2026 is shaping up to be a year of balances. Global markets are riding this week between electoral risks, inflation data in the U.S., and geopolitical debates on security, while corporate earnings and signals from central banks add to a horizon filled with focal points.
In the opinion of Christian Gattiker, Head of Research at Julius Baer, markets begin the week managing a dense combination of political events, macroeconomic data, and corporate earnings. Specifically, he believes that investors will be particularly attentive to the evolution of inflation in the U.S. and geopolitical developments: “Macroeconomic attention is focused on Friday’s U.S. CPI report, which will serve as a key indicator to assess whether inflation continues to moderate gradually. Markets remain sensitive to any upside surprise that could call into question expectations of continued monetary easing later this year.”
According to Gattiker, “these releases will help determine whether corporate fundamentals can continue sustaining market sentiment in a context of persistent macroeconomic and geopolitical uncertainties.”
“This week’s January U.S. employment situation report will be important in shaping investors’ views on the trajectory of the labor market in the world’s leading economic power after the data released last week came in weaker than expected. The general expectation is that nonfarm employment will grow by 70,000 jobs, compared to 50,000 in December, that the unemployment rate will remain stable at 4.4%, and that average hourly earnings growth will moderate slightly to 3.7% year-on-year. Markets will be closely watching the nonfarm payroll figures given the weak job creation since May,” acknowledges Ronald Temple, Chief Market Strategist at Lazard.
For Hans-Jörg Naumer, Global Head of Capital Markets & Thematic Research at Allianz Global Investors, although global politics is increasingly defined by shifts in spheres of influence, financial markets are looking beyond the geopolitical risks that dominate headlines, such as the recent turmoil surrounding Iran and Greenland, and are focusing on macroeconomic data, corporate earnings, and the factors driving medium-term returns.
“After the strong results achieved in 2025, equity markets began the year with very positive momentum. Commodities also extended their gains, and gold and silver continued their upward trend for much of January, before greater turbulence emerged in the markets. In contrast, fixed income markets recorded more differentiated performance. European government bonds benefited from falling yields, while U.K. and U.S. sovereign bonds were under pressure,” adds Naumer.
Politics and Geopolitics
Certainly, the political backdrop remains at the forefront, marked by snap elections in Japan, along with general elections in Thailand, whose results could influence the direction of regional policy and investor sentiment in Asia. In the case of Japan, the landslide victory of the Liberal Democratic Party (LDP) of Prime Minister Sanae Takaichi provides her with a firm mandate to assert herself on legislative matters. “In early trading today, the yen appears unchanged from Friday’s close in New York. Investors’ focus will be on the magnitude of fiscal expansion. In particular, close attention will be paid to developments regarding the temporary reduction of the food tax promised during the election campaign,” notes Sree Kochugovindan, Senior Research Economist at Aberdeen Investments.
In addition, looking at the week’s agenda, geopolitics adds another dimension, as the Munich Security Conference is likely to intensify the debate on NATO’s strategic outlook and the war in Ukraine, underscoring the persistent uncertainty surrounding global security.
Central Banks: Focus on the Fed
One of the drivers moving the market has to do with central banks. According to MSCI experts, market confidence in the independence of the Federal Reserve could prove decisive in 2026. “With inflation still above target and early signs of a weaker labor market, the pressure to ease policy risks clashing with the Fed’s mandate. Grand jury subpoenas issued to the Chair of the Federal Reserve have further added complexity to an already delicate monetary policy environment. When a central bank’s credibility is eroded, inflation can persist even as growth slows, leading to stagflation, a scenario in which bonds cease to diversify against equities,” they explain.
“Moreover, the Fed kept interest rates unchanged, as expected, at its January monetary policy meeting, with Governors Miran and Waller dissenting in favor of a 25 basis point cut. Uncertainty surrounding the independence of the Federal Reserve intensified at the beginning of the month following news that the Department of Justice subpoenaed the Fed and its Chair, Jerome Powell, in connection with the renovation of the Fed building. The situation has extended to the Senate, where Senator Thom Tillis, a senior member of the Banking Committee, has indicated his intention to block Fed confirmations until the investigation is resolved,” adds Marco Giordano, Investment Director at Wellington Management, regarding the noise surrounding the Fed that continues to hold investors’ attention.
Investment Opportunities
In this context, investment firms are also speaking about opportunities. For example, it is hard to ignore how Japanese equities rose sharply on Monday after Prime Minister Sanae Takaichi’s coalition secured a historic supermajority, unlocking fresh momentum for the so-called “Takaichi trade.”
In this regard, the message is clear: with political stability and reform catalysts in play, investors should be alert to further upside potential, as well as short-term episodes of volatility in bonds and the yen.
“We maintain our attractive rating on Japanese equities and see room for further gains, especially in sectors that benefit from domestic policies (defense, banks, real estate, and IT services) and global themes (energy, data centers, automation, and some auto sector stocks). As for the Japanese dollar/yen, authorities have already signaled a high degree of urgency regarding currency movements, which should help contain pressures,” says Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
At Capital Group, the focus is on how emerging markets are becoming the engine of industrial transformation on a global scale, thanks to strong investment in electric vehicles (EVs), robotics, and manufacturing related to artificial intelligence, including semiconductors. “The region is expected to account for nearly 65% of global economic growth by 2035. However, the long-term competitive advantage of emerging markets depends not only on excellence in the hardware segment, but also on their ability to advance toward innovation in software and systems,” they argue at the asset manager.
Finally, François Rimeu, Senior Strategist at Crédit Mutuel Asset Management, revisits one of last week’s standout topics: gold. Precious metals have been in the spotlight in recent weeks due to the exceptional movements observed in prices: a 25% increase between the end of the year and January 28, followed by a decline of more than 13% in the case of gold. The situation is even worse for silver, which has lost a third of its value after having risen by more than 60%.
“From our point of view, the rebound in gold (and, to a lesser extent, silver) is driven by several factors, some more relevant than others. The key factor appears to be the continuation of expansionary fiscal policies since the Covid crisis and the war between Russia and Ukraine. On the other hand, current geopolitical instability acts as another supporting factor for gold prices and, once again, recent developments do not point, in our view, to a decline,” explains Rimeu.
His main conclusion is that the catalysts that have been present over the past three years remain in place and that the recent correction is ultimately healthy, as it helps to eliminate more speculative investments.
