Morning Brew January 5 2026

Good morning,

Welcome to the first real trading week of 2026! The year has started with volatility, so be prepared for the unexpected. We have left behind a rather bewildering 2025, where few forecasters can claim they got it right. A client once remarked that even if we had given him all the headlines for the year in January, he still would have gotten it wrong—a fitting description of 2025 indeed.

Last year saw spectacular performances in precious metals, AI, defense, and an overall strong equity market.

On Saturday, the U.S. conducted a military operation in Venezuela, capturing President Maduro, which has sparked protests over the action's legality under international law. As Venezuela holds the title of the oil-richest nation on earth, any governmental changes could have significant implications on the oil market. China was quick to voice strong protests. The increased U.S. dominance in Central America marks a paradigm shift, and China is unlikely to be pleased about losing influence over a major oil producer.

Charu took a deeper look into the situation with the report: Venezuela: With Maduro captured, what’s next and how to position?

The clearest market reaction seems to be in precious metals, with gold up 2.0% from Friday at 4,420 and silver up 3.7% at 75.50. Oil is currently trading down 0.7%. Equities remain surprisingly calm with the US500 at 6,866, the GER40 at 24,630, Bitcoin at 92,230, and the USD index at 98.67. US 10-year yields are at 4.17%.

In an interview on Air Force One, Trump mentioned possible further strikes against Venezuela and expressed dissatisfaction with Colombia. Marco Rubio highlighted issues with the Cuban government, in line with the new “Monroe Doctrine” that seems to give the U.S. free rein in the region. A tweet from Trump's circle showing Greenland in U.S. colors has sparked renewed worries in Denmark.

In the near term, we are monitoring global PMI data, further escalations in Central America, Greenland, or Iran, and the U.S. Nonfarm Payrolls on Friday. Meanwhile, an arson attack in Berlin has left 45,000 households without electricity until at least Thursday, and two underwater cables in the Baltic Sea have been damaged.

China’s services activity expanded at its slowest pace in six months in December, slightly below expectations.

As we ponder what 2026 will bring, here are a few key considerations:

• Political uncertainty (see above) – What will be on the U.S. agenda this year? It certainly started with drama! Will Europe find cohesion, and can the German coalition survive the year?
• Interest Rates – Rate traders foresee 2.5 rate cuts in the U.S. in 2026, while the Fed has indicated one. The EU is expected to hold rates steady through the year, with Japan anticipated to hike twice. The Bank of England is projected to cut rates by 1.5 times.
• AI Sustainability – With approximately 40% weight in the S&P, the sector's importance cannot be ignored.
• Precious Metals – We've seen a fantastic year driven by fear of fiat currencies and strong demand. Last year, silver and platinum gained over 100%, while gold rose 65%. It remains uncertain whether this behavior truly signifies a safe haven.
• Passive Investments – Will the trend toward passive investments hold and expand as expected? AI calculations suggest this could support the S&P by 4% annually.

Tesla has ceded its crown as the world's top electric vehicle maker to BYD, after annual sales fell for the second consecutive year, impacted by rising competition, the expiry of U.S. tax credits, and brand backlash. With global EV sales rising 28% last year, BYD outsold Tesla for the first time on an annual basis.

Berkshire Hathaway's post-Buffett era began quietly on Friday. Meanwhile, Baidu gained 8.8% following its AI chip IPO, while ASML soared 7% after a major upgrade.

Ole commented on the U.S. Yield Curve: : What the steepest US yield curve since 2021 signals as 2026 begins

As 2026 unfolds, the U.S. yield curve is likely to become a central reference point across asset classes, signaling both the direction of front-end policy expectations and the market’s tolerance for long-end risk. While the front end could benefit from larger-than-expected rate cuts, long yields may remain stubbornly high, as interest payments—expected to approach USD 1 trillion—continue to be the fastest-growing part of the federal budget. That combination would imply tighter financial conditions than headline rate cuts alone suggest.

Wishing you a successful week ahead!

Key Dates in January:

5-Jan     Global PMI

6-Jan     Global PMI

6-Jan     DE          CPI

7-Jan     DE          Unemployment

7-Jan     EU          Inflation

8-Jan     DE          Industrial Orders

8-Jan     EU          Unemployment Rate

8-Jan     US          Initial Jobless claims, International Trade

9-Jan     China   PPI, CPI

9-Jan     US          Nonfarm Payrolls, University of Michigan

13-Jan  US          CPI

14-Jan  US          PPI, Existing Home Sales

14-Jan  China   Trade Data

15-Jan  UK          GDP

15-Jan  US          Initial Jobless Claims, Initial Jobless Claims

16-Jan  DE          Inflation

19-Jan  China Retail Sales, GDP, Urban Investment

19-Jan  CA          PMI

19-Jan  US          Market Holiday

20-Jan  China   Rate Decision

20-Jan  UK          Employment

20-Jan  DE          ZEW

21-Jan  UK          CPI

22-Jan  US          GDP

22-Jan  AU          CPI

23-Jan  Japan    Rate Deecision, CPI

23-Jan  UK          Retail Sales

23-Jan  US          PMI&University of Michigan

26-Jan  US          Durable Goods

27-Jan  US          Consumer Confidence

28-Jan  AU          CPI

28-Jan  Canada               Rate Decision

28-Jan  US          Rate Decision

29-Jan  US          PCE

30-Jan  Japan    CPI

30-Jan  Switzerland       KOF

30-Jan  EU          GDP, Consumer Confidence.