Closing Recap 

The first trading days of 2026 saw a choppy start for U.S. equities, reflecting the volatility of a new year. After a weak open, markets found footing late Friday, snapping a 4-day losing streak for the S&P 500 (+0.19% for the week). While the “Magnificent Seven” led the charge (Nvidia +3%, Micron +7%), broader participation was thin. On Saturday, the U.S. launched military strikes on Venezuela, targeting military facilities and drug trade hubs. Simultaneously, data revealed the Fed quietly pumped $31 Billion into the banking system via overnight repos—the largest injection since Covid—providing a massive liquidity backstop that helps explain the market’s buoyancy despite stretched valuations. Conversely, Bitcoin and the broader crypto complex remain in “search for a bottom” mode, with massive ETF outflows. In a surprise twist, Silver volatility exploded, whipping between +9% and -7% days, highlighting the intense battle in hard assets.

Key Takeaways (The Week in 60 Seconds) 

• Stocks Start 2026 in the Green: The new year kicked off with familiar themes. The “Magnificent Seven” led early gains before fading, allowing Small Caps (Russell 2000 +1.06%) to outperform. The S&P 500 (+0.19%) snapped a 4-day losing streak to finish the week positive, hovering just below the 7,000 milestone. 
• Geopolitical Shock: US Strikes Venezuela: President Trump ordered military strikes on Venezuelan targets, including military facilities, following the seizure of oil tankers. The escalation has put a floor under sliding oil prices and kept safe-haven bids active; WTI Crude held steady near $57.32 but remains down ~20% over the last year. 
• Silver’s Historic Volatility: Silver was the wildest asset on the board, briefly spiking to a record high near $83.50/oz on China export ban fears before crashing back down in a period of extreme volatility. It remains the best-performing asset of the last year. 
• Dollar Snaps Losing Streak: After its worst annual performance since 2017 (-9% in 2025), the U.S. Dollar Index (DXY) started the year with a bounce, rising 0.24%. The rebound pressured the Euro and Yen. 
• Fed Divide: FOMC Minutes revealed a split committee; many members favor a pause in January to assess the impact of recent cuts, capping upside for bonds.
• Fed Liquidity: The Fed injected a staggering $31B into the banking system via overnight repos, surpassing Dot Com bubble peaks.
• S&P History: The S&P 500 just posted its 3rd consecutive year of >15% gains. This has only happened twice before (Dot Com run-up and 2019-2021).
• Bitcoin ETF Outflows Deepen Market Correction: Bitcoin is struggling to find a floor, currently hovering near the $90,000 support level. The asset class is facing renewed ‘crypto winter’ sentiment, evidenced by $244 million in weekly outflows from the largest ETF (IBIT), cementing a 30% decline from its October peaks.
• Bitcoin celebrated its 17th birthday on a sour note. Analysts at CryptoQuant argue the bear market began two months ago, targeting a bottom between $56k − $60k.
• Yen Weakness Persists Despite BoJ Hike: USD/JPY climbed back toward 157.00. Despite the Bank of Japan’s recent rate hike to 0.75%, the slow pace of tightening combined with the Fed’s “wait-and-see” stance is keeping the Yen under pressure, raising intervention risks. 
• Government Shutdown Risk: Dropped to 29% as unified Republican control suggests a smoother funding process. 
• 2026 Targets: Wall Street expects a respectable 11% gain for the S&P 500 this year, with price targets ranging from 7,100 (BofA) to 8,100 (Oppenheimer).
• Week Ahead Focus – The Data Floodgates Open: The holiday calm is over. Traders face the ISM Manufacturing (Mon) and Services (Wed) PMIs, FOMC Minutes (Tue), and the main event: the US Non-Farm Payrolls report (Fri). 

Looking Ahead 

The “vibe” for next week is “Wake Up Call.” After a holiday lull, traders return to full desks and a barrage of data. The spotlight is split between Las Vegas (CES) for the AI narrative and Washington/Venezuela for the geopolitical risk premium. The macro backdrop is shifting: The Dollar just had its worst year since 2017 (-9%), but started 2026 with a bounce. This suggests the “easy short dollar” trade might be crowded. With the U.S. labor market data (NFP) arriving Friday, the market will finally get clarity on whether the Fed’s next move is a cut or a pause.

Weekly Market Narrative: New Year, Same Winners (For Now)

The first trading days of 2026 looked a lot like 2025, but with a twist. The “Magnificent Seven” stocks, which accounted for 45% of the S&P 500’s return last year, surged out of the gate, driven by positioning ahead of next week’s CES trade show in Las Vegas. However, investor fatigue regarding high AI valuations set in late in the week, causing a rotation. Capital flowed into the Russell 2000 and Energy stocks, the latter boosted by the sudden military escalation between the U.S. and Venezuela. Under the surface, the “Santa Rally” momentum held on by a thread. 

Index	Last Closing Level	Weekly Change	Weekly Change %	Trend
DJ Industrials	48382	319.1	0.0066	Bullish
S&P 500	6858	12.97	0.0019	Neutral
Nasdaq	23231	-10.05	0.0004	Neutral
Russell 2000	2508	26.32	0.0106	Bullish

The S&P 500 defended key support late Friday. Breadth is improving, with large caps outperforming small caps for a 5th straight year – a streak that historically precedes a massive rotation into small caps. While volumes were thin, the S&P 500 managed to close the week higher, respecting the statistic that “Year 2” of a presidential cycle is often tricky but positive. Wall Street remains constructive, with Goldman Sachs setting a 2026 target of 7,600, though the looming “fog of war” in South America and the upcoming decision on the next Fed Chair (Warsh vs. Hassett) are injecting fresh uncertainty into the outlook.

The Week Ahead: January 5 – 9, 2026 

The holiday hibernation is officially over. This week brings the first full slate of top-tier data for 2026, headlined by the US jobs report and critical insights into the Fed’s thinking. Economic Calendar Highlights: 

SUN (Jan 4): 

• OPEC+ Meeting Expectation: Reaffirming production pause through Q1. With Venezuelan supply now at risk due to US strikes, OPEC’s decision to hold back barrels could keep a floor under oil prices despite 2026 surplus fears.

MON (Jan 5): 

• US ISM Manufacturing PMI (Dec): The first major data point of the year. Consensus is 48.3. A print below 50 would mark continued contraction, potentially boosting bond prices. Watch for the “Prices Paid” component. Any spike here due to tariffs will spook the bond market.
• China Services PMI: A key read on the health of the Chinese consumer. 

TUE (Jan 6): 

• Eurozone CPI (Dec Prelim): Inflation data that will dictate the ECB’s next move. 
• CES 2026 Kickoff (Nvidia/AMD Keynotes): Expect AI product announcements to drive intraday volatility in Semis.

WED (Jan 7): 

• US ISM Services PMI (Dec): A critical gauge of the U.S. economy’s largest sector. Strength here would support the “soft landing” narrative. Services is the engine of the economy. A drop below 50 here would ignite recession fears.
• Australian CPI (Nov): Crucial for the RBA, which has remained hawkish compared to peers. 
• US ADP Employment: A warm-up act for Friday’s NFP. 

THU (Jan 8): 

• Global Inflation Events: Swiss CPI, Chinese Trade Balance.

FRI (Jan 9): 

• US Non-Farm Payrolls (Dec): The Main Event. Consensus is for +55k jobs (impacted by the prior shutdown noise) and an unemployment rate of 4.5%. A weak number could reignite aggressive Fed cut bets; a strong number could boost the dollar further. A “Hot” number (>100k) kills the cut. A “Cold” number (<20k) brings 50bps cuts back on the table.
• Canadian Employment (Dec): Critical for the Bank of Canada’s outlook. 

Asset Class Spotlight: Commodities, Currencies, Crypto & Treasuries

Commodities saw extreme divergence. Silver experienced a chaotic week, whipsawing violently between record highs and sharp corrections due to China’s new export licensing regime, which effectively restricts 60-70% of global refined silver. Silver is the most exciting asset on the planet right now. China’s export license regime (effective Jan 1) has turned it into a strategic asset, causing massive volatility ($70 − $83 range). Gold cooled slightly (-0.27%) to $4,329, consolidating its massive 2025 gains. WTI Crude finished the week down slightly at $57.32, but the downside was limited by U.S. military strikes in Venezuela, which threatens to disrupt supply in the region. 

Asset	Last Level	Friday’s Change	Unit / % Change
WTI Crude	57.32	-0.1	USD/bbl (-20% YoY)
Brent Crude	60.75	-0.1	USD/bbl
Gold (Feb)	4329.6	-11.5	USD/oz (-0.27%)
Silver	~70.00	Volatile	China Export Ban
EUR/USD	1.1715	-0.003	Rate (-0.22% Wk)
USD/JPY	156.92	0.26	Rate (+0.16% Wk)
10-Year Note	0.04188	0.035	Yield (%)
Bitcoin	90742	0.032	USD (Recovering)

The currency market kicked off 2026 with a U.S. Dollar recovery, fueled by the realization that the Fed may not be as aggressive with cuts if inflation data stabilizes. 

• EUR/USD: The pair started the year on the back foot, sliding 0.22% to 1.1715. Weak manufacturing data from the Eurozone (PMI revised down to 48.8) is weighing on the single currency, as the divergence between a resilient U.S. economy and a stagnant Europe comes back into focus. 
• GBP/USD: Sterling drifted lower to 1.3460 (-0.10%). After a strong 2025, the Pound is consolidating. Traders are wary of the divergence between the Fed and the Bank of England, especially after UK manufacturing growth was revised lower. 
• USD/JPY: The pair pushed higher to 156.92 (+0.16%). The Yen is struggling to capitalize on the BoJ’s recent rate hike. With the pair approaching the 158.00 level—a previous danger zone for intervention—markets are testing the Ministry of Finance’s resolve. 

Bitcoin remains the weak link in the risk asset chain. The largest cryptocurrency has started the new year cautiously posting two consecutive positive closes and breaking above the key psychological level $90,000. But the upside seems capped down by six weeks of net outflows from crypto funds. The narrative has shifted from “digital gold” to a liquidity-constrained asset searching for a bottom. The correlation between Bitcoin and Tech is breaking down. While NVDA rallies, BTC struggles. This divergence suggests crypto-specific headwinds (ETF outflows, regulatory fatigue) are dominant. Meanwhile, the 10-Year Yield pushing 4.19% warns that the bond market sees stickier inflation/growth than the equity market admits.

What to Watch Next Week

• The “Sunday Scramble” (Geopolitics): The U.S. strikes on Venezuela happened after the close. Traders must watch the Sunday evening futures open for WTI Crude and Defense Stocks. If Maduro retaliates or supply lines are threatened, the “Oil Glut” narrative for 2026 could vanish overnight.
• The Silver “Super-Squeeze”: This is no longer just a trade; it’s a structural shift. With China locking up 60-70% of refined silver exports and U.S. banks facing billions in losses on shorts, volatility will be extreme. Watch the $80 level. A break above could trigger a forced liquidation of paper shorts, but a break below $70 can also trigger a violent repricing lower, regardless of what the dollar does. 
• Fed Chair Watch: Rumors are swirling that President Trump will announce his pick for Fed Chair (Kevin Warsh or Kevin Hassett) soon. An official nomination would be a massive market mover, likely steepening the yield curve if a dove is selected.
• Tech at CES: The Consumer Electronics Show (CES) in Las Vegas kicks off. Watch for keynotes from Nvidia (Jensen Huang) and AMD (Lisa Su). AI announcements here could reignite the tech trade or, if underwhelming, accelerate the rotation into other sectors. 
• The NFP “Fed Verdict”: Friday’s jobs report is binary. The FOMC minutes showed a “finely balanced” decision with many members leaning toward a pause to assess lagged effects. Weak NFP (<50k): Fed cuts in Jan -> Dollar Drops -> Gold/Silver Rally. Strong NFP (>100k): Fed Pauses -> Dollar Rips -> Risk Assets Correction. Also if unemployment ticks up to 4.6% or higher, the “bad news is bad news” narrative could hit stocks.