January is the month where markets stop “trading vibes” and start demanding evidence. The key shift this week is participation: liquidity is returning, and with it, the ability for macro releases to actually reset positioning.
Late December can hide a lot — thin trading, mechanical flows, and narrow leadership. January tends to expose it. If the first macro prints don’t validate the market’s preferred policy path, risk assets can reprice quickly.
This week begins the run into the first major January releases. The market’s current sensitivity suggests the biggest reactions will be tied to inflation and employment — not because these are new concepts, but because they drive the policy debate.
With normal liquidity returning, the market’s moves should become more “explainable.” That doesn’t mean calmer — it means catalysts regain power. If rates move, leadership rotates. If data surprises, positioning adjusts.
The market is entering its first real test of 2026: can the data support the optimism embedded in risk assets? Next week is about information regaining control from mechanics.