Market Wrap 2026-01-28
Today's US Market Wrap — Key Points
- Stocks rose amid Dollar weakness; Treasury yields steepened.
- Focus shifts to upcoming Fed, BoC, and BCB policy announcements.
- Key earnings expected from MSFT, META, TSLA, and others.
- Crude oil prices increased due to US winter storm production cuts.
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- SNAPSHOT: Stocks increased, Treasury yields steepened, crude oil rose, the Dollar declined, and gold advanced.- REAR VIEW: The former President indicated a lack of concern regarding the Dollar's decline; Consumer Confidence reached a 12-year low; the Richmond Fed Manufacturing index showed a slight, though still negative, increase; tariffs on South Korea were raised; the Japanese Finance Minister stated intentions to take appropriate FX steps in coordination with the US; healthcare insurers were impacted by an upcoming proposal to maintain steady Medicare rates to insurers; LMVH exceeded earnings expectations; and the average 5-year US Treasury auction took place.- COMING UP: Data releases include Australian CPI (Dec), German GfK (Feb), and New Zealand Trade (Dec). Events include the Fed Policy Announcement, BoC Policy Announcement, and BCB Policy Announcement. Speakers include the ECB's Elderson and Schnabel, the BoC's Macklem, and Fed Chair Powell. Supply events include those from Japan, Germany, and the US. Earnings reports are expected from Microsoft, Meta, Tesla, Lam, ServiceNow, IBM, GE Vernova, AT&T, Starbucks, VF Corp, Danaher, ASML, and Volvo AB.
More Newsquawk in 2 steps:- 1. Subscribe to the free premarket movers reports- 2. Trial Newsquawk’s premium real-time audio news squawk box for 7 days## MARKET WRAP
US equities closed higher, largely due to gains in mega-cap stocks as markets anticipate earnings from MSFT, TSLA, and META on Wednesday following the FOMC meeting. Healthcare was the weakest sector, pressured by widespread weakness in insurers (UNH -19.6%, CVS -14.2%, HUM -21.1%) after a report that the former administration is proposing to keep Medicare rates to insurers steady, lower than the anticipated 5%. Financials also experienced losses, while Tech, Utilities, and Energy outperformed. Energy was supported by rising crude prices as the winter storm in the US curtailed production, with analysts estimating that US oil producers lost up to 15% of national production over the weekend. US economic data had limited impact on FX but contributed to lower US 2-year yields as US Consumer Confidence hit a 12-year low; the Richmond Fed Manufacturing Survey showed slight improvement, albeit still negative, and ADP weekly growth marginally eased. The most significant move occurred near the US cash close, with broad Dollar weakness extending after the former President commented that he was not overly concerned about the Dollar's decline, pushing the DXY to levels not seen since 2022. For JPY, a sharp increase in strength was observed during the European morning, maintaining speculation about FX intervention or rate checks. T-Notes were sold on the long end, steepening the curve; there was little reaction to an average 5-year note auction. In commodities, gold and silver recovered some of the weakness from the previous day and strengthened further, accelerating after the Dollar weakened following the former President's comments; gold climbed above USD 5,185/oz, and silver returned above USD 112/oz.## FIXED INCOME
T-NOTE FUTURES (H6) SETTLED 1 TICK LOWER AT 111-25
T-Notes steepened as the former President increased pressure on South Korea regarding trade talks, while US Consumer Confidence fell to a 12-year low.
At settlement, 2-year yields decreased by 2.5bps to 3.573%, 3-year yields decreased by 2.0bps to 3.643%, 5-year yields decreased by 1.1bps to 3.819%, 7-year yields decreased by 0.3bps to 4.021%, 10-year yields increased by 0.8bps to 4.229%, 20-year yields increased by 2.5bps to 4.793%, and 30-year yields increased by 2.6bps to 4.836%.
THE DAY:
T-Notes gradually declined throughout APAC trading before stabilizing until the US morning. News flow at the time was limited to trade as the former President targeted South Korea, raising tariffs to 25% from 15% on multiple goods due to a lack of progress in the trade deal agreed upon last year. Updates were sparse until US Consumer Confidence hit a 12-year low, allowing for a continued rally in the 2-year as money markets slightly increased rate cut bets for March and April. The Richmond Fed Manufacturing Survey was slightly firmer in January, supported by increases in Shipments and New Orders, while employment fell. In the US afternoon, the 5-year note auction saw average demand, marking the 7th tail out of the last 8 auctions. Focus now shifts to the Fed, where the Committee is expected to hold rates, but likely with at least two dovish dissents, Governors Bowman and Miran. ZN H6 traded in a 111'21-111'29 range.
SUPPLY:
Notes- The US sold USD 70bln of 5-year notes.- Overall, the 5-year note auction was average, marking the 7th tail out of the last 8 auctions. The tail printed 0.3bps, above the prior 0.1bps, but roughly in line with the 0.4bps six-auction average. The bid-to-cover ratio was little changed at 2.34x from the prior 2.35x, close to the 2.36x average. Dealer's bid proportion rose to 10.9% from 8.8%, above the 10.4% average, a result of directs bid dropping to 28.5% from 31..7%, beneath the average of 28.7%. Indirects took 60.7% of the bid, up from 59.5%, but slightly shy of the 61.0% average.
Bills- The US sold 6-week bills at a high rate of 3.635%, with a bid-to-cover ratio of 2.64x.- The US is to sell USD 69bln of 17-wk bills on January 28th, and USD 105bln of 4-wk bills and USD 95bln of 8-wk bills on January 29th; all to settle on February 3rd.
STIRS/OPERATIONS- Market Implied Fed Rate Cut Pricing: January 0bps (previous 0bps), March 3.4bps (previous 2.8bps), April 6.7bps (previous 6.2bps), December 46.7bps (previous 45.2bps).- NY Fed RRP op demand at 1.25bln (previous 1.49bln) across 5 counterparties (previous 7)- EFFR at 3.64% (previous 3.64%), volumes at USD 83bln (previous 99bln) on January 26th.- SOFR at 3.66% (previous 3.65%), volumes at USD 3.143tln (previous 3.137tln) on January 26th.## CRUDE
WTI (H6) SETTLED USD 1.76 HIGHER AT 62.39/BBL; BRENT (H6) SETTLED USD 1.98 HIGHER AT 67.57/BBL
The crude complex was firmer and gained from troughs throughout the duration of the US session.
There was no specific headline driver for the turnaround in prices, but it appears to be closely associated with the winter storm in the US, as it has curtailed production and even drove US Gulf Coast crude exports to zero over the weekend. Analysts add that US oil producers lost up to 2mln BPD or ~15% of national production over the weekend. While the impact is only going to be in the immediate short-term, desks write that the cold weather will likely cause quite notable drawdowns in oil stocks over the next few weeks, particularly if this weather continues. Further on the supply footing, a Reuters source reports that Kazakhstan's biggest oilfield, Tengiz, is likely to restore less than half of its normal production by February 7th as it slowly recovers from a fire and power outage. While there wasn’t too much to add from a geopolitical standpoint, the former President said a big armada is going over to Iran, but hopefully won't have to use it. While on Ukraine/Russia, remarked that very good things are happening. After-hours we get the weekly private inventory data, whereby current expectations are (bbls): Crude +1.8mln, Distillate -0.6mln, Gasoline +1.0mln.## EQUITIES
CLOSES
: SPX +0.41% at 6,979, NDX +0.88% at 25,940, DJI -0.83% at 49,003, RUT +0.26% at 2,667
SECTORS:
Health -1.66%, Financials -0.74%, Communication Services +0.02%, Materials +0.04%, Real Estate +0.14%, Consumer Staples +0.33%, Industrials +0.42%, Consumer Discretionary +0.67%, Energy +0.99%, Utilities +1.25%, Technology +1.42%.
EUROPEAN CLOSES
: Euro Stoxx 50 +0.58% at 5,993, Dax 40 -0.10% at 24,908, FTSE 100 +0.58% at 10,208, CAC 40 +0.27% at 8,153, FTSE MIB +1.09% at 45,440, IBEX 35 +0.70% at 17,804, PSI +0.90% at 8,654, SMI +0.46% at 13,206, AEX +0.29% at 1,002
STOCK SPECIFICS:- Following NVIDIA’s (NVDA) investment on Monday, CoreWeave (CRWV) was upgraded at Deutsche Bank.- Meta (META) reportedly agreed a deal to pay Corning (GLW) as much as USD 6bln for fibre optic cables in data centres.- Micron (MU) is to invest USD 24bln over 10 years in Singapore NAND plant.- Salesforce (CRM) subsidiary Computable Insights awarded USD 5.64bln Army contract- The former administration proposes keeping the rates steady that Medicare pays insurers. Of note for insurers, Humana (HUM), UnitedHealth (UNH), CVS Health (CVS).- Amazon (AMZN) to close Amazon Go and Amazon Fresh physical stores; now planning to invest in opening more than 100 new whole foods market stores over the next few years. To launch new same-day deliveries in more cities in 2026.
EARNINGS:- American Airlines (AAL): The midpoint of its FY profit outlook surpassed Wall St. consensus.- Boeing (BA): Profit beat expectations, but only because results included a $9.6bln gain on a digital aviation solutions deal.- General Motors (GM): Profit topped expectations and approved a new $6bln share repurchase program.- HCA Healthcare (HCA): Profit topped expectations and authorized an additional share repurchase program for up to $10bln.- JetBlue (JBLU): Reported a deeper loss per share than expected.- Nucor (NUE): EPS and revenue were light.- RTX (RTX): Showed strong Q metrics with the midpoint of its FY EPS outlook also above expectations.- Sanmina (SANM): Next quarter sales outlook disappointed.- UnitedHealth (UNH): Profit and revenue were short of expectations with FY26 top line guidance light.- UPS (UPS): Top and bottom lines surpassed expectations; provided a strong FY revenue outlook.## FX
The Dollar
was sold again, as the “de-dollarisation” trade is still very much in effect, with renewed pressure stemming from US/Japan rate checks and the former President’s latest tariff threats on Canada and South Korea. On the latter, he announced he is "increasing South Korean tariffs on Autos, Lumber, Pharma, and all other reciprocal tariffs, from 15% to 25%. US data came in the form of Consumer Confidence, Richmond Fed, and the weekly ADP, but did little to move the Greenback as participants await FOMC and Mag-7 earnings on Wednesday. Briefly recapping the data, Consumer Confidence disappointed, Richmond Fed was slightly better than expected, albeit still negative, and ADP added 7.75k jobs a week (previous 8k). The Dollar Index hit a low of 95.953 against an earlier high of 97.118 as the week's key risk events come into view.
G10 FX
was firmer across the board and benefited from the broad Dollar weakness.
Swissy
was the clear gainer, and seemingly buoyed by its haven status, while all other G10s also saw decent strength. On the in-vogue
Yen
, a large bout of strength was seen in the EU session, which led USD/JPY to tumble below 153.20, from around from 154.55, and the move lacked a fresh catalyst. Markets no doubt will speculate the move being either a) intervention or b) a rate check, which, of course, follows a rate check conducted by the NY Fed on Friday. On this front, Finance Minister Katayama said they are coordinating with the US, and will take appropriate steps on FX – a comment which led the pair down to make a fresh trough below the 153.00 mark. The pair continued lower and found a floor at 152.57, a level it resides around at the time of writing.
There was little currency-specific newsflow, but
Cable
printed a 4-year high of 1.3791, while
EUR
/USD hit a high of 1.1990. On the central bank footing, ECB's Nagel said there is no reason to change rates anytime soon, and agrees with Chief Economist Lane that there is no good argument for changing rates in either direction. ECB's Kocher remarked officials must be ready to act if needed. Precious metals once again saw strength, as spot silver peaked at c. USD 117/oz and spot gold at USD 5140/oz, with Citi raising silver 0-3month price forecast to USD 150/oz (prev. 100 oz), citing strong speculative demand and tightening physical supply outside the US, and it also warns short-term profit-taking from Chinese investors could pressure prices.
In
EMFX
, and to avoid repeating myself saw gains on the known themes, while CNB Deputy Governor Frait said the domestic economy does not justify rate cuts; 50bps of easing is the maximum for this year.## CENTRAL BANK PREVIEWS
FED:
The Federal Reserve is widely expected to leave the policy rate unchanged at 3.50-3.75%, with the latest Reuters poll showing unanimous expectations for no change at this meeting, and also 58% of economists surveyed by Reuters also see rates staying on hold through the quarter. Money markets are pricing in around 45bps of cuts by year-end, with the first 25bps reduction seen by July. Goldman Sachs said the meeting is likely to be uneventful, with no change to the Federal Funds Rate, only minor statement tweaks, and few clues on the future policy path. The bank expects Chair Powell to stress that the FOMC has already delivered three cuts to help stabilise the labour market and is well positioned to assess the impact. As in recent meetings, guidance is likely to matter more than the decision itself, particularly around how long policymakers intend to remain patient before easing eventually comes into view.
BOC:
The BoC is widely expected to keep rates on hold at 2.25%, as reflected in the unanimous view of a Bloomberg survey of analysts and current OIS pricing. A Reuters poll shows about 75% of the 35 economists surveyed expect rates to remain unchanged in 2026, up from around 60% in December. The shift reflects worsening US-Canada trade relations and elevated uncertainty ahead of USMCA renegotiations later this year, prompting participants to scale back bets on a return to tightening. The latest escalation followed comments by US President Trump, who threatened 100% tariffs on Canada over closer ties with China, including reduced tariffs on Chinese EVs and the reopening of channels for investment, energy cooperation and long-term trade growth. Money markets now price about 12 bps of hikes by year-end, down from around 35 bps in December. Data since the December meeting have been mixed, giving the BoC scope to cite greater economic uncertainty in a decision to hold rates. The unemployment rate again proved volatile, rising in December despite full-time job gains offsetting a decline in part-time employment. Headline inflation accelerated, while average BoC core measures eased slightly. The meeting will include the latest MPR, with attention on any changes to the neutral rate estimate, although desks say this is not expected.## More
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