Week ended January 16 2026: global stocks gain, US stocks and bonds lose ground

Most U.S. indices lost ground last week as inflation, jobs data and other economic (and political) news weighed on investors’ minds.  Importantly, CPI data came in about as expected for December, suggesting that inflation is slowly continuing to moderate.  Concurrently, jobs data (JOLT, first time claims) suggests that the U.S. economy remains in fine shape.  Try as the current American political leadership may with some of their crazy idea, it’s proving difficult to derail the mighty U.S. economy.  And I’m an optimist – things could get even better this year.  After all, what could possibly go wrong with a double dose of stimulus just around the corner?

Earnings got off to a good start too last week, with the large U.S. banks serving up solid 4Q25 earnings driven by strong trading revenues.  It was slightly awkward for bank CEOs to face analysts post-earnings just after President Trump had tabled a proposal to cap credit card interest rates at 10%.  Don’t get confused – this progressive, largely Democratic idea was not coming from Elizabeth Warren or Bernie Saunders.   Rather, it reflects Mr Trump grasping at populist straws in an effort to address the biggest problem currently facing his presidency – the affordability crisis.  I never thought I’d see the day that a Republican president would table socialist-leaning Democratic ideas to rescue his party, and it smacks of desperation.  However, the administration is feeling pressure from this “Democratic hoax” as mid-term elections approach.

Of course, the week started with the announcement that the Justice Department would be investigating “improprieties” associated with the refurbishment of the Federal Reserve building, going specifically after Fed Chair Powell.  What a stupid move, with nearly unanimous blowback coming from former Fed chairs, central bankers globally, prominent investors, and even a number of Republican members of the Senate.  Anything less than an independent central bank risks turning the U.S. into a banana republic; I simply do not think it will happen.  Related, many of Mr Trump’s comments on Tuesday at the Detroit Economic Forum were inaccurate (as usual), some bordering on ridiculous. He of course used the forum as an opportunity to go after the Fed, which he believes should lower interest rates sharply.  I keep asking myself how someone with such a poor understanding of basic economics can be in charge of the U.S.  At the same time, I am enormously grateful that most market participants have now learned to filter out the noise and ignore much of the bizarre rhetoric being bantered around, and focus purely on fundamentals.

This coming week is a shortened trading week in the U.S., with Monday being a market holiday.  We also have a slew of additional S&P 500 company earnings and what will likely be some very interesting speeches coming from the “rich and famous” at the annual meeting of elites in Davos.

MARKETS LAST WEEK

U.S. stocks were mostly weaker last week, but small/midcap stocks continued to buck the trend.  The Russell 2000 added to its impressive gains YtD (+7.9%). Many would argue that a rally in value stocks is long overdue, especially as major U.S. indices compised of larger stocks (especially the tech components) face more and more questions around valuations.  Outside of the U.S. and aside from Chinese equities, nearly all major global stock indices inched higher last week, continuing to illustrate the benefits of international portfolio diversification.  U.S. Treaasuries also continue to trade in a very narrow range, with yields moving higher on the week across the curve due to a myriad of ongoing well-known factors.  Credit spreads moved even tighter still to levels on both investment grade and high yield bonds that are making me squirm although I suppose the migration is in line with the “improving U.S. economy” and TACO narratives that largely govern risk markets these days.  Gold moved higher still, and the US Dollar was better bid.  Bitcoin finally showed some life, rallying back above $95,000 after being stuck in the $90,000 or so context for the better part of two months running. 

The tables below have been updated for the end of the week.

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