Macro Wrap

The DJIA, the S&P500, and the Nasdaq Composite Index fell 0.4%, 0.4%, and 0.9% respectively. For the week, the DJIA fell 0.4%, the S&P500 rose 0.4%, while the Nasdaq Composite Index fell 0.2%.

The Dollar Index rebounded 0.7% to 96.99 last Friday but fell 0.6% for the week, the US 2Y yield fell 4bp to 3.52% last Friday and fell 7bp for the week. The US 10Y yield was flat last Friday at 4.24% and was just 1bp higher for the week. The UK 10Y yield edged up 1bp to 4.52% last Friday and was just 1bp higher for the week.

Brent crude oil prices were flat last Friday at USD70.69 but rose 7.3% for the week. It has risen by 16.6% so far this year. Gold fell 9% to USD4,894 last Friday and went down 1.9% for the week. Silver plunged by 26.4% to USD85.20 last Friday and went down 17.4% for the week. Year-to-date, gold and silver are still up by 13.3% and 18.9% respectively.

US President Trump nominated Kevin Warsh to replace Fed Chair Powell, a choice seen by markets as supporting a more disciplined and cautious approach to easing. Positive for USD

US producer prices rose 0.5% in December, surpassing expectations. Services rebounded and nonferrous metals surged, while diesel fell. Core PPI climbed 0.7%. Annual inflation remained at 3%, and core inflation increased to 3.3%, both above forecasts. Positive for USD

China’s Manufacturing PMI fell to 49.3 in January 2026 from 50.1, which means factory activity weakened. New orders dropped, production slowed, and foreign demand decreased. Costs for raw materials rose faster, selling prices went up, and business confidence reached its lowest level in six months. Broadly negative for industrial commodities

However, another reading showed the PMI rising to 50.3, the fastest growth in three months, helped by stronger output and more new orders, especially from Southeast Asia. But metal prices increased sharply, causing companies to raise their selling prices for the first time since November 2024. Even though activity improved, business confidence still fell to a nine month low due to rising costs.

Weekly Key Events

Key upcoming data from Europe includes the preliminary January Eurozone CPI due on 4 February, ahead of the ECB policy meeting. In Japan, political attention will intensify as the country enters the final week of campaigning before the 2026 general election on 8 February. Across major developed economies, several important releases are expected, including the final private sector manufacturing PMI readings, UK January housing prices, German December retail sales, and notably, the US ISM manufacturing survey for January, which Bloomberg estimates at 48.5 (up from 47.9 in December), with the price paid sub index projected to rise to 59.4 from 58.5.