The first week of 2026 delivered a familiar message: the market is still trading the same three variables — rates, narrative, and positioning. The “Santa” tailwind was not as clean as traders hoped, and the tape is now refocusing on the first major January macro catalysts.
Several week-in-review notes highlighted that the expected year-end lift didn’t materialize in a straight line. That’s important because it changes psychology: when the market doesn’t get the easy rally, investors start demanding “proof” from data and policy signals.
Even in a light week, we saw how sensitive risk assets remain to inflation expectations and rates. The takeaway: January won’t be about opinions — it’ll be about whether incoming data validates the market’s preferred policy path.
The market didn’t gift a clean year-end rally — which means early January data will matter more. The new focus is simple: inflation prints, labor data, and how the Fed reacts if the numbers don’t cooperate.