Chart Source(s): Topdown Charts, LSEG
Geopolitical risks be damned; the US government has come out swinging this year to put America first and to do everything within its power to push risk-taking sentiment to extremes by fueling optimism around defense spending and housing recovery and affordability. Small-cap US equities have outperformed large-cap US peers for 10 consecutive days, the longest streak since 2008.
Sometimes equities climb a wall of worry and sometimes they just vault over all concerns due to ample liquidity and a robust economic setup. With global headline inflation relatively subdued and ex-US equity valuations having substantial room for catch-up, its risk-on.
However, tail risks are growing from risk-taking consensus skewed to the upside. The Trump-put equity floor from "TACO-ism" still exists, but the dependability of the put is slowly eroding due to radical policy announcements.
Global Markets & Economic Data
- US: Dec. CPI data was in-line to slightly lower than expectations. Regional Fed surveys showed rising growth and sticky price pressures. Q4 housing reflected an improving situation from multi-decade low levels.
- Switzerland/UK/Europe: Swiss inflation hit 0.0% y/y levels. UK growth and retail data was stable, but a BOE cut in March is still possible. Eurozone inflation data trended lower and investor sentiment data is picking up.
- China/Japan: Recent data suggests Chinese deflation is slowing. Japanese household spending figures are improving and a 25bps hike to 0.75% is expected at the Feb BoJ meeting.
Index Returns Summary
- MSCI World: 1.84% MTD · 1.84% YTD
- MSCI Asia Pacific: 1.89% MTD · 1.89% YTD
- MSCI Europe: 2.03% MTD · 2.03% YTD
- MSCI China: 2.87% MTD · 2.87% YTD
- Bloomberg Barclays Global Aggregate Index: -0.16% MTD · -0.16% YTD
- Bloomberg Commodities Index: 2.30% MTD · 2.30% YTD
- HFRX Global: 1.17% MTD · 1.17% YTD
- HFRX Macro/CTA: 2.12% MTD · 2.12% YTD
- HFRX Equity Hedge: 1.42% MTD · 1.42% YTD
Index data as of January 9, 2026
Market Spotlight: Active vs. Passive
Chart Source(s): Goldman Sachs
Investor appetite for ETFs is seemingly insatiable. 1,000 ETFs were launched in the U.S. last year bringing ETF industry assets to $13.5T. In fact, the WSJ claims that there are now more ETFs than individual stocks in the US equity market. The Investment Company Institute found that $3T flowed from traditional mutual funds to ETFs from 2015 to 2024.
Market Spotlight: Bond Market Vol collapsed
Chart Source(s): The Daily Shot
Bond trading these days is like watching the paint dry. A top macro RV fixed income trader told me the other day that day to day there is just nothing to do. All of the dislocations caused by a normal functioning market environment were quashed as the Fed ended QT and started stealth QE.
Market Spotlight: Commodity Supercycle 2.0!?
Chart Source(s): Topdown Charts, LSEG
As China/EM growth ignited the "commodity supercycle" 20 years ago, we stand today on the precipice of the next step-function higher in commodity prices to meet the insatiable demands of a roaring global economy.