Heavy snowfall affected much of the central and eastern United States, while in Washington, D.C., the Federal Reserve held its first meeting of the year, keeping rates at 3.75% with ten of twelve members voting for a pause. Fed Chair Jerome Powell, now entering the final months of his tenure, expressed satisfaction with the continued resilience of the economy and noted that risks to both inflation and employment have eased.
Fed Governors Chris Waller and Stephen Miran were the two dissenters, both voting instead for a 25bps (0.25%) rate cut. The pause, however, was broadly anticipated by markets, with only two cuts priced in for the year. It is evident that the Fed is waiting for further softening in the labour market and for inflation to move decisively towards target of 2%. Much attention has also centred on the race for the next Fed Chair, and this Friday morning President Trump nominated Kevin Warsh to replace Chair Powell in May. Mr Powell offered advice to his successor: “Don’t get pulled into elected politics”.
Tesla Q4 25 results were announced on Wednesday as revenues fell 3% to$24.9bn (year-on-year). Ironically 2025 did not pan out as expected for CEO Elon Musk as he walked away from the D.O.G.E organisation and feuded with President Trump over the end of the EV tax incentives. Musk announced that the next step for Tesla would include the halt of production for the S and X models in a push towards self-driving Cybercabs and Ai enabled robots with plans to spend over $20.9bn in Capex this year alone.
Across North America, the Bank of Canada also kept interest rates unchanged at 2.25%. However, commentary following the meeting suggested that Governor Macklem remains uncertain about the next step for monetary policy, with trade tensions and geopolitical risks continuing to cloud the outlook. This uncertainty was further heightened by President Trump’s latest threat to impose a 100% tariff on Canada should it proceed with a trade agreement with China, arguing that China would use Canada as a “drop‑off point” to circumvent U.S. tariffs. Whether the threat will materialise remains anyone’s guess.
UK Prime Minister Sir Keir Starmer has been on the road this week, meeting Chinese President Xi Jinping in Beijing. He is the latest in a growing line of global leaders seeking to strengthen ties with China amid continued uncertainty surrounding US policy. Following the meeting, a number of agreements were announced, including visa‑free entry for UK citizens and a reduction in tariffs on Scotch whisky from 10% to 5%. In addition, UK pharmaceutical giant AstraZeneca unveiled plans for an £11bn investment in China, focused on expanding research and development capabilities and accelerating drug discovery.
Pubs across England and Wales are also set to benefit from a 15% reduction in business rates, offering meaningful relief for the sector. The package, which will run for the next three years, will also extend to live music venues, with the prospect of broader support for hotels further down the line. Chancellor Rachel Reeves will be hoping for a warmer reception in her own local pub after a national campaign led by landlords sought to ban Labour MPs during the dispute.
Over in Japan core inflation came in at 2%, lower than expected and the lowest reading in 15 months. Elevated inflation expectations have begun to embed in Japan, so this lower reading is pleasing to see and should provide a lift to the Japanese consumer.
It has been an exceptionally volatile week within the commodities sector. Prices of precious metals rose sharply at the start of the week, many reaching new all-time highs, before a sell-off started on Thursday afternoon, accelerating on Friday. Given the rapid appreciation in prices over recent months, short-sharp pullbacks should be expected.
This week brings a close to the first month of 2026. It’s been an eventful start to the year, both within asset markets and geopolitically. In this environment we continue to focus on diversification within portfolios, with the inclusion of assets such as commodities and alternative strategies alongside more traditional equity and fixed income positions.
Nathan Amaning, Investment Analyst
Risk warning: With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.