Holding Pattern: The Fed Blinks, Commodities Break, and Markets Shrug

David Halseth
2 days ago
2 min read

For the week ended 1/31/26.

Well, good morning and shall we jump right on in? I say yes! The Federal Reserve hit the pause button last week – and made it abundantly clear they’re in no rush to press play again. By a 10–2 vote, the Fed held the federal funds rate steady at 3.75%, with Chair Jerome Powell noting that recent data look slightly better than expected: economic growth has firmed and the labor market may be finding its footing. Translation: unless inflation resumes a convincing march toward 2% or the job market cracks, the Fed is content to sit on its hands.

Layer onto that the political intrigue. President Trump nominated Kevin Warsh as the next Fed Chair - a known critic of the central bank and an advocate for faster rate cuts, yet historically also known as an inflation hawk. Add a messy Senate confirmation process and a Justice Department probe into the Fed, and you’ve got uncertainty on tap. Markets love clarity. This is… not that.

So how did markets digest all this? Fairly calmly, all things considered. According to the dashboard, foreign stocks led last week, up 1.4%, followed by global property stocks (+1.3%). U.S. stocks were basically flat (+0.3%), while bonds did what bonds do these days – nothing, with U.S. bonds finishing unchanged. Crypto? Still living dangerously, down 6.8% on the week. Year-to-date, leadership remains overseas and in real assets, while cryptocurrencies continue to dig a hole they’d rather not discuss at dinner parties.

Yes, commodities were up, overall (+1.0%) while also providing the week’s headline drama. Silver cratered 31% - its worst drop since 1980 – while gold followed with an 11% plunge. A brutal reminder that inflation hedges can cut both ways, especially when positioning gets crowded.

Looking ahead, it’s a busy economic week. JOLTS job openings hit Tuesday, followed by ADP employment, ISM services, and initial jobless claims midweek. Friday brings the heavyweight bout: January nonfarm payrolls, the unemployment rate, and average hourly earnings. In other words, plenty of fodder for the Fed – and the markets – to argue with themselves.

With that, enjoy your morning brew. The Fed is waiting. The markets are watching. And volatility is never as far away as it feels.

Welcome to February.