The first full week of 2026 did what early January often does: it set a tone. Markets absorbed high-profile macro signals and still managed to finish strong — a reminder that the path of least resistance can remain higher when the rates narrative stays supportive.
Investors came in ready for volatility — instead, the week ended with a constructive bid. That doesn’t mean risks disappeared; it means positioning and narrative were aligned enough that dips found buyers.
Closing at/near record levels tends to do two things: it attracts performance-chasing flows and it compresses fear — until a catalyst reintroduces it. In other words, record highs are bullish until they become fragile.
A lot of “good market weeks” are really expectation weeks. If the market expects a shock and doesn’t get one, that alone can be supportive. The framing going forward remains the same: inflation + labor + Fed path → yields → leadership.
The next test is inflation. If inflation prints confirm cooling, risk can extend. If not, the market’s high sensitivity to yields will show up immediately — and crowded leaders will be where de-risking happens first.
This week reinforced the core regime: markets still trade off rates expectations. Into next week, inflation becomes the main event — not because it’s new, but because it determines the entire story investors are currently buying.