Markets Sift Through Noise As They Look For Clarity

The Trump administration began with a flurry of executive orders, but there is still ample policy uncertainty related to economic matters, most notably tariffs. As such, financial markets have been in a bit of a holding pattern waiting for more clarity.

That doesn’t imply January was an overly quiet month.

On the data front, a softer December CPI report somewhat offset a strong December jobs report. The last week of the month began with a tech-driven, risk-off trade that sent benchmark yields lower after it was reported that a Chinese firm had produced a viable AI model at a relatively low cost compared to U.S. competitors. Even so, major U.S. equity indices still ended the month higher, including the NASDAQ.

For the Fed, the January 29 FOMC meeting ended with policy rates unchanged, as widely expected, but the forward guidance was murkier. The official statement was more hawkish on the margin, with the assessment of the labor market upgraded and the assessment of inflation progress downgraded. However, chair Powell dampened any hawkish interpretation of the official statement with his comments during the press conference.

For now, it appears the Fed might remain reactive to short-term trends in data metrics, which presents risks to higher interest rate volatility.
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Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.