Weekly Market Insights
January 16, 2026 Volume 13 Issue 2
Equities experienced another week of broad strength, with the S&P 500 climbing modestly and small caps outperforming. International markets also gained ground, led by emerging markets, particularly Latin America, which continues to outperform the wider MSCI Emerging Markets Index. Sector performance was mixed but slightly tilted defensive, with Energy, Real Estate, and Consumer Staples advancing, while Technology and Communications declined. Commodities were stronger, highlighted by a notable jump in silver along with steady support from gold. Treasury yields remained within a range despite increasing macroeconomic uncertainty, with the 10-year near 4.2%.
Political risk dominated discussions as the conflict between President Trump and Fed Chair Powell worsened. Powell’s unprecedented public statement in response to a Department of Justice subpoena highlighted concerns about political interference in monetary policy, drawing unanimous criticism from former Fed chairs and Treasury secretaries. Markets have so far managed the conflict well, but investors remain cautious about the possibility that Fed independence could gradually weaken instead of collapsing suddenly. This risk has started to appear in debates about curve steepening and dollar weakness. Housing policy developments were another main focus. The administration’s push for $200 billion in GSE mortgage-bond purchases and proposals to limit institutional homebuyers aim to improve affordability but might stimulate demand more than supply, raising the risk of renewed upward pressure on prices. Mortgage activity briefly increased as rates fell, but levels remain low compared to historic standards.
Corporate earnings expectations stay positive, with guidance at their highest since 2021 and mid-teens growth forecasted by mid-2026. However, leadership remains focused on technology, and upcoming results will test whether the recent shift toward small caps and cyclicals can persist.
Have a great weekend!
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*All economic release data referenced from public sources believed to be accurate. *The source of data for all charts/graphs included in this presentation is Bloomberg LP. *Figures quoted represent monthly changes (m/m) and are seasonally adjusted.