment Change (4 weeks ending Jan 3)
1400 – US Nov. Home Price Index
1500 – US Jan Conference Board Consumer Confidence
1800 – US Treasury to auction 5-year notes
0030 – Australia Dec. and Q4 CPI data
Earnings events
Today: LVMH, UnitedHealth, Boeing, RTX, NextEra Energy, Texas Instruments, Union Pacific, HCA Healthcare, General Motors, UPS, Seagate, Northrop Grumman, Atlas Copco
Wednesday: Microsoft, Meta, Tesla, ASML, Lam Research, IBM, Amphenol, GE Vernova, AT&T, Danaher, ServiceNow, Starbucks, General Dynamics
Thursday: Apple, Samsung, Visa, Mastercard, Roche, SK Hynix, Caterpillar, SAP, ThermoFisher Scientific, KLA Corp, Blackstone, Southern Copper, ABB, Lockheed Martin
Friday: ExxonMobil, Cheveron, American Express, Verizon, Regeneron
For all macro, earnings, and dividend events check Saxo’s calendar.
Equities
USA: The Dow rose 0.6% to 49,412.40, the S&P 500 gained 0.5% to 6,950.23, and the Nasdaq added 0.4% to 23,601.36 as investors positioned for the Federal Reserve (Fed) decision and a heavy earnings week. Apple climbed 3.0%, Meta rose 2.1% and Microsoft gained 0.9% as traders leaned into big-tech results, while Tesla fell 3.1% as investors de-risked ahead of its own report. Safe-haven flows stayed loud too, with gold briefly topping $5,110 an ounce as fiscal and geopolitical noise kept risk appetite in check.
Europe: Europe finished slightly higher, with the STOXX 600 up 0.2% to 609.57 and the Euro STOXX 50 up 0.2% to 5,957.80 as investors looked through recent tariff jitters and toward the Fed and earnings. Puma rebounded 17.0% after heavy recent losses, while Adidas gained 2.2% as sentiment across the sector stabilised. Rheinmetall slipped 2.1% as defence names cooled, and the next test is a busy run of bank results and central-bank signals.
Asia: Asia was mixed: Japan’s Nikkei 225 slid 1.8% to 52,885 and the Topix dropped 2.1% to 3,552.49 as a stronger yen pressured exporters, while Hong Kong’s Hang Seng edged up 0.1% to 26,765.52 and China’s CSI 300 added 0.1% to 4,706.96. In Tokyo, tech-linked names led the fall, with Fujitsu down 7.8%, Renesas off 6.3% and Sumco lower by 6.1%. In Hong Kong, property shares outperformed as lower rates and the removal of stamp duty supported the housing theme, and markets now waited for the Fed and fresh China data.
Volatility
Market volatility remains contained after last week’s tariff-driven wobble, with the VIX holding near the mid-teens ($16.15). Very short-dated volatility dropped sharply, suggesting investors feel more comfortable about immediate headline risk, even if confidence is not fully restored. Attention now shifts to the Federal Reserve meeting (27–28 January), where rates are expected to remain unchanged, but markets will be highly sensitive to Chair Powell’s tone on inflation, rate cuts, and the broader policy outlook.
Despite calmer headline volatility, option pricing still reflects caution beneath the surface. Skew remains elevated, meaning downside risks are priced more expensively than upside, a typical pattern when investors stay invested but keep protection in place.
Expected move (SPX, this week): options imply a move of roughly ±80 points (about ±1.2%) into Friday’s close.
Skew check (today’s expiry): skew appears broadly balanced to slightly upside-leaning near the money, indicating no urgent demand for same-day crash protection, but still a preference to manage risk selectively.
Digital Assets
Crypto markets traded in a narrow range, with bitcoin holding near $88,000 and most major altcoins showing only modest moves. Ethereum hovered just below $3,000, while solana and xrp remained stable, reflecting a broader “wait-and-see” mood ahead of the Fed decision.
ETF price action was softer on the day, with both IBIT and ETHA lower, broadly in line with cautious risk sentiment. The more interesting signal came from recent flows. Bitcoin ETF flows were slightly positive, led by IBIT, while ethereum ETF flows were positive overall but split beneath the surface, with ETHA seeing outflows and strong inflows going into competing products.
For investors, the message is one of selectivity rather than broad enthusiasm. Crypto remains closely tied to macro conditions and liquidity expectations, meaning upcoming Fed communication is likely to be a key driver for the next directional move rather than crypto-specific news alone.
Fixed Income
Japan’s government bond yields rose at the front end of the curve again, with the benchmark 2-year JGB yield up almost a basis point to above 1.28%, a new high for the cycle as the market raised expectations of a March BoJ hike to above 25% and to nearly 50% for an April rate hike. At the longer end of the curve, a 40-year JGB auction receive sufficient demand to avoid notice, while the benchmark 10-year JGB yield rose nearly five basis points Tuesday to 2.29%, still some eight basis points shy of the multi-decade high in yields posted last week.
US treasuries saw little volatility Monday, with the benchmark 2-year treasury yield remaining pinned just under the key zone of 3.60%+, while the benchmark 10-year treasury yield has settled right above the key 4.20% level that had capped the action from September until last week’s break above and testing of 4.30%+. In early hours in Europe Tuesday, the benchmark traded at 4.22%.
Commodities
Gold and silver rebounded strongly after a late bout of selling on Monday saw silver tumble by more than USD 15 after hitting a fresh record high near USD 118 earlier in the session. Gold, meanwhile, found solid support at USD 5,000 before bouncing back toward USD 5,100.
With silver now trading at its strongest level relative to gold since 2011, volatility has surged to levels that are increasingly untradeable for both bulls and bears, highlighting rally fatigue while raising the risk of a correction. Attention is turning toward Chinese speculative positioning and the risk of positions being scaled back ahead of the Lunar New Year, starting on 16 February, when local markets will remain shut for more than a week.
U.S. natural gas futures spiked above USD 7 on Monday before selling emerged after a week in which the soon-to-expire February contract more than doubled amid surging demand and supply disruptions caused by the U.S. winter storm. While disruptions may persist for a bit longer, the March contract is already trading 44% lower at USD 3.71, reflecting the transition from peak winter demand toward spring and lower heating needs.
Oil trades lower after Brent, for the fourth time since October, found resistance above USD 66.50. The latest rejection is being attributed to the resumption of output from Kazakhstan’s giant Tengiz field, while Chevron looks set to increase supply from Venezuela. With no fresh developments on Iran, traders’ focus has shifted back to ample supply, once again weighing on prices. OPEC+ meets today with no additional production increase expected next month.
Currencies
The JPY rally was tamed Monday and in Tokyo hours Tuesday. After USDJPY traded as low as 153.31 Monday, it rebounded to 154.50+ despite a relatively weak US dollar, while EURJPY rebounded as high as 183.61 Tuesday after posting a low south of 182 in Monday’s rush higher in the JPY, a move that was a follow on to an avalanche of JPY buying Friday after the US New York Fed reportedly “checked” the USDJPY.
The US dollar sell-off extended sharply Monday and went sideways in Tuesday’s Asian session, with EURUSD trading near 1.1880 after a high of 1.1899. AUDUSD tested the highs since early 2023 of 0.6942 on Monday, missing that mark by a single pip before retreating toward 0.6920.
AUD reports its December and Q4 CPI data early Wednesday, ahead of next Tuesday’s RBA meeting, in which a rate hike is seen somewhat more likely than not.
For a global look at markets – go to Inspiration.
This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
