Churn’en and Burnham

US equity markets managed to finish the week close to where they started, fending off the potential resurgence of new tariffs sparked by the battle over Greenland and, secondly, a sharp sell-off in Japanese government bonds. One would normally expect the latter to have a limited impact on the wider stage, but in this instance, the move was severe enough to threaten contagion into US Treasury markets, amid concerns that Japanese authorities may need to sell US Treasuries to defend their currency.

This week is likely to be dominated by the Federal Reserve meeting, which concludes on Wednesday evening our time. There is little expectation that the Fed will bow to the president’s bidding and cut rates by a further 25 basis points. The Fed cut three times late last year; one would suggest they were more aggressive than they would otherwise have been, had they not been under so much pressure from Trump.

January’s flash Purchasing Manager survey was released at the end of the week. US business activity growth ticked higher in January, as the Composite Output Index signalled ongoing growth of business activity at the start of 2026. According to Chris Williamson, Chief Strategist at S&P Global, “The flash PMI brought news of sustained economic growth at the start of the year”. He goes on to add some words of caution for the broader global economy: the rate of expansion has cooled over the turn of the new year, compared to the hotter pace indicated back in the fall.

In the week ahead, there will be further indicators of US economic trends, including durable goods orders, factory orders, consumer sentiment, the housing market and producer prices. Several regional manufacturing surveys will also provide further insights.

For the eurozone, there is also a reasonable number of economic reports scheduled for the week, including fourth-quarter GDP growth, which flash PMI survey data hint at a modest expansion of approximately 0.3%.

As for the UK, there is little economic data, but some house price data. Politics may come to the fore again after the National Executive Committee banned Mr Burnham from standing for parliament for the upcoming Gorton and Denton byelection. For Mr Burnham, this must have been the perfect outcome, and it must put more pressure on the Prime Minister.  As yet, there seems to be little reaction from the currency market.

Global equities seem to be starting the week fairly flat, if possibly a touch weaker.