Golf Claps for CPI, High-Wire Acts for Markets

David Halseth
Jan 25
2 min read

For the week ended 1/24/26.

As this author so boldly prognosticated just a couple of weeks back (humility is overrated), the latest CPI reading came in largely unchanged. And sure enough, consumer prices rose 2.7% year-over-year in December, matching November’s pace and landing exactly where economists expected. Cue the polite golf clap.

Zooming out, inflation has cooled meaningfully from 3.0% in January 2025 to 2.7% today, though it remains stubbornly above the Fed’s ever-elusive 2% target. Meanwhile, the labor market spent much of 2025 slowly exhaling. Job growth cooled to its weakest average monthly pace since 2003 – excluding the two most recent recessions. Not a collapse, but hardly the stuff of economic bravado.

And yet, despite a softer labor backdrop, recent data continue to reassure investors that the economy remains on reasonably firm footing. Credit conditions look healthy, recession odds appear low (for now), and corporate America keeps doing what it does best: adapting.

Turning to the markets, a week that began with renewed threats of a trans-Atlantic trade war ended with U.S. equities finishing roughly 30 basis points in the red. The topsy-turvy path to Friday’s quiet close reminded investors that this record-breaking run increasingly feels less like a victory lap and more like a high-wire act.

Donald Trump briefly threatened additional tariffs on some of America’s longest-standing allies – apparently in a bid to acquire Greenland – before promptly walking them back. Investors flirted with a short-lived “Sell America” trade by unloading stocks and bonds… and then just as quickly bought them back.

Perhaps that helps explain why foreign equities gained another 80 basis points on the week and now sit well ahead of U.S. markets as January winds down. The scorecard: U.S. stocks up 1.1% YTD; the rest of the world up 5.3%. Commodities are running even hotter, up a robust 9.3% early in 2026, driven largely by precious metals as both gold and silver continue to notch new highs.

Looking ahead, all eyes turn to Wednesday’s FOMC rate decision. Both Jerome Powell and President Trump are scheduled to speak, setting the stage for what should be an entertaining pair of dueling essays. I’ll go out on a limb once again and predict the Fed will refrain from an additional rate cut. Stand firm, Jerome – the economy and markets are counting on it.

And with that, have a great week. And maybe keep an eye on Antarctica. You never know.