Removing Maduro, Moving Markets
A weekly look at what matters and how to trade it. (January 5th)
Holiday trading delivered exactly what it tends to over the new year: price action with little conviction.
US equities drifted lower in thin conditions, with modest losses masking a broader lack of direction as investors waited for the calendar to turn. There were no meaningful catalysts to force positioning, and flows looked more like balance-sheet housekeeping than the start of a new trend. Even Friday’s semiconductor bounce, the first trading session of 2026, failed to alter the tone as broader tech underperformed into year-end squaring.
Beneath the surface, the week was defined by selective weakness. Consumer discretionary lagged after Tesla’s disappointing delivery numbers reignited doubts around growth-sensitive names, while software stocks stayed heavy, leaving Microsoft near six-month lows. In contrast, energy and utilities outperformed, likely reflecting defensive positioning and weather-driven demand rather than any shift in the macro outlook. Commodities were largely inert, reinforcing the sense that markets were marking time.
Rates and FX told a similar story. Treasuries drifted higher in yield, led by the long-end, with a mildly stronger USD supported by month-end flows rather than fundamentals. The December FOMC minutes offered little new information, confirming a committee split between patience and further easing if inflation continues to cool. In other words, policy uncertainty remains intact, but dormant.
The result is a market entering the first full week of 2026 without momentum. However, some weekend events out of Venezuela will kick momentum into oil and energy corporations. With narratives mostly unchanged, and the first clean batch of post-shutdown data looming, direction will likely come not from year-end reflections, but from how growth and labour data validate (or challenge) the still-fragile soft-landing consensus.
The Week Ahead
A quick rundown of what we’re focusing on in this week’s report:
“Removing Maduro”
The first major event of the year is already upon us, unravelling in Venezuela and the US, with implications in oil and EM debt markets.
“The Yen’s Calm”
The recent stability in the Yen may be deceiving.
“Elsewhere in FX”
FX/rate market updates for AUDNZD and SFI.
“Steepening Is the Message”
Rising long-end yields is the name of the game, both in the US and Europe.
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