Markets Today: FTSE 100 Breaches 10,000 Mark, Gold Rises 1.8% as UK House Prices Drop to 20-Month Lows

Economic

Summary:

Global markets began 2026 strongly as the FTSE 100 topped 10,000, Asian tech stocks surged, metals rallied on safe-haven demand, while UK house prices dipped and investors awaited key U.S. data.

Global Equity Funds Saw Strong Flows in Final Week of 2025

Global stock funds attracted $26.54 billion in new investments this week, continuing a strong buying trend following a massive $37 billion inflow the previous week.

This enthusiasm comes after the global market gained nearly 21% in 2025, its best performance since 2019.

American stock funds led the way, taking in roughly $17 billion, while European and Asian funds also saw healthy gains of $5.75 billion and $2.67 billion, respectively.

When picking specific industries, investors favored finance, real estate, and industrial companies, but they continued to pull money out of the healthcare sector, which lost $510 million.

Markets Today: FTSE 100 Breaches 10,000 Mark, Gold Rises 1.8% as UK House Prices Drop to 20-Month Lows_1

Asia Market Wrap - Samsung Hits New Record High

Stock markets kicked off the new year the same way they ended 2025, with Artificial Intelligence (AI) and computer chip companies leading the charge.

Asian markets rose by 0.9% overall, with the technology sector reaching a new all-time high. Major success stories included Samsung, which hit a record share price, and Baidu, which jumped 7.5% after announcing plans to list its chip business on the stock market.

Meanwhile, AI chip designer Shanghai Biren saw its value quadruple on its first day of trading. South Korea’s market, last year’s top performer, climbed another 2.3% to a record high, powered by huge gains in Samsung and SK Hynix.

Similarly, Taiwan’s market reached a new peak, continuing the strong tech-driven rally that saw it gain 27% last year.

The MSCI index of emerging Asian equities jumped as much as 2% to its highest point since late October.

Stock markets kicked off the new year the same way they ended 2025, with Artificial Intelligence (AI) and computer chip companies leading the charge.

Similarly, Taiwan’s market reached a new peak, continuing the strong tech-driven rally that saw it gain 27% last year.

The MSCI index of emerging Asian equities jumped as much as 2% to its highest point since late October.

UK House Prices at 20-Month Lows

UK house price growth slowed significantly in December, rising just 0.6% compared to a year ago, the weakest annual increase since April 2024 and well below what experts predicted.

MoM, prices unexpectedly fell by 0.4%, marking the first drop in four months. Nationwide's Chief Economist explained that this slowdown is partly due to comparisons with strong price gains from the previous year.

However, he noted that the housing market remains stable, with mortgage approvals sitting at pre-pandemic levels. He also highlighted that homes are becoming more affordable as wages rise faster than property prices and mortgage rates continue to fall.

Looking ahead, house prices are expected to recover slightly, with growth forecast between 2% and 4% in 2026.

European Session - FTSE 100 Hits 10000 for the First Time

London's main stock index, the FTSE 100, hit a historic milestone on Friday by crossing the 10,000-point mark for the first time.

This achievement follows a strong performance in 2025, where the index rose nearly 22%, its best year since 2009 beating major markets in Europe and the US.

While global markets have been largely driven by excitement over Artificial Intelligence, the UK's rally was powered by different sectors: mining companies benefited from high metal prices, defense firms grew due to increased military spending, and banks profited from high interest rates.

The large international companies in the FTSE 100 significantly outperformed smaller, domestic UK businesses.

Although the UK index still grew slower than markets in Japan and Italy, reaching this new record offers hope for renewed investor confidence after years of uncertainty surrounding Brexit and political instability.

On the FX front, the US dollar started 2026 with a small recovery, rising 0.2% on Friday after suffering its worst year in nearly a decade with a 9.4% drop in 2025. While the dollar stabilized, the Euro dipped slightly and the British Pound remained near its recent highs; both European currencies had surged last year, recording their strongest annual gains since 2017.

In the Pacific, the Australian and New Zealand dollars continued their winning streaks, starting the new year with further gains after strong performances in 2025.

Overall trading was quiet because markets in Japan and China were closed, but investors are watching closely for upcoming US economic data to help predict future interest rate changes.

Currency Power Balance

Precious metals started the New Year with a strong rally on Friday, continuing the massive success they saw in 2025. Market participants are buying these "safe-haven" assets because of ongoing political conflicts and the expectation that interest rates will fall later this year.

Gold prices rose 1.4% to around $4,372 per ounce, bouncing back after a short dip earlier in the week.

Other metals saw even bigger gains. Silver jumped 3.6% to nearly $74 per ounce, following a historic year where it gained 147%, its best performance ever.

Platinum also rose 2.5%, recovering after hitting a record high earlier in the week; it more than doubled in value last year.

Palladium climbed 2.4%, building on a 76% gain in 2025, which was its best result in 15 years.

Oil prices rose slightly on the first trading day of 2026, recovering from their biggest annual drop since 2020. This small boost was driven by supply concerns after Ukrainian drones attacked Russian oil facilities and a US blockade restricted Venezuelan exports.

Despite these tensions, the market is coming off a difficult year where prices fell more than 15% due to global oversupply.

Specifically, Brent crude climbed 22 cents to $61.07 a barrel, while U.S. crude also increased by 22 cents to reach $57.64.

Economic Calendar and Final Thoughts

The European session is quiet moving forward with a few medium impact data releases being released already in the morning.

In the US session market participants will get the US and Canadian manufacturing PMI data before attention turns to next week's US data releases which include the NFP jobs data release.

Markets Today: FTSE 100 Breaches 10,000 Mark, Gold Rises 1.8% as UK House Prices Drop to 20-Month Lows_3

Chart of the Day - FTSE 100 Index

From a technical perspective, the FTSE 100 index has finally breached the psychological 10000 mark.

Price has pulled back since with bouts of volatility and that shouldn't be a surprise. When price breaches such psychological levels we do tend to see some volatile price swings.

Immediate support which may be tested in the near-term include the 9973 and 9943 handles respectively.

However, a key level on the four-hour chart for bullish continuation will be the swing low from December 30 which rests around the 9872 handle. If this handle holds, then fresh highs will likely materialize.

FTSE 100 Index Four-Hour Chart, January 2, 2026

Source: marketpulse

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Glendon

Forex

Economic

Germany's economy has endured a terrible 2025. Chancellor Friedrich Merz's government has set the course for further decline in the coming year.

If German politicians' salaries were linked to private sector growth, lawmakers would likely have to take out loans in the deeply recessive year of 2025 and compensate citizens for parliamentary inaction and ideological foolishness.

Although the term diät derives from the Latin dieta, loosely meaning "compensation," in the context of Germany's collapsing industry it more accurately reflects the German meaning: deserved frugality and material austerity. Economically, Germany is now facing the end of the illusion of prosperity, which follows the catastrophic policies of the government.

Shrinking Private Sector and Rising State Burden

After eight months under Chancellor Merz, the record is not just meager—it is pitiful. Assuming a 50% state quota and calculating real GDP growth of 0.2% with net new debt over 4%, the net result for 2025 is a roughly 3.8% contraction of the private sector compared to the previous year.

What is scarcely known in Berlin—likely a form of economic esoterica not taught in party seminars or union courses—is that only the private sector produces the goods and services people actually consume. It is no surprise that heavy regulation and crushing taxes—Germany is surpassed only by Belgium in the OECD in fiscal extraction—strangle private enterprise.

Investment fell roughly 6.5% below long-term averages—a quantum leap in the wrong direction, deeply impacting labor markets, public budgets, and social security. While Finance Minister Lars Klingbeil attempts to mask deficits and exemptions as mere cosmetic fixes, municipalities face a €35 billion shortfall this year.

Crisis Becomes Visible

At the lowest levels of the state, in cities and towns, the bill for decades of political mismanagement is now arriving first.

The trigger is collapsing business tax revenue, a direct result of a record number of corporate bankruptcies: 24,000 companies will have exited the market in 2025.

The labor market's seeming stability is misleading. Hundreds of thousands of new public sector jobs and age-related retirements obscure the collapse of the real economy in official statistics. Merz executed the debt brake with the outgoing Bundestag in April, catapulting Germany into a debt spiral with a €500 billion special fund—a clear indication that policymakers knowingly ran the economy into a wall.

Neither the green "art economy" nor the heavily subsidized military sector will adequately fill freed industrial capacity. Core sectors such as chemicals operate at just 70% capacity, 10% below break-even—a stark signal that the creeping productivity erosion and economic depression since 2018 will worsen, regardless of state credit funneled into centrally planned subsidies.

Welfare State and Refusal to Reform

Berlin has fully submitted to Brussels' dreadful climate-socialist doctrine and now faces the challenge of hiding its ideological failure. Merz and his team continue the known media-political strategy: as with migration, a continuous camouflage is maintained.

When it comes to deceiving the public, party headquarters show remarkable creativity, leaving no lie too bold. A deportation flight may be staged for optics, while borders remain wide open, family reunification is promoted, and German passports are handed out freely. The aim is to cultivate new voter bases and apply a "divide et impera" strategy to erode cultural and traditional societal cohesion.

Time is bought and the course maintained—just as in climate policy. Pseudo-reforms, such as the ostensible end to the combustion engine phase-out, serve only to give the struggling auto industry an illusion of technological openness while creating a new bureaucratic monster, ultimately fulfilling Brussels' objective: halting German automotive production.

From the Eurocrats' perspective, the results are impressive if the goal was deindustrialization. Around 300,000 industrial jobs were cut in the last five years. And when a nation loses its industrial core, much of its value creation disappears with it.

In 2025, German production hovered about 20% below the 2018 peak. An economic and social catastrophe looms, whose consequences seem intellectually incomprehensible to functionaries and eco-centric elites with regard to social cohesion.

Collision with Reality

If 2025 was already catastrophic, the coming year will likely be a collision with reality for many Germans. Social contributions and taxes must rise sharply to sustain social security amid migration and demographic pressures.

Merz's government continues the legacy of Angela Merkel and Olaf Scholz: a Brussels-bound green central planner in the guise of the Ludwig-Erhard party, a political scarecrow devoted solely to consolidating power in Brussels.

The German people, particularly the shrinking class of economic achievers in the middle market, will face an accelerated decline after a dreadful 2025—one the government's media games can no longer conceal.

Merz's illustrious "Made for Germany" entrepreneur café was a media fake; "Made in Germany" increasingly belongs to the past. The bitter truth: Germany is done

Source: Zero Hedge

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Adam

Economic

MARKET WRAPS

European shares were up on the first day of trading of 2026 with little in the way of economic data due today.

London's premier FTSE 100 index opened the new year at a record high, passing the 10,000 mark for the first time , with the European-wide Stoxx 600 also hitting a new record.

Global market liquidity is expected to be thin before a likely pick up next week, Danske Bank said. "Looking ahead, market liquidity should improve next week alongside a fuller data slate ."

Next week's data include key U.S labour market releases such as the December jobs report on Jan. 9 and the ISM surveys. The data could give further cues on the Federal Reserve's next policy move.

The Fed is expected to cut rates four more times in 2026 to move to a neutral rate , Navellier & Associates said. Weak home prices are raising deflation concerns that the central bank needs to address.

"Additionally, there is no reason for the Fed to remain restrictive when the U.S. economy is not creating many jobs," it added.

Barclays maintains its expectation for the Fed to lower interest rates twice in 2026, by 25 bps each in March and June. The bank views the risks around this baseline as skewed toward delayed rate cuts .

Gold and silver prices were on the rise, starting 2026 on an upbeat note. Gold notched its largest one-year net gain on record last year, as Comex gold contracts climbed 64.5%. Silver also hit a record high in 2025 and surged nearly 148% in 2025.

U.S. Markets:

Stock futures were up on Friday, kicking off the new year with gains following a strong 2025.

The S&P 500 gained 16% last year, marking its third consecutive year of double-digit gains.

Forex:

The dollar traded steady against a basket of currencies and against the euro in quiet trade after the New Year holiday.

Bonds:

Eurozone government bond yields rose , tracking Treasurys.

In 2025, global bonds had their strongest year since 2020 , although there were significant divergences in performance, Deutsche Bank said.

Energy:

Oil was steady as prices hold around three-month averages. Prices are likely to move in a $55/bbl-$65/bbl range in 1Q 2026, Phillip Nova said. "The dominant theme across markets remains the supply-demand imbalance ."

Metals:

Gold rose as geopolitical tensions continued into the new year. Tensions between Saudi Arabia and the United Arab Emirates have risen as the states' proxies clash in Yemen, with geopolitical risk supporting the safe-haven asset .

Silver

Silver clawed back losses caused by the CME Group's increased margin requirements at the end of 2025. Heightened geopolitical tensions also supported silver levels.

The precious metal could benefit more than gold in a potentially declining interest rate environment said XS. Silver's high liquidity, ease of trading and relatively lower cost compared with gold makes it an attractive option as a safe-haven asset for both retail and institutional investors .

EMEA HEADLINES

Orsted's Revolution Wind to File Injunction Against U.S. Construction Halt

Orsted said its U.S. joint venture would seek an injunction against the Trump administration's lease suspension order, which halted the construction of all U.S. offshore wind projects.

Revolution Wind, a 50-50 venture between the Danish renewable company and Global Infrastructure Partners' Skyborn Renewables, filed a supplemental complaint challenging the order, Orsted said. The complaint, filed in the U.S. District Court for the District of Columbia, would be followed by a motion for a preliminary injunction, it said.

U.S. Slashes Proposed Tariffs on Italian Pasta

The U.S. has stepped back from imposing trade-killing duties on Italian pasta makers, meaning that Italian-made pasta will most likely continue to be available in U.S. stores.

Previously, the U.S. Commerce Department had said it would slap antidumping duties of 92% on Italy's main pasta exporters as soon as January-a measure that Italian pasta makers said would force them to pull out of the U.S. market. Italy's government and the affected companies have been lobbying the Trump administration for weeks to revise the decision.

Iranian Protesters Killed as Unrest Turns Violent on Fifth Day

Violence erupted between Iranian protesters and police during unrest on Thursday, leaving at least five dead on the fifth day of demonstrations over the country's economic crisis.

Three people were killed during a demonstration outside a police station in Lorestan Province in western Iran, according to Fars news agency, which is affiliated with the paramilitary Islamic Revolutionary Guard Corps. Another two people were killed during a protest near the governor's residence in Lordegan, another western Iranian province, Fars said.

Fire at Swiss Ski Resort Kills Roughly 40

CRANS-MONTANA, Switzerland-Roughly 40 people were killed and some 115 injured in a fire that suddenly broke out during New Year's celebrations at a bar in this quaint Swiss ski-resort town, authorities said.

Crowds of young revelers were packed into the bars of Crans-Montana to dance and drink Champagne when, at 1:30 a.m. local time Thursday, authorities say smoke was first spotted outside a bar called Le Constellation.

GLOBAL NEWS

Asian Factory Activity Gauges Signal Growth But Cost Pressures Cloud Recovery

The Asian manufacturing sector seems to be on firmer ground, wrapping up last year on an optimistic note as survey data signaled improving factory activity though rising cost pressures could cloud any recovery.

Purchasing managers index data from S&P Global released Friday showed improved manufacturing activity, including in export powerhouses Taiwan and South Korea.

Trump Rolls Back Tariffs on Furniture and Kitchen Cabinets

President Trump delayed by a year tariff increases on upholstered furniture, kitchen cabinets and vanities, the latest move to walk back levies in the face of consumer frustration over high prices.

The increased tariffs, announced in September to target lumber-based products, were set to go into effect on Jan. 1, according to a White House statement published on New Year's Eve.

The $358 Billion Question for the New CEO of Berkshire Hathaway

Greg Abel's time has come, and there's a $358 billion question on investors' minds: What will the new chief executive of Berkshire Hathaway do with all of that cash?

As Warren Buffett's handpicked successor, Abel faces several challenges as he takes the reins today. For one, he isn't Warren Buffett, who became a household name as the leader of one of America's most-admired companies. Shareholders don't know if Abel can channel the stock-picking magic of his predecessor, who earned the nickname the Oracle of Omaha.

As Signs of Aging Emerge, Trump Responds With Defiance

WASHINGTON-President Trump is taking more aspirin than his doctors recommend. He briefly tried wearing compression socks for his swelling ankles, but stopped because he didn't like them. And he regrets undergoing advanced imaging because it generated scrutiny of his health.

"In retrospect, it's too bad I took it because it gave them a little ammunition," Trump said in an interview with The Wall Street Journal on his decision to get a cardiovascular and abdominal scan in October. "I would have been a lot better off if they didn't, because the fact that I took it said, 'Oh gee, is something wrong?' Well, nothing's wrong."

Modi Taps India's Consumer Power in Trade Fight With Trump

NEW DELHI-On a recent Sunday in India's capital, Shrey Dixit, a 22-year-old engineering student, proudly drove a khaki green, Indian-made Hyundai sport-utility vehicle off a dealership lot.

Dixit's household, with several branches of the family living together, had shared one car for nearly a decade. But after India sharply cut sales taxes in September, the family realized buying the second car they had their eye on was suddenly more than $1,000 cheaper.

Venezuelan Exiles Root for U.S. Military Action. Those Left Behind Oppose It.

LIMA, Peru-The millions of Venezuelans who have fled the rule of Nicolás Maduro stand largely in solidarity with compatriots who stayed behind-except on the question of U.S. military intervention to change the regime.

Most of the eight million Venezuelans living in exile see American military action as the best shot to bring back democracy in a country they fear they may otherwise never see again, polls show.

Iranian Protesters Killed as Unrest Turns Violent on Fifth Day

Violence erupted between Iranian protesters and police during unrest on Thursday, leaving at least five dead on the fifth day of demonstrations over the country's economic crisis.

Source:morningstar

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Justin

Cryptocurrency

Political

Iran is looking to accept crypto payments in its sale of ballistic missiles, warships, and other advanced weapons, The Financial Times reported Thursday.

The Ministry of Defence Export Center (Mindex) reportedly stated it is prepared to negotiate military contracts allowing payment in digital currencies, as well as through barter arrangements and Iranian rials.

This offer, first introduced in 2025, marks one of the first known cases where a nation-state publicly indicated willingness to accept cryptocurrency as payment for weapons exports, the FT report said.

Mindex, as a state-run overseas defense seller, reportedly holds client relationships with 35 countries. Its official website showcases a variety of products, including missiles, rockets, ammunition, and hovercrafts.

Evading sanctions

Western powers, including the U.S., UK, and EU, have placed extensive sanctions on Iran, targeting its nuclear missile programs, oil sector, and access to international banking networks, forcing the regime to rely on barter trade and digital assets like bitcoin increasingly. Last month, the U.S. announced that it sanctioned 29 "shadow fleet" vessels that aided the covert delivery of Iran's oil and petroleum exports.

While sanctions continue to expand, Mindex states on its website that "there is no problem" in carrying out contracts.

"It should be noted that, given the general policies of the Islamic Republic of Iran regarding circumvention of sanctions, there is no problem in implementing the contract," Mindex wrote on the website. "Your purchased product will reach you as soon as possible."

Iran has already been utilizing cryptocurrencies to evade Western sanctions over the past several years.

Last September, the U.S. Treasury Department identified two Iranian nationals who facilitated over $100 million in bitcoin and other digital asset purchases to process the Iranian government's oil sales between 2023 and 2025. U.S. officials view such cases as part of Iran's much larger financial "shadow network."

Source: TradingView

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Michelle

Forex

Economic

The first full trading week of the new year could shake the US stock market out of its winter holiday slumber as the monthly jobs data headlines a busy start to 2026 for investors.

Stocks slid in the final session of 2025, with the benchmark S&P 500 falling into a monthly loss for December. But the index still climbed more than 16% in 2025, its third straight year of double-digit percentage gains, while the Cboe Volatility index was last just above its lows for the year.

Trading volumes were thin at the end of 2025, but the new year could get off to an eventful start. Aside from economic data, investors await a US Supreme Court decision on President Donald Trump's tariffs along with his choice of a new Federal Reserve chair, and US corporate earnings season is around the corner.

While the S&P 500 is near record highs, it is also around the same level it was in late October, noted Matthew Maley, chief market strategist at Miller Tabak.

"The market is looking for direction," Maley said. "We break out of these ranges and that's going to give either people a lot of confidence or a lot of concern depending on which way it breaks."

Jobs data could send rate signals

The employment data due on Jan 9 could provide a jolt either way. Concerns over weakness in the labour market prompted the Fed to lower interest rates at each of its last three meetings of 2025, as the US central bank juggles its goals of full employment and contained inflation.

Lower rates have supported equities, but the extent of further cuts in 2026 is unclear. Fed officials were divided over the path for monetary policy at the most recent meeting in December. Inflation remains above the Fed's 2% annual target.

With the benchmark rate at 3.5%-3.75%, Fed funds futures suggest little chance of a cut at the next meeting in late January, but nearly a 50% chance of a quarter-point reduction in March.

"The fact that there has been softening in the labour market has really given the Fed good cover to change their outlook about reducing rates," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

At the same time, investors are also wary that an overly weak report could signal more severe economic concern than markets currently anticipate.

Employment for December is expected to have climbed by 55,000 jobs, according to a Reuters poll. Payrolls rose by 64,000 in November, but the unemployment rate was 4.6%, a more than four-year high.

"If (employment) starts turning down in any kind of meaningful way, that's going to signal that the recession is a lot closer than people think," Maley said.

Inflation, 4Q earnings also loom

Other data next week includes manufacturing and services sector activity, along with job openings and other labour market data. Economic releases are returning to more normal schedules following the 43-day government shutdown that delayed or cancelled many key reports.

A closely watched report on inflation trends, the monthly US consumer price index, is due out on Jan 13.

"Anything that has to do with underlying economic activity and inflation is really going to catch the market's attention," said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, adding that a backdrop of modest economic growth and moderating inflation is "a good environment for stocks and for risk assets in general".

Investors will be gearing up for fourth-quarter earnings season, with results from JPMorgan on Jan 13, along with other major bank reports that week.

With stocks trading at historically lofty valuations, investors are banking on strong earnings growth. Overall S&P 500 company earnings are expected to have climbed 13% in 2025, with another 15.5% rise in 2026, according to LSEG IBES data.

"To make an investment case for the S&P 500 at current levels, one must believe in some combination of good/very good earnings growth and continued investor confidence in economic conditions and macro policy," said Nicholas Colas, co-founder of DataTrek Research, in a research note.

Source: Theedgemarkets

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Gerik

Economic

Commodity

Aluminum Breaks $3,000 Barrier as Global Supply Tightens

Aluminum futures surged past the $3,000 per ton mark for the first time in over three years on Friday, driven by growing concerns over constrained global supply and long-term demand optimism. The metal, which gained 17% in 2025 its strongest annual rally since 2021 continues to ride a wave of positive sentiment across the broader base metals sector.

The rally reflects structural supply limitations. In China, a cap on smelting capacity continues to restrict domestic output. Meanwhile, elevated energy prices in Europe have reduced production incentives, putting further pressure on global inventories. These supply-side constraints come just as demand from the construction and renewable energy sectors remains resilient, helping fuel speculative and strategic positioning in the futures market.

Copper, Nickel Join the Rally Amid Broad Metal Tightness

Aluminum wasn’t the only metal making headlines. Copper, the star performer among the six major London Metal Exchange (LME) industrial metals in 2025, resumed its climb after slipping 1.1% in the prior session. At $12,487 per ton, it’s up 0.5% on the day, continuing a year-end surge that saw the red metal reach multiple all-time highs.

Copper’s rise is largely attributed to a string of global supply disruptions. Major mines across Indonesia, Chile, and the Democratic Republic of the Congo faced accidents and operational delays throughout 2025. At the same time, trade tensions, particularly tariff-related concerns, led to a shift in shipments toward the U.S., amplifying tightness in available supply elsewhere.

Nickel also jumped, up 1.2% to $16,845 per ton. This followed an announcement by PT Vale Indonesia halting mining operations due to delayed approval of its 2026 work plan. While the company assured markets that operations remain sustainable and that approval is expected shortly, the delay stirred supply-side anxiety especially after Indonesia signaled plans to reduce national nickel output this year. December marked nickel’s strongest monthly gain since April 2024.

Iron Ore Steadies, Chinese Markets Remain Closed

Iron ore futures in Singapore rose modestly by 0.3% to $105.65 per ton. With Chinese markets closed for a public holiday, trading remained subdued, though sentiment continues to be supported by steel-sector restocking and hopes for construction stimulus from Beijing once markets reopen.

The breach of the $3,000/ton level by aluminum underscores growing investor conviction that supply constraints and long-term green infrastructure demand will continue to tighten industrial metal markets in 2026. From copper’s end-of-year rally to nickel’s sudden supply scare and aluminum’s upward breakout, the trend is clear: industrial metals are back in the spotlight.

With energy transitions, global infrastructure upgrades, and geopolitical supply vulnerabilities all converging, base metals appear poised to extend gains provided macroeconomic risks or demand shocks don’t derail momentum. Traders and manufacturers alike are watching closely for signals from China, Indonesia, and the U.S. that could either confirm or challenge this bullish trajectory.

Source: Bloomberg

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Gerik

Economic

Treasuries Rally as Market Eyes More Rate Cuts in 2026

U.S. Treasuries continued their upward trajectory on the first trading day of 2026, building on their strongest annual return in five years. The benchmark 10-year yield dropped two basis points to 4.15%, while the 30-year yield slipped by one basis point to 4.84%, reversing earlier gains seen in morning trading.

This rally comes after a Bloomberg index tracking Treasuries posted a return exceeding 6% in 2025 the best since the pandemic-driven surge in 2020. The gains were supported by softening inflation pressures, a shift in Federal Reserve tone, and a sharp decline in bond market volatility, which has now fallen to its lowest level since early 2022.

Fed Outlook Drives Bullish Sentiment Despite Mixed Data

Investors are entering 2026 with strong conviction that more interest rate cuts are on the horizon, especially amid speculation that President Donald Trump will appoint a more dovish successor to Fed Chair Jerome Powell, whose term ends in May. This expectation serves as a key driver behind the demand for longer-dated Treasuries.

However, this outlook is being tested by economic fundamentals. Data released last week revealed that the U.S. economy expanded at its fastest pace in two years, raising questions about whether the Fed will act as swiftly or as deeply as markets anticipate. The disconnect between growth momentum and policy expectations introduces a degree of fragility to the Treasury rally, suggesting that incoming data could sharply alter the market’s course.

The release of the S&P Global U.S. Manufacturing PMI later on Friday is among the first data points likely to test this narrative, with further labor market and inflation readings expected in the coming weeks.

Global Bond Markets Show Divergence as U.S. Leads

While U.S. yields fell, global bond markets moved in the opposite direction. Germany’s 10-year bund yield rose as much as six basis points to 2.91% before paring gains, while the UK’s 10-year gilt yield climbed five basis points to 4.53%. These moves reflect a catch-up in trading activity, as European markets reopened following the New Year’s Day holiday and responded to earlier U.S. developments.

Australian bonds lagged most, with yields on three- and 10-year notes rising about nine basis points. This was partially driven by renewed speculation around rising commodity prices, which could reignite inflationary concerns in resource-heavy economies like Australia.

Issuance Calendar and Technicals to Play Key Role in January

January is traditionally a heavy month for bond issuance, and the resulting supply pressures could exert upward force on yields. Investors may require higher returns to absorb the influx of new government and corporate debt, which could temporarily dampen the rally unless balanced by continued dovish signals from the Fed or disappointing macroeconomic data.

U.S. Treasuries have entered 2026 with solid momentum, but whether that performance can be sustained will depend on a delicate balance between market expectations for rate cuts and the actual resilience of the U.S. economy. For now, bond markets are leaning into a dovish pivot but any surprises in inflation, labor, or leadership at the Fed could quickly test that assumption.

With Powell’s tenure winding down and Trump poised to reshape central bank leadership, Treasuries are not just a barometer of rate expectations they’re also a reflection of deepening uncertainty about how U.S. monetary policy will be shaped in a pivotal election year.