Update for January 2026

This market report covers developments in December 2025 and January 2026. US job growth remained weak, with only 50,000 new jobs in December, making 2025 the slowest hiring year outside a recession since 2003. Inflation remained at 2.7%, with no Fed rate cut expected until June. The Trump administration opened a criminal investigation into Fed Chair Powell, intensifying political pressure on monetary policy.Tensions escalated after Trump threatened new tariffs on eight European countries unless the US is allowed to buy Greenland. Europe is considering strong countermeasures, including a potential €93bn tariff package and activating the Anti-Coercion Instrument. This trade rift has cast uncertainty over US-Europe relations and delayed progress on the EU-US trade deal.Euro area inflation edged down to 2.0%, and the ECB held rates steady while signaling a possible future hike if growth momentum continues. Oil prices rose 7–8% on improved global growth sentiment. Gold hit a record high of $4,730 (+7.9%), while Bitcoin rose 5.7% to $90,940.US equities reached new highs before retreating on “sell America” sentiment triggered by the Greenland dispute. European stocks were mixed, with Germany’s DAX up 2.9%. Bond yields rose in the US but fell slightly in parts of Europe. Cyprus inflation held at 0.1%, with 10-year yields dipping slightly to 3.13%.US bank earnings were mixed; megabanks beat estimates but saw share price declines on valuation concerns. European banks were set to report in late January and early February.