What moved (and what didn’t) in the past 24 hours

U.S. cash markets observed the Martin Luther King Jr. Day holiday, keeping the NYSE, Nasdaq, and the cash Treasury market closed. With no major federal data releases scheduled for the holiday and an abbreviated futures session, price discovery was limited and liquidity thinner than usual. FX and commodities traded globally, but cross-asset volatility remained largely a function of overseas headlines and positioning into the U.S. reopening.

In the absence of fresh macro data, investor focus centered on three themes:

  • Earnings season ramp-up: The next wave of fourth-quarter and full-year corporate results is set to deepen this week. Investors are watching banks for net interest margin dynamics, credit costs, and capital return; large-cap tech and semiconductor names for AI-related capex and margin trajectories; and consumer-facing companies for holiday-quarter demand and 2025 guidance.
  • Rates path and inflation glidepath: With the next FOMC meeting approaching, markets remain sensitive to any signals on the pace and timing of rate cuts. The trajectory of core disinflation, labor-market cooling, and financial conditions will be central to how quickly the policy stance pivots.
  • Supply and liquidity considerations: Treasury bill and coupon supply later this month, together with quarter-start issuance in investment-grade credit, are set to interact with front-end funding conditions. Auction outcomes and credit spreads will help gauge risk appetite and balance-sheet capacity.

Bottom line: The holiday pause deferred meaningful price discovery to the first full session of the week, when cash equities and Treasuries reopen and the earnings and data calendar begin to reassert themselves.

Macro context heading into the week

  • Growth vs. inflation mix: Recent trends have pointed to moderating inflation alongside slower but resilient activity. Markets are attuned to whether incoming data corroborate a soft-landing narrative or hint at either stickier price pressures or sharper growth deceleration.
  • Labor market cooling: Wage gains and hiring momentum remain pivotal for the Fed’s reaction function. Weekly jobless claims will be scrutinized for inflection signs.
  • Housing and manufacturing: New construction, permitting, and regional manufacturing gauges can sway expectations for early-2026 growth momentum and inventories.
  • Global spillovers: Energy prices, shipping and logistics, and major central-bank signaling abroad (particularly from the ECB and BoE) continue to influence the dollar, U.S. rates, and multinational earnings outlooks.

Seven-day outlook: catalysts and scenarios

Note: Specific release dates and times are subject to official calendars; the items below reflect typical mid-January cadence and the current corporate reporting window.

Tuesday

  • Post-holiday reopening: Expect catch-up flows as cash equities and Treasuries resume trading. Liquidity typically normalizes through the morning as investors digest any holiday-period headlines.
  • Earnings: Early-week results from financials, consumer, and tech-adjacent firms can set tone. Watch commentary on 2026 demand visibility, pricing power, and cost discipline.
  • Rates and credit: Front-end yields may be sensitive to any issuance announcements; investment-grade primary markets often reopen briskly after a long weekend.

Wednesday

  • Housing and production reads (if scheduled): Housing starts/permits and industrial production are typical mid-month releases. Stronger activity would argue for a shallower and later easing path; softer prints support earlier policy normalization.
  • Treasury supply: A mid-month 20-year bond auction often lands on a Wednesday. If held this week, watch bid-to-cover and tail to assess duration appetite.
  • Equities: Sector rotations can accelerate as earnings broaden beyond banks—keep an eye on guidance dispersion and margin commentary.

Thursday

  • Initial jobless claims: The weekly update remains a high-frequency check on labor-market cooling. A sustained drift higher would reinforce disinflation and ease concerns about wage-push inflation; an unexpectedly low print could firm yields and strengthen the dollar.
  • Credit markets: New-issue IG and HY volumes frequently peak midweek. Concessions and order-book depth are useful gauges of risk appetite.
  • Fed watch: Depending on proximity to the FOMC, public remarks may be limited by blackout rules. Absent fresh Fedspeak, markets will lean more on data and earnings for direction.

Friday

  • Flash PMIs (if scheduled): S&P Global’s preliminary January activity surveys typically arrive in the back half of the month. Services input costs and prices-charged components are crucial for near-term inflation expectations.
  • Earnings breadth: A heavier docket can drive index-level moves via large-cap beats/misses. Pay attention to AI and cloud demand signals in tech, and holiday sell-through in consumer.
  • Positioning into the weekend: Dealers and funds may adjust risk, particularly if key data land next Monday/Tuesday or if major geopolitical headlines loom.

Weekend

  • Guidance digestion: Analysts update models and revisions flow through to next week’s estimate momentum. Sectors with the largest guidance surprises often see outsized Monday follow-through.
  • Policy preview: Any official schedules released over the weekend (Treasury auction details, central-bank agendas) can shape Monday’s rates tone.

Monday (one week out)

  • End-of-month coupon cycle: The final-week 2-, 5-, and 7-year auctions often begin early in the week. Size and demand will influence the curve’s belly and term premium.
  • Data rollover: As the February pipeline comes into view, markets reassess how much easing is priced for the first half of the year and whether disinflation remains on track.

Cross-asset implications

  • Equities: Earnings and guidance will dominate. A broadening of beats beyond mega-cap tech would support risk-on breadth; margin compression or cautious outlooks could reintroduce defensiveness. Watch cyclical vs. defensive leadership as a growth signal.
  • Rates: The market’s path of policy easing is finely balanced between disinflation progress and growth resilience. Hot activity data or sticky services inflation pressures argue for higher front-end yields; downside growth surprises would steepen bull curves.
  • Credit: Spread behavior hinges on earnings quality and supply. Healthy demand for new IG/HY paper would confirm constructive risk appetite; weaker coverage or wider new-issue concessions would caution on beta.
  • FX: Dollar direction remains tethered to relative growth and rate differentials. U.S. upside data surprises typically support the dollar; synchronized global upside tempers that advantage.
  • Commodities: Energy prices remain a swing factor for both headline inflation and sector leadership. Persistent supply bottlenecks or shipping frictions would echo into goods prices and inflation expectations.

Key signposts to monitor

  • Services inflation metrics: Prices paid/received within PMIs, alongside wage indicators, for signs of stickiness.
  • Labor-market tightness: Claims trend, vacancy-to-unemployment ratio, and commentary from labor-intensive sectors.
  • Earnings guidance dispersion: The breadth and magnitude of full-year 2026 guidance changes, not just headline beats/misses.
  • Funding and liquidity: Repo rates and bill yields around month-end; any signs of balance-sheet strain or collateral scarcity.
  • Treasury auctions: Coverage, indirect bid participation, and tails for read-through on duration demand.

Risk scenarios

  • Upside growth surprise: Strong activity prints and bullish guidance could lift cyclical equities and weigh on duration, nudging the market toward fewer or later rate cuts.
  • Disinflation accelerates: Softer price metrics with stable growth favor long duration, quality growth equities, and credit carry.
  • Growth downshift: Weaker demand data or cautious corporate outlooks could widen credit spreads, steepen curves in a bull move, and rotate equity leadership toward defensives.
  • Supply-induced volatility: Heavier-than-expected coupon supply or weak auction reception could cheapen the belly, pressure valuations, and spill into risk assets via higher real yields.