This week is dominated by a dense schedule of central bank decisions, with markets closely watching both policy signals and forward guidance.
Tonight, the Federal Reserve (Fed) will announce its latest interest rate decision, followed by the press conference with Jerome Powell. Market consensus expects the Fed to remain on hold. However, the focus will be less on the decision itself and far more on Powell’s tone, forward guidance, and any signals regarding the balance between inflation risks and slowing economic momentum.

Earlier today, the latest US Producer Price Index (PPI) added an important piece to the puzzle. Producer prices rose by 0.7% month-over-month in February 2026, accelerating from 0.5% in January and significantly above expectations of 0.3%. This marks the strongest increase in seven months and reinforces the view that inflationary pressures are re-emerging rather than fading.

Yesterday, the Reserve Bank of Australia (RBA) raised interest rates by 25 basis points to 4.1%, in line with expectations, signaling continued vigilance on inflation.

Today, the Bank of Canada (BoC) held its policy rate unchanged at 2.25%, also as expected.

Tomorrow will be particularly important, with four major central banks announcing their decisions: the Bank of Japan (BoJ), the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB). All are currently expected to keep rates unchanged.

Markets: driven by headlines from Middle East - optmistic investors

• Equities: fell in the red zone during afternoon session

• Bonds: no major moves, only with a slight uptick - US 10-year Treasury yield 4.23%

• Currencies: USD gaining more ground, the Swiss franc weakens with intervention by the SNB

• Commodities: oil climbs - WTI crude oil at USD 98/barrel and Brent at USD 108/barrel, while precious metals fall with stronger USD

• Cryptos: losing ground - Bitcoin down to USD 71k after reaching 76k

• Volatility: The VIX only a bit higher towards 24

My View: We continue to see a dangerous and even growing divergence between market expectations and macro reality, guess driven by liquidity available almost endlessly.

Some investors are already positioning for rate cuts, driven by rising recession fears linked to higher oil prices. However, this view ignores a critical constraint: Rising inflation, led by the oil shock, limits central banks’ ability to cut rates. Current data and news point toward a stagflationary setup: higher inflation, slowing growth, limited policy flexibility.

At the same time, markets continue to price: a quick end to the Middle East conflict and contained impact from higher energy prices.

Both assumptions appear overly optimistic. First signs of energy stress are already emerging in several countries, and the longer the disruption persists, the more visible the macro impact will become.

In this environment, chasing short-term upside based on hopes of quick resolution or supportive central bank action carries significant risk. There is currently no compelling reason to increase speculative exposure to equities at these levels. On the contrary, the risk-reward profile suggests a more cautious approach.

Position for lower equity levels rather than chasing upside driven by hope.

The Iran war has now entered its third week, and the developments over the weekend point more toward further escalation rather than de-escalation.

Iranian leadership reiterated that it remains unwilling to engage in ceasefire negotiations, while attacks on neighboring countries and energy infrastructure continue. At the same time, the Strait of Hormuz remains effectively closed, keeping global energy markets under significant pressure.

US President Donald Trump is now urging NATO members and Asian countries — including China — to contribute naval forces to help reopen the narrow passage through which roughly 20% of global oil supply normally flows.

So far, however, no sustainable solution has emerged to guarantee the safe passage of tankers.

Markets: 

• Equities: move higher

• Bonds: yields are slightly falling - US 10-year Treasury yield 4.24%

• Currencies: USD falling back after recent strength

• Commodities: oil falls on hopes - WTI crude oil at USD 94 per barrel, while precious metals unchanged

• Cryptos: small rally - Bitcoin at USD 73k

• Volatility: The VIX falls back to 24

My View: Today’s buys just rely on hope. At this stage, there is little justification to bet on a quick end to the conflict.

Markets appear increasingly willing to price in optimistic headlines, but the underlying geopolitical reality suggests that a prolonged disruption remains a very plausible scenario.

Trading markets purely on the expectation of positive war headlines is typically a high-risk strategy. Such trades often turn into losses before eventually working out, if they work out at all.

Although I see several potential investment opportunities that have been developing over the past weeks, I deliberately refrain from adding risk at this stage. My base case remains that equity markets could trade lower, which would likely create more attractive entry levels to selectively accumulate positions.

For now, patience remains the more disciplined strategy.

Today’s US inflation data came broadly in line with expectations, but it had only a limited impact on markets. The February CPI report showed that inflation pressures remain present while the market’s main focus continues to lie elsewhere: geopolitics and energy prices.

The US Consumer Price Index rose 0.3% month-over-month in February, slightly accelerating from the 0.2% increase in January and matching market expectations. On an annual basis, inflation held steady at 2.4%, unchanged from the previous month and remaining at the lowest level since May 2025.

Markets: rebound stalled

• Equities: broadly lower

• Bonds: yields moved higher again driven by the renewed rise in oil prices. The US 10-year Treasury yield climbed back to around 4.23%

• Currencies: The US dollar strengthened, reflecting rising yields and renewed uncertainty

• Commodities: Energy markets remain the dominant driver. WTI crude oil climbed back to around USD 88 per barrel, while precious metals eased slightly after their yesterday’s rally.

• Cryptos: short rally lost momentum - Bitcoin stabilizing at USD 70k

• Volatility: The VIX remains elevated around 24

My View: Today’s inflation data is largely a side note.

While the February CPI reading remains above the Federal Reserve’s 2% inflation target, it reflects past price developments rather than the forward-looking inflation risks now emerging.

The key variable for markets has become energy supply and oil prices.

If the disruption of oil flows persists – particularly due to the closure of the Strait of Hormuz – energy prices are likely to remain elevated and could move significantly higher. This would inevitably feed into higher future inflation expectations.

At this stage, the trajectory of markets depends primarily on how the geopolitical conflict evolves and whether global energy supply disruptions continue.

An immediate resolution would likely calm markets quickly. However, based on the current dynamics, a rapid solution appears unlikely.

For now, markets will remain highly sensitive to developments around the conflict and oil supply, while macroeconomic data and corporate fundamentals are likely to play only a secondary role.

Markets rebounded after a sharp risk-off move earlier in the week, following comments by Donald Trump suggesting that the conflict with Iran could end “very soon.” During a press conference, Trump stated that he expects the assault to end shortly, while at the same time warning that the United States would launch additional strikes should Iran attempt to block global energy flows through the Strait of Hormuz.

The remarks triggered a relief reaction across financial markets. Oil prices fell sharply after their previous surge, easing immediate inflation concerns and allowing risk assets to rebound.

However, the geopolitical situation remains far from resolved. Iranian leadership has reportedly warned that not “one liter of oil” will be allowed to transit the Strait of Hormuz if US and Israeli attacks continue. Iran’s foreign minister also dismissed the possibility of ceasefire negotiations with Washington.

At the same time, Israeli Prime Minister Benjamin Netanyahu stated that the military campaign is “not done yet,”indicating that Israel’s strategic objective remains the dismantling of Iran’s ruling clerical regime.

Markets: the oil pullback sparks risk rally

• Equities: Global equities are seeing a rebound

• Bonds: Yields eased with energy prices retreating - US 10-year Treasury fell back to 4.11%

• Currencies: USD weakened markedly, EUR/CHF rising back above 0.90

• Commodities: Oil prices corrected sharply after their recent spike - WTI fell back below USD 80/barrel (-15%) while precious metals moved higher - Gold: USD 5220/oz and silver USD 89/oz

• Cryptos: joined the risk-on stance - Bitcoin back at USD 71k

• Volatility: The VIX declined to 22

My View: Markets are currently extremely headline-driven, reacting to every political statement rather than to the structural risks of the situation.

I am surprised by the market reaction. There is still absolutely no clarity on the duration of the Iran war or how long disruptions to global energy flows could persist. Yet markets are already behaving as if the conflict is close to being resolved.

However, the divergence in rhetoric highlights that the conflict still carries significant escalation risk. The comments from President Trump were clearly aimed at calming markets. However, they do little to change the underlying realities on the ground. Military operations continue, and the threat of disruptions in the Strait of Hormuz remains significant.

This kind of environment often leads investors to chase short-term news flow instead of assessing the bigger picture. History shows that reacting emotionally to headlines usually means running behind the market rather than ahead of it, leading to more to losses than gain

At this stage, the key question remains unchanged: How long will the conflict last, and how long will energy flows remain disrupted?

Until clearer answers emerge, I expect volatility to remain elevated and equity indices to face further downside from current levels while oil prices could see higher levels again.

The war involving Iran has now entered its first week with no visible signs of de-escalation. Military operations continue and geopolitical tensions across the region remain elevated.

At the same time, the closure of the Strait of Hormuz is disrupting global energy flows, pushing oil prices sharply higher.
Brent crude has surged above USD 91 per barrel (+25% WoW) while WTI crude trades above USD 88 (+33% WoW).

This represents one of the fastest weekly oil price increases in recent years and significantly raises the risk of renewed inflationary pressure globally.

Today’s US economic data added another layer of concern:

• Labour market: The US economy shed 92k jobs in February, the largest decline in four months. January payrolls were revised lower to +126k, and the figure came far below expectations of a +59k increase. At the same time unemployment rose to 4.4% (est. 4.3%).

• Retail sales: US retail sales fell 0.2% in January, marking the first monthly decline since October and signalling weakening consumer momentum.

Markets: broad risk off move

• Equities: Global equities moved lower, with losses led by European markets and US technology stocks.

• Bonds: Yields rose as higher oil prices increased inflation concerns - US 10-year Treasury to 4.17%

• Currencies: USD broadly unchanged while CHF strengthened

• Commodities: Broad gains across the complex, led by oil (+8% intraday) and precious metals.

• Cryptos: fell sharply, with Bitcoin falling toward USD 68k (-5%)

• Volatility: The VIX jumped above 27, levels last seen in November

My View: As highlighted already last weekend in my “Weekly Market Snapshot”, this is not the moment to add additional risk exposure.

Until mid-week, markets clearly underestimated the potential duration and economic impact of the conflict. The assumption that the situation would stabilize quickly now appears overly optimistic.

At the same time, the surge in oil prices represents one of the fastest weekly increases in recent years, significantly raising the risk of renewed global inflationary pressure.

If the closure of the Strait of Hormuz persists, the economic implications could become substantial:

• structurally higher energy prices

• renewed inflationary pressure

• higher bond yields

• weaker consumer demand

• a drag on economic activity

• a broader economic slowdown

At the same time, recently weaker US labour market data is already hinting at a potential shift in monetary policy expectations. Historically, the Federal Reserve has tended to place greater weight on labour market deterioration than on inflation risks when both forces move in opposite directions.

This creates a challenging policy environment: rising energy-driven inflation combined with a weakening labour market could force the Fed to consider rate cuts even as inflation pressures rise.

Such a mix increases macro uncertainty and in combination with geopolitical tensions, this historically tends to trigger a repricing across risk assets, particularly equities and cryptos.

At this stage, there are no clear signs that the conflict or the disruption of energy flows will end anytime soon.

For now, maintaining a cautious positioning remains the prudent approach.

Yesterday’s trading session in Europe and this morning in Asia initially showed signs of panic, with sharp declines across several equity indices. Even traditional safe-haven assets such as gold temporarily lost ground, indicating forced liquidations and a broader risk-off reaction.

However, the situation stabilized quickly. The US market appeared far less vulnerable and was comparatively resilient, likely reflecting its lower direct exposure to potential disruptions in Middle Eastern oil and gas flows. As a result, US equities recovered and are now trading even above the levels seen before the conflict with Iran began.

Markets:

• Equities: Rebounded, led by US technology stocks

• Bonds: Yields moved higher, with the US 10-year Treasury rising back to around 4.10%

• Currencies: USD weakened

• Commodities: Precious metals advanced, while oil continued its upward move for another day

• Cryptos: Rebounded strongly, with Bitcoin climbing back near USD 73k

• Volatility: The VIX declined to around 21

My View: At this stage, markets do not appear structurally vulnerable to the current geopolitical escalation. The rapid stabilization suggests that investors still view the conflict primarily as a regional risk and ending soon rather than a systemic shock to the global economy.

However, the more relevant medium-term risk lies in energy markets. Oil prices continue to climb and could become a meaningful drag on the global economy if they do not fall back quickly. Brent crude has already moved above USD 80 per barrel, the highest level in more than a year, reflecting concerns about potential disruptions to energy flows in the region.

If tensions persist or the Strait of Hormuz remains constrained, oil prices could potentially move toward USD 100 per barrel. Such a move would likely increase inflationary pressures and complicate the outlook for central banks, potentially delaying rate cuts or forcing policymakers to keep interest rates higher for longer.

At the same time, higher energy and gasoline prices act as an additional tax on consumers and could weigh on consumption in the coming months.

I cannot fully share the overall optimism currently visible in financial markets. The conflict does not appear likely to end quickly. Even though Iran’s military response so far seems limited in scale, the geopolitical situation remains highly unstable and unpredictable.

Markets may be underestimating the risk of a prolonged conflict and the second-round effects of persistently higher energy prices. Sustained elevated oil prices would likely feed into inflation, keep central banks cautious and ultimately act as a headwind for global consumption and economic growth.

The Iran war has entered its fourth day and the conflict is clearly broadening. Joint U.S. and Israeli airstrikes against Iran continue, while US President Donald Trump indicated that the bombing campaign could last for weeks and again called on Tehran to capitulate. Iran’s leadership has ruled out negotiations and continues retaliatory missile and drone strikes across the region.

Attacks have affected Israel and several Gulf states, including the United Arab Emirates, Bahrain, Qatar, Saudi Arabia and Kuwait. At the same time, Israeli operations extend toward neighboring countries such as Jordan and Lebanon. Practically, most of the Middle East is now directly or indirectly involved.

The most market-relevant development came in the evening: an Iranian commander declared the Strait of Hormuzofficially closed. This waterway is the most critical global energy chokepoint. Roughly 20% of global oil supply and a significant portion of LNG exports pass through this narrow corridor. While much of the flow is directed toward Asia, Europe remains materially exposed to Middle Eastern energy supplies. A prolonged disruption would have direct macro consequences.

Markets: nervous but no panic

• Equities: Broadly lower, but no panic selling. US markets managed to rebound intraday.

• Bonds: Falling first, yields rose on renewed inflation concerns rather than pure safe-haven demand. The U.S. 10-year trades around 4.04%, reflecting fears of a potential energy-driven inflation impulse.

• Currencies: The USD strengthened significantly, typical in early-stage geopolitical stress environments. The Swiss franc, against a normal scenario, weakened as Swiss National Bank announced potential currency intervention

• Commodities: old moved higher and ended around USD 5’300/oz after testing USD 5’400 intraday. Silver was extremely volatile, briefly reaching USD 96/oz before falling back below USD 90/oz. Energy markets remain the key transmission channel to watch. Oil jumped above USD 70/barrel

• Cryptos: Rebounded markedly, with Bitcoin back near USD 69k - rotation from silver.

• Volatility: the VIX spiked above 25 before easing toward 21 — stress, but not disorder.

My View: Is this the moment to buy? Not yet.

While the first shock in geopolitical events is often the most violent, this conflict carries a meaningful risk of worsening before stabilizing. The decisive factor is not the military headlines themselves, but whether energy flows through Hormuz are materially disrupted.

If the closure proves rhetorical or very short-lived, markets may digest the situation relatively quickly. However, should shipping volumes decline meaningfully and oil prices spike sharply, the macro impact could become significant. Higher energy prices would feed directly into global inflation, restrict central banks’ flexibility, and increase the probability of stagflation, weaker growth combined with rising prices.

OPEC+ has agreed to increase production quotas by 206,000 barrels per day in April. This is supportive at the margin, but small compared to a serious disruption of a route handling nearly one-fifth of global oil supply.

The key questions now are straightforward: How long will hostilities continue? Will the Strait of Hormuz remain effectively closed? How far is Iran willing — and able — to escalate militarily? Does diplomacy re-enter the picture, or does the conflict broaden further?
President Trump’s indication that additional troops could be sent to the region is a clear signal that this situation may not resolve quickly.

Markets currently appear to price a limited-duration scenario: partial de-escalation and a relatively fast normalization of energy flows, allowing risk assets to stabilize after heightened volatility.

The bear case involves sustained disruption in Hormuz combined with ongoing regional strikes, leading to a renewed oil spike, re-accelerating inflation, lower equity valuations and widening credit spreads.

The worst case would be a severe and prolonged supply shock — triggering a global growth slowdown alongside an inflation surge, creating a policy dilemma and increasing recession risk.

At this stage, I tend toward the bear case. Therefore I see markets to re-rate to lower levels.

This is a volatility regime, not a capitulation phase. Patience and optionality remain critical. The opportunity to add risk will emerge with clarity, not during escalation.

Tonight, after the closing bell, Nvidia reports its Q4 earnings. Expectations are high – but more important than the numbers themselves will be the guidance and tone. This earnings call increasingly functions less like a quarterly update and more like a public stress test for the entire AI trade. Nvidia has become a proxy for the broader AI narrative.

Markets:

• Equities: Followed yesterday’s rebound, with Tech leading. Nvidia up almost 2% ahead of results.

• Bonds: US yields remain lower (US 10y ~4.04%).

• Currencies: USD continued to weaken.

• Commodities: Precious metals extended their rally – Gold ~USD 5’200/oz, Silver above USD 90/oz.

• Cryptos: Rebounded markedly from oversold levels, Bitcoin back at USD 68k

• Volatility: VIX fell below 19.

My View: This event is no longer just about Nvidia’s quarterly figures. It has become a key signal for the entire AI boom. The AI story took a breather in recent weeks as markets are currently pricing close to perfection. Any deviation from very high expectations could trigger outsized reactions.

The world’s largest tech companies are planning eye-popping capital expenditures for 2026, with hundreds of billions of dollars earmarked for AI infrastructure. This underpins the long-term demand narrative. However, the crucial question remains whether this massive investment wave will translate into sustainably higher margins and profits. Personally, doubts remain as to whether these billions can be earned back in the nearer term.

Based on past earnings calls, Jensen Huang will almost certainly present an optimistic narrative. Whether this will be “positive enough” to satisfy markets after the recent volatility is hard to predict. Headlines and analyst interpretations could easily push markets in either direction.

In such a headline-driven, binary setup, I avoid making directional bets ahead of this kind of pivotal event. This is not a moment for conviction trades, but a moment to observe investor behavior and draw insights for future investment decisions.

The US Supreme Court’s decision to strike down key Trump-era tariffs briefly raised hopes for relief. However, the relief was short-lived: President Trump quickly reinstated broad-based global tariffs – first at 10%, then raised to 15% over the weekend via alternative legal channels.

At the same time, stress signals are emerging in private credit. Blue Owl sold around USD 1.4bn of loan assets from three private debt funds, while curbing liquidity payments to investors. Blue Owl is a leading asset management firm offering alternative investment solutions in private credit.
This highlights growing concerns that years of ultra-low rates and compressed spreads have encouraged excessive risk-taking across parts of the private credit universe. Liquidity mismatches could become the weak spot if market stress intensifies.

Markets:

• Equities: clearly lower led by US Tech down around 1.2%

• Bonds: US yields slightly lower after Friday’s spike(US 10y ~4.03%)

• Currencies: USD weakened markedly

• Commodities: Precious metals extended their rally
  – Gold ~USD 5’230/oz (+2.4%)
  – Silver ~USD 88.5/oz (+4.7%)

• Cryptos: Sharp sell-off, Bitcoin back near USD 64k

• Volatility: VIX jumped to 21

My View: What happens next remains unclear. Refunds of already paid tariffs, corporate reclaim mechanisms and the fiscal implications for the US Treasury are unresolved. This legal and political fog adds yet another layer of uncertainty for corporates, supply chains and markets.

Markets are slowly starting to internalize that the current environment is fundamentally different from the easy “buy-the-dip” regime of recent years. This reallocation process does not happen in one session – positioning typically adjusts over several days or even weeks.

On Friday, I outlined the expected market reaction to renewed tariff uncertainty:

• Weaker USD ✅

• Higher US yields ❌ (only briefly on Friday)

• Fragile risk assets (equities & cryptos lower) ✅

• Precious metals higher ✅

• Volatility rising ✅

The initial positive market reaction was for me hard to reconcile with the underlying fundamentals and unresolved risks. The market reversal after the weekend suggests that investors are now reassessing the situation more realistically, broadly in line with my initial assessment and underlying analysis as they have largely played out as expected..

The broader picture remains unchanged: uncertainty is not diminishing – it is increasing. Tariff policy chaos, legal uncertainty, fiscal concerns and emerging cracks in private credit form a fragile cocktail.

Should negative momentum accelerate, a faster and more disorderly unwind of risk assets cannot be ruled out.

TThe US Supreme Court ruled (6–3) that the legal framework underpinning the Trump-era import tariffs does not “authorize the President to impose such duties”. This landmark decision removes a major pillar of recent US trade policy — but opens a new layer of legal, fiscal and political uncertainty.

Market reaction: (initial moves)

• Equities: Jumped on relief and hopes for lower input costs, less trade friction

• Bonds: US yields moved higher (10y ~4.10%), reflecting fiscal concerns

• Currencies: USD weakened

• Commodities: Precious metals paused their rally

• Cryptos: Risk-on bounce, Bitcoin back around USD 68k

• Volatility: VIX lower on relief

My View: not a moment to add risk

This ruling is not a clean positive catalyst for risk assets. Risks and uncertainties remain, even increase:

• Legal & implementation uncertainty:
  What happens to tariffs already paid? Refund mechanisms could take years and trigger lawsuits. Corporate cash flows and balance sheets remain exposed to administrative and legal friction.

• Fiscal implications:
  Tariffs effectively acted as a revenue source. With US debt already elevated, the removal of this income stream implies higher Treasury issuance, structurally higher yields, and rising fiscal risk premia.

• Policy unpredictability:
  Trade policy remains hostage to political cycles. The risk of abrupt reversals (tariffs off today, back tomorrow via another legal route) keeps uncertainty elevated for corporates and investors.

What I expect from here:

• Weaker USD on political risk and twin deficits

• Higher US yields as fiscal supply pressure rises

• Fragile risk assets: equities and cryptos vulnerable once the relief rally fades

• Precious metals remain structurally supported by USD weakness and elevated uncertainty, despite short-term consolidation

Today’s US macro data delivered a mix of numbers: growth is cooling faster than expected, while inflation pressures are re-accelerating.

US GDP growth slowed to an annualized 1.4% in Q4 2025 (vs. 3.0% expected, 4.4% in Q3). At the same time, the Fed’s preferred inflation gauge, PCE prices, rose +0.4% m/m in December (+2.9% YoY), the strongest monthly increase since February and above expectations.

Markets:
Equities: US futures under pressure after the data
Bonds: Yields ticking higher (US 10y ~4.08%)
Currencies: USD softer
Commodities: Precious metals strong - silver up 5% > USD 81/oz and gold more than 1% >USD 5’050/oz
Cryptos: sideways; Bitcoin around USD 67k
Volatility: VIX continues to trend higher

My View: Only a few weeks ago, markets were priced for “perfection”. It seems they now definitely need to reassess the “perfection pricing”.
Valuations in parts of the equity market remain stretched, while macro reality is turning less supportive: growth is slowing and inflation is proving sticky. This combination complicates the outlook for monetary policy and risk assets alike. This reduces the probability of near-term Fed easing – and with that, one of the key pillars that supported high risk appetite.

Importantly, overall equity indices are still not far from record highs. The recent damage has been concentrated in selected, crowded names. A broader re-rating of valuations therefore looks increasingly likely as investors reassess earnings assumptions and discount rates under a “higher-for-longer” inflation backdrop.

I currently see no clear macro or liquidity catalyst that would justify a sustained push to new highs in equities. Positioning remains fragile: many investors who suffered losses in recent swings, and fund managers who were positioned “all-in,” are now constrained by lower cash buffers and reduced risk appetite. This limits the fuel for an aggressive rebound.

Bottom line:
The environment remains headline-driven and volatile. Markets can overshoot in both directions, but for now, patience remains key. Selective opportunities may emerge in individual stocks if valuations reset to more attractive levels – but the broader backdrop argues for caution rather than chasing rebounds.

Yesterday’s publication of the minutes showed, the Federal Reserve is far from united on the policy path ahead. While most officials agreed to keep rates unchanged at the January meeting, opinions diverge on what comes next. Some members emphasized the need to support the labor market, while others stressed that rates may need to stay higher for longer, or even rise further, if inflation fails to cool.

Markets are currently pricing a 94% probability that the Fed holds rates steady at the next meeting, with roughly a 50% chance of a first rate cut in June (CME FedWatch).

Markets: rebound lost quickly momentum
Equities: broadly lower, rebound stalled
Bonds: little changed - US 10y ~4.10%
Currencies: USD firmer
Commodities: metals sideways - oil supported by Iran-related risks
Cryptos: weak; Bitcoin back to USD 66k
Volatility: VIX continues to trend higher

My View: As highlighted in my comments yesterday, the recent rebound looks fragile and likely short-lived. There is little prospect of fresh liquidity support from the Fed before summer at the earliest. On the contrary, ongoing balance sheet reduction continues to drain liquidity from the system, which has been a big driver for cryptos. This could be an overall headwind for risk assets.

The macro backdrop remains unusually uncertain. Labor market dynamics and inflation trends are difficult to forecast, while political and legal risks around tariffs remain unresolved. Although some estimates suggest that up to 90% of tariffs are passed on to consumers, recent inflation prints do not yet fully reflect this — adding to the uncertainty around the true inflationary impact.

ETFMandate positioning remains rather defensive:

• Elevated cash levels, waiting for more attractive entry points in equities

• Precious metals favored as safe-haven assets

• Swiss franc expected to remain supported in risk-off phases (EUR and USD fully hedged)

• No bond allocation given the lack of a clear trend and headline-driven yield swings

With liquidity tightening, policy uncertainty rising and volatility creeping higher, downside risks still dominate. Patience remains key. Tactical rebounds may occur, but the broader risk-reward for equities remains unattractive at current levels. The reason I do not add fresh money to increase current equity exposure.

Last week, the first attempted rebound on Wall Street failed, with mounting concerns around profit sustainability in the tech sector. What started with AI disruption fears in software names spilled over into other segments, including wealth managers, media/publishers and transport companies.

Two key factors continue to weigh on markets, especially the tech sector:
Rising AI-related Capex:
Big Tech’s aggressive investment plans in AI are increasingly questioned by investors, with concerns around capital discipline and uncertain returns.

Broad disruption fears
AI is no longer just a pure growth story — it is increasingly perceived as a disruptive force across multiple industries. This is putting pressure not only on selected tech names but also on adjacent sectors, as investors reassess business models, competitive advantages and long-term earnings visibility.

With tech sector under pressure the Magnificent 7 (Apple, Microsoft, Nvidia, Alphabet (Google), Amazon, Meta, Tesla) underperform the rest of the market.

Markets: rebound in equities and commodities
Equities: Broad rebound, led by Tech; Nasdaq +1.3%
Bonds: Yields slightly higher (US 10y ~4.09%, Japan 10y ~2.14%)
Currencies: USD stabilizes after recent weakness; CHF remains strong
Commodities: Strong rebound — gold back above USD 5’000/oz (+2.5%), silver above USD 78/oz (+6%)
Cryptos: No recovery; Bitcoin remains below USD 68k
Volatility: VIX trending higher again, staying above 20 despite the rebound

My View: Current market volatility, reflected in larger price swings, does not come as a surprise. Today’s rebound may prove short-lived, as uncertainty remains elevated. AI-related concerns are unlikely to fade quickly, especially with valuations in parts of the tech sector still extremely demanding.

The classic “buy-the-dip” playbook is losing reliability. Many speculators who were rewarded for this strategy in the past are now facing a different market regime, which is likely to limit fresh risk-taking on rebounds.

The underperformance of the Magnificent 7 (Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta and Tesla) also has a technical component: ETF-driven flows amplified gains during the rally — and now, as positions are being reduced, these heavyweight stocks are coming under over proportionate pressure. This mechanical selling can reinforce downside moves even without a major fundamental shift.

Bottom line:
Headline-driven markets, stretched positioning and rising volatility argue for caution. Tactical rebounds may occur, but the environment remains prone to renewed setbacks — especially in crowded tech and AI trades.

US inflation data surprised positively in January, with CPI coming in at 2.4%, below estimated 2.5% and down from 2.7% last month. At first glance, this supports the disinflation narrative.

Markets:
Equities: Under renewed pressure, led by tech and AI-related names
Bonds: Yields falling sharply on renewed rate-cut hopes. US 10-year yields falls to 4.05%
Currencies: USD continues to weaken while Swiss franc strength continues
Commodities: Rising across metals

My View: The softer CPI print does not change the broader picture materially:

• Fed rate cuts are not a given as the US labor market remains resilient.

• Tariffs remain inflationary: based on a recent report, around 90% of tariffs are ultimately paid by consumers, adding structural price pressure.

• Rising commodity prices matter: Even without higher oil prices, rising metals and input costs feed into production and consumer prices over time.

• Weaker USD: could become an additional inflation driver later in the year as import costs are rising.

Markets may be tempted to price in a smooth disinflation and rate cuts. The risk is that inflation pressures return via tariffs and commodity prices – keeping volatility elevated and narratives unstable.

A rare political signal emerged from Washington as the Republican-led US House of Representatives passed a resolution rejecting President Donald Trump’s tariffs against Canada, a core element of his economic and trade policy agenda. Several Republicans crossed party lines to support the move, highlighting growing internal resistance to the administration’s trade stance.

The resolution now heads to the Senate, which approved similar measures in the past.

Markets: in wait and see mode while European stocks moved higher with hope that tariffs could be called off.

My View: The legislative effort remains largely symbolic. The President retains veto power, making a policy reversal unlikely at this stage.

The rejection of the Canada tariffs highlights how fragile and politicized US trade policy has become. Even if the resolution is ultimately vetoed, the episode underlines the elevated uncertainty surrounding future tariff decisions, compounded by pending court rulings that could still reshape the legal framework for existing measures.

Uncertainty remains elevated. The tariff topic is far from resolved. Whether tariffs are enforced, delayed, challenged in court, or suddenly rolled back, each outcome carries market implications. Volatility around trade headlines continue.

Retail sales disappointed yesterday, reinforcing concerns that the US consumer is finally starting to feel the pressure from high interest rates and sticky inflation.

Today’s January employment report, delayed by the partial government shutdown, surprised on the upside:

• Non-farm payrolls: +130k (vs. +70k expected)

• Unemployment rate: down to 4.3% from 4.4%

Markets:

• Equities: mixed without clear trend

• Currencies: USD stabilized after recent decline while the strength of Swiss franc took a pause

• Bonds: US yields dropped sharply with negative retail sails to 4.15%% - while Japanese yields moved higher again, close to 2.3%

• Commodities: Silver, gold continue to rise

• Cryptos: broadly drop with Bitcoin down to USD 66k

My View: This combination underlines the current macro dilemma: economic momentum is slowing in parts of the economy, while the labor market remains relatively resilient. For markets, this is an uncomfortable mix – not weak enough to justify rapid rate cuts, but no longer strong enough to support aggressive risk-taking.

In such an environment, markets tend to swing quickly between optimism and risk aversion – driven more by headlines and short-term data surprises than by a clear, stable trend. This increases the probability of false breakouts and short-lived rallies.

Therefore, I continue to favor a defensive and selective positioning.

China has reportedly instructed domestic banks to reduce exposure to US Treasuries and limit new purchases, citing concerns over volatility and US debt risks.
After Japan (USD 1.2tn) and the UK (USD 888bn), China – with almost USD 700bn – remains the third-largest foreign holder of US government bonds. Even marginal shifts in China’s allocation policy therefore carry outsized signaling effects for global markets, both psychologically and structurally.

Markets:

• USD under pressure

• Bonds: US yields broadly ungchanged - US 10-year yield at ~4.20% - while Japanese yields moved higher again, close to 2.3%

• Commodities: strong safe-haven rally with gold +2% and silver +7%

My View: his should be seen as a strategic move within the broader trade-war and geopolitical framework. Tariff threats, technology restrictions, strategic resource dependencies, and geopolitical posturing continue to point toward a persistent risk of renewed trade conflict.

This is not an imminent collapse scenario, but another step highlighting that the de-dollarization trend still has room to run. A reduced structural demand for US assets implies a structurally weaker USD as a relevant medium-term theme.

At the same time, a weaker dollar raises import prices for the US, potentially adding to inflationary pressure.

In this environment, precious metals remain a strategic hedge against geopolitical risk, currency debasement, and rising systemic uncertainty. Demand for safe-haven assets such as gold, silver, and the Swiss franc is therefore likely to remain supported.

The ETFMandate is therefore fully hedged against the USD and has substantial exposure in gold and silver, even increased last week.

Big Tech earnings took center stage this week. After Google on Wednesday, Amazon reported solid results after market close yesterday. However, the real flashpoint came during Amazon’s earnings call, when management announced a dramatic step-up in AI-related capital expenditures of around USD 200bn for 2026 – more than 60% higher than last year.

Google, in parallel, signaled AI-related capex of around USD 180bn (+97% YoY). Taken together, Microsoft, Google, Amazon, and Meta are now guiding toward roughly USD 650bn of AI-related investments for 2026 alone.

Investors did not applaud. Google and Amazon shares sold off sharply after the announcements. Skepticism spilled across the broader tech complex, amplifying an already fragile sentiment backdrop driven by recent crypto turmoil.

Markets:

• Equities: tentative rebound after recent sell-off, tech leading

• Bonds: yields moved higher again after a brief dip - US 10-year yield back at ~4.21%

• Commodities: broad-based rebound

• Cryptos: stabilization after heavy selling - Bitcoin around USD 68k after dipping close to USD 60k

• Volatility: VIX slipped back below 20 after the recent spike

• Currencies: USD moving lower again

My View: After weeks of markets rewarding anything linked to “AI,” investors are finally starting to ask the uncomfortable but necessary question:
How does all this investment actually turn into profits?

For a long time, the market rewarded sheer ambition and the scale of spending, especially when wrapped in the AI narrative. That tolerance is now wearing thin. Capital expenditures are exploding, while the path to sustainable returns and monetization remains blurry. The market reaction to Amazon shows that even strong operational results are no longer enough when the future growth bill keeps rising faster than confidence in future cash flows.

This dynamic raises the risk of a broader rerating of AI-related valuations. The current rebound in tech stocks therefore looks more technical in nature than fundamentally driven — and may prove limited in scope.

A large share of the announced spending will flow into AI infrastructure and the broader supply chain. In theory, this should support selected beneficiaries. However, two risks dominate at current levels:

1. Valuations are already stretched, with much of the AI capex story priced in.

2. Should doubts about the commercial success of AI intensify, these investment plans can be scaledback quickly, removing an important pillar of the bull case.

In both scenarios, the asymmetry looks unfavorable: downside risks appear larger than the remaining upside potential from here.

Therefore, I keep my allocation unchanged and maintain the existing short positions. At the same time, I continue to favor precious metals. I expect investor focus to shift back toward safe-haven assets as uncertainties remain elevated and confidence in high-valuation growth stories is increasingly challenged.

Markets are showing clear signs of a hiccup. Crowded positions are coming under heavy pressure, with previously “untouchable” trades — which seemed to move endlessly higher — starting to unwind. This includes parts of the AI sector, defense stocks, and other high-momentum segments that had attracted significant speculative flows.

Pressure is currently led by cryptocurrencies. Bitcoin has fallen to around USD 72k, levels last seen in 2024. This move is particularly uncomfortable for late entrants. The portfolio of Strategy (formerly MicroStrategy), for example, has an average entry price around USD 76k – meaning the company’s billion crypto exposure has moved into negative territory. The same applies to many other players who added exposure late in the cycle during 2025.

Markets: Unwinding in crowded positions

• Equities: broad-based weakness led by technology, with the Nasdaq down almost 2%

• Bonds: Yields remain elevated, with the US 10-year yield around 4.28%

• Commodities: Precious metals show wide intraday swings – gold spiked to USD 5’100, fell to USD 4’900 and is now back near USD 5’000/oz; silver jumped to USD 92, dropped below USD 85 and rebounded above USD 87/oz

• Currencies: The US dollar further stabilized after recent volatility, while safe-haven demand is fading

• Cryptos: Continued de-risking pressure, with Bitcoin now below USD 74k

My View: So far, there are still no clear signs of panic. Not all stocks are falling, and correlations have not fully converged into a broad-based risk-off move. However, the environment has become noticeably more fragile, and price action suggests that momentum could turn.

As mentioned yesterday, I remain unconvinced about the near-term outlook for risky asset classes such as equities. Commodities, particularly precious metals, remain the exception for now, but even here speculative positioning needs to be monitored closely.

This is a typical pattern in speculative market phases. In short and to repeat, once momentum turns, highly leveraged positions are forced to unwind. Margin calls accelerate selling pressure, and what initially looks like “healthy consolidation” can quickly turn into a negative and heavy market sell-off in combination with fear. This market pattern would be my favorite to regain substantial weight in equities.

At the same time, cash levels among fund managers remain close to record lows. This is a crucial vulnerability. With little dry powder left, any further deterioration in sentiment forces managers to reduce exposure to risky assets rather than rotate within portfolios. De-risking becomes mechanical, not strategic.

The recent moves underline a key point: the “buy the dip” strategy finally seems to fail, the first time since a longer period with market dips. A good reminder for investors: There is no free lunch.
The strategy has now already failed in parts of the crypto market. If equity markets come under more sustained pressure, the same pattern is likely to play out there as well. In leveraged and crowded markets, dips can quickly turn into trend breaks.

I remain in a defensive wait-and-see stance. Most of my short positions are delivering high positive absolute returns today. With limited upside potential from here, caution is currently the more robust positioning.

After last Friday’s violent sell-off, markets are showing signs of stabilization. Metal prices have started to recover part of their heavy losses, while volatility has eased.

Additional news and positioning data are emerging, helping to explain the magnitude of the move and why the pressure may now be fading.

Reports and market talk suggest that the market was hit by an unusually large sell order on the last trading day of the month — a moment when liquidity is often thinner and positioning adjustments are common.

While this cannot be fully verified, rumors indicate that some large institutional players with open short positions had moved deeply into negative territory earlier in the month. As prices surged, pressure on these positions increased. In such situations, aggressive selling can be used to push prices lower, stabilizing short exposure and triggering technical reactions.

Once prices started to fall rapidly, mechanical forces took over:

• Speculative and leveraged long positions were forced to sell as margin calls were triggered

• Stop-loss levels were hit across futures and derivative markets

• ETFs and structured products experienced outflows, adding further supply

This created a self-reinforcing downward spiral: falling prices led to forced selling, which pushed prices even lower — largely independent of fundamentals.

Markets:

• Commodities: Precious metals rebound from deeply oversold levels

• Equities: Broader equity markets are calmer, though sentiment remains fragile and highly headline-driven.

• Bonds: Yields continue to move higher

• Currencies: The US dollar stabilized after recent volatility, while safe-haven flows continues

• Cryptos: continued pressure from derisking with Bitcoin below USD 78k

My View:

Was I surprised by the correction? No.
Was I surprised by the magnitude of the correction? To some extent, yes.

As stated in my earlier publications, I was no longer recommending to jump onto the fast-moving train, as speculative positioning had reached unusually elevated levels. In such an environment, both the timing and the size of market moves become highly unpredictable.

That is exactly what we experienced.

While the trigger and the scale of the sell-off could not be forecast, the underlying risk was clearly visible. In hindsight, the recommendation to stay patient and wait for a better entry point proved to be the right approach.

Speculative markets rarely end in a smooth adjustment — they tend to correct fast, deep, and emotionally.

The latest move has many characteristics of a positioning-driven flush rather than a structural trend reversal.

• Large speculative positions were likely washed out during the sell-off.

• Short-term traders and leveraged players appear to have reduced exposure aggressively.

• With this positioning reset, short covering may now add support to metal prices.

This is why I shared a buying opportunity for metals yesterday. The underlying narrative has not fundamentally changed. Most of the arguments supporting higher metal prices remain intact: structural demand, geopolitical uncertainty, and diversification needs in portfolios, supported also by a weakening US dollar and re-positioning from cryptos into precious metals.

That said, the broader environment for other asset classes remains fragile.

Uncertainty is still elevated:

• Geopolitical tensions remain unresolved.

• Bond yields are high and sensitive to inflation surprises.

• Signs of re-inflation are reappearing.

This morning’s rate hike by the RBA (Royal Bank of Australia) underlines that the global fight against inflation is not over and re-inflation could emerge. Other central banks could follow if price pressures persist — with one notable exception: the SNB, where a very strong Swiss franc continues to act as a tightening force on its own.

inancial markets are currently dominated by headlines around new record highs in precious metals.

Gold briefly surged above USD 5’100 per ounce before trading slightly below that level, while silver jumped to USD 115 per ounce, gaining more than 10% in a single session.

At the same time US dollar continues to weaken. Signs of big shifts from the US dollar cash into metals.

Markets:

• Commodities:
  Precious metals in a sharp momentum-driven rally
  Gold and silver at extreme levels, fueled by speculative demand

• Currencies:
  US dollar under pressure, supporting hard assets - Swiss franc strong

• Bond yiels: US 10-year yield stable above 4.2%

• Equities: Asia and Europe slightly negative while US markets trading in the green

• Cryptos: Bitcoin below USD 87k, no participation in the current momentum trade

My View: The key questions are how far this rally can go and why investors are increasingly shifting US-dollar cash positions into real assets.

The answer lies in uncertainty and maybe too much of political noise lately.
In an environment marked by geopolitical tensions, elevated asset prices, and declining confidence in fiat purchasing power, capital tends to rotate toward tangible stores of value. Precious metals are currently the primary beneficiary of this shift.

Speculative moves like the current one in metals are extremely difficult to time. From a technical perspective, gold and silver are clearly overbought. However, momentum can persist longer than fundamentals alone would suggest.

History shows:

• Strong momentum phases often extend further than expected

• But once the move turns, corrections tend to be sharp and fast

As steep moves go up, they can also fall just as steeply.

As long as this momentum phase continues, I stay the course. I have not taken profits yet, but I remain highly attentive to early signs of exhaustion or reversal.

The World Economic Forum WEF in Davos once again became the center of global attention today as US President Donald Trump delivered a closely watched speech.

Against the backdrop of rising geopolitical tensions, trade frictions, and fragile market sentiment, investors worldwide were looking for clarity, reassurance, or new signals.

Markets: Markets reacted positively during Trump’s remarks.

My View: This conflict is not solved. As a result, the positive market reaction may prove short-lived.. While the speech avoided fresh shock announcements, it also failed to provide concrete solutions. At least a military intervention is not on the table for the Greenland takeover bid.
However, core issues, trade policy uncertainty, geopolitical flashpoints, and strategic rivalries, remain unresolved. The tone may have been stabilizing at the first sight, but substance regarding the raising concerns was limited.

Therefore, the underlying drivers of uncertainty remain firmly in place. Temporary market rebounds driven by speeches or headlines should not be mistaken for a structural improvement in the outlook.

In a market where headlines change quickly and often drive prices, but investors should avoid constant shifts in positioning and stay the course. Short-term moves can create tactical opportunities, but mid- to longer-term positioning should still reflect high geopolitical risks, stretched valuations, and the risk of sharper downside moves.

Overall, no change in my view and any new investment calls done today.

Davos, the Swiss Alpine town, is once again at the center of global attention. This week, political leaders, central bankers, and business executives gather for the World Economic Forum (WEF). But this year’s meeting takes place against a notably more fragile geopolitical backdrop.

The dominant theme is rising geopolitical tension, triggered by renewed rhetoric around Greenland and the re-escalation of tariff threats over the weekend. Markets entered the week on the defensive, with investors reacting swiftly to headline risk.

Today, French President Emmanuel Macron delivered a closely watched speech, calling for cooperation, multilateral dialogue, and economic stability. His remarks come at a sensitive moment, as trade tensions between Europe and the United States have intensified following the Greenland-related dispute.

Later this week, US President Donald Trump is expected to join the WEF on Wednesday, a moment markets will watch closely for any signals on trade, tariffs, and geopolitical direction.

Markets:

• US equities declined sharply led by Nasdaq ~2% lower

• Europe: broad-based selling continued, down another 1%

• Asia: - however Japan 10-year yield continues to rise, now already above 2.34%

• Commodities: rally in metals remains intact

  • Gold up, above USD 4’750/oz

  • Silver up, around USD 95/oz

• Cryptos: Risk appetite fading further, Bitcoin below USD 90k

• Volatility: VIX Future jumps towards 21

• Currencies: strong safe-haven demand

  • CHF and JPY clearly strengthened

  • USD sharply weaker

My View: I do observe, that markets are increasingly flirting with a “sell America” narrative, driven by policy uncertainty, trade friction, and rising geopolitical risk premia.

The environment remains headline-driven, volatile, and fragile. At current levels, I continue to see more downside risk than upside opportunity, particularly as valuations remain elevated while macro and geopolitical risks rise.

Only a clear and constructive statement between Europe and the United States, signaling cooperation rather than confrontation, could provide markets with a temporary breather.
Until then, caution remains warranted.

However, Netflix reports earnings after today’s market close. The stock is also in focus following reports around a potential takeover bid involving Warner Bros, adding another layer.

Disclosure: short position in Netflix

Fresh tariff headlines emerged over the weekend, with US President Donald Trump announcing plans to impose 10% tariffson NATO nations involved with Greenland, escalating to 25% as of 1 February. Affected countries include Denmark, Norway, Sweden, Finland, France, Germany, the UK, and the Netherlands.

Should no agreement be reached by 1 June, additional tariffs of up to 25% were flagged.

In response, the European Union is reportedly preparing retaliation measures of up to USD 100 billion, including tariffs and market restrictions on US companies.

Markets:

• US markets closed today; futures trading ~1.5% lower
  Europe

• Europe: equities down more than 1%

• Asia: only minor losses - however with Japan 10-year yield jumping to 2.27%

• Commodities: strong rally continues:

  • Gold +1.7%, close to USD 4’700/oz

  • Silver +4%, above USD 93/oz

• Cryptos: losing ground, giving up most gains since the start of the year amid de-risking

• Volatility: VIX Future jumps from below 16 above 19

• Currencies: clear safe-haven demand

  • CHF and JPY both stronger

  • USD and EUR both weaker

My View: As mentioned in my last comment, these headlines once again hit over the weekend, when markets are closed. This time, US markets are even closed on Monday — a familiar pattern that often buys time for negotiations, limits immediate reactions, and hopes investors remain calm.

However, the outcome is far from clear.

Is this another strategic escalation by President Trump to force concessions? Possibly. But the determination to push the Greenland issue appears real, not just rhetorical.

Europe’s tools remain limited. The region is structurally deeply dependent on the US and other major trading partners and lacksa unified voice, strategic autonomy, technological leadership, and military strength. This episode once again highlights the fragility and fragmentation of the European Union in a world increasingly driven by power politics.

President Trump’s approach is consistent: demonstrate strength, leadership, and dominance on the global stage.

Attention now turns to the World Economic Forum (WEF) in Davos, where world leaders meet this week. If any venue can deliver temporary clarity or a political off-ramp, it is likely there — though expectations should remain realistic.

Positioning – as an investor

Is this another TACO trade moment?
The “TACO trade” (Trump always chickens out) refers to markets buying risk assets on political or policy threats, assuming they will ultimately be softened, delayed, or reversed.

I am not playing this card. The risk-reward is clearly skewed to the downside:

• Limited upside from current levels if adding fresh exposure

• Significant downside if negotiations fail or rhetoric turns into action

From a portfolio perspective, capital preservation matters more than chasing rebounds at this stage.

ETFMandate Portfolio positioning:

The ETFMandate portfolio is already positioned for market stress:

• Long volatility exposure

• Short positions in crowded trades and high-beta stocks

• Significant allocation to commodities

• Fully hedged in EUR and USD against the Swiss franc

• Zero allocation in bonds

• High cash quota

The year starts with a sharp rise in geopolitical uncertainty.
Multiple new flashpoints are in focus: Venezuela, Iran, Greenland, the Middle East (Gaza), the ongoing Russia–Ukraine war, and China’s stance toward Taiwan.

Today, US President Donald Trump hinted at imposing tariffs on countries that “don’t go along with Greenland,” reiterating that Greenland is “needed for national security.”
At the same time, the US Supreme Court is expected to rule on the legality of Trump’s reciprocal and fentanyl-related tariffs — a decision already postponed twice.

Meanwhile, Canada’s Prime Minister Mark Carney has reset relations with China, calling it a “strategic partnership,” marking a clear break from the diplomatic chill of recent years, turning away from the close partnership with the US.

Markets: Despite rising geopolitical stress, markets remain strikingly calm. Equities are supported as the AI trade received fresh fuel from strong earnings reported by TSMC (Taiwan Semiconductor Manufacturing Company). Volatility remains compressed, and risk premia for any potential geopolitical escalation are largely absent.

My View: We are seeing real actions, not just words. Geopolitics in early 2026 is no longer background noise — it is actively shaping the framework for trade, security, and economic decision-making.

The US move against Venezuela in the first days of the year, combined with renewed and very real pressure around Greenland, highlights a more assertive and unpredictable geopolitical environment. Venezuela alone could be dismissed as an isolated event. But taken together, global tensions are mounting and intensifying. And Europe? Largely sidelined, reactive, and without strategic weight.

Meanwhile, markets are trading at or near all-time highs across Europe, the US, and Asia. Markets appear increasingly decoupled from reality. First, the AI narrative pushed valuations to clearly stretched levels. Now, geopolitical escalation risk is being almost entirely ignored. Volatility remains low, even as economic momentum shows early signs of fatigue.

This uncertainty is already weighing on the real economy. Companies delay investment decisions, capex plans are postponed, and confidence erodes quietly beneath the surface.

And to remember, the key court ruling on tariffs is still pending — and already postponed twice.

While markets are currently calm, the growing disconnect between risk fundamentals and asset pricing is turning into a certain red flag for investors. Navigating this environment requires readiness for action, scenario planning, and disciplined portfolio protection.
The ETFMandate portfolio therefore maintains an elevated cash position. I am waiting for better entry points, with a meaningful dip that could arrive sooner than many expect.

Lately, major announcements have increasingly been released after Friday’s market close or over the weekend. Headline risk remains elevated.

Let’s see what this weekend brings. At these elevated market levels, headlines can trigger outsized moves.

The fourth-quarter earnings season has started with the major US banks, delivering solid headline results. JPMorgan and Bank of New York Mellon reported yesterday, both posting earnings above expectations. Today, Wells Fargo, Bank of America, and Citigroup followed with broadly stronger results, while Goldman Sachs, BlackRock, and Morgan Stanley will report tomorrow.

Markets: US bank stocks declined

My View: Banks often provide the first meaningful signal on both corporate earnings momentum and the underlying state of the economy, giving investors another look at credit quality and consumer health. While reported earnings were mostly stronger than expected, forward guidance matters far more than backward-looking numbers at this stage of the cycle.

Several financial institutions flagged rising risks — including geopolitical tensions, sticky inflation, and elevated asset prices.

US bank stocks had already seen a strong rally in recent weeks, leaving limited upside and increasing the likelihood of consolidation or a shift in momentum. President Trump’s announcement to cap credit card interest rates also weighed on sentiment, raising concerns about potential margin pressure.

I left the financials party earlier. With clouds gathering on the horizon, the risk-reward balance had already turned less attractive. When banks themselves highlight that asset prices are elevated, this should clearly not be ignored.

Looking ahead, technology earnings will be decisive for broader market direction. Taiwan Semiconductor Manufacturing Company (TSMC) is among the first to report tomorrow, with the major US tech names following in the coming weeks.

The widely followed December US inflation data delivered a mixed but important message for markets.

• Headline CPI rose 0.3% month-on-month and 2.7% year-on-year, exactly in line with expectations.

• Core CPI (ex food & energy) increased only 0.2% MoM and 2.6% YoY, undershooting the consensus forecast of 2.8%.

At first glance, investors interpreted the data as confirmation that inflation pressures are easing. A closer look suggests the picture remains incomplete.

Markets:

• Equities: US equity Futures, flat overnight, briefly moved into positive territory after the release before slipping into the red shortly after the opening bell.

• Bonds: Yields declined across the curve, both at the short and long end, after the US 10-year yield had briefly exceeded 4.2%ahead of the data.

• USD: strengthened

• Commodities: Gold, silver, and other metals continued their rally.

My View: Prices are cooling—but not enough to justify another rate cut anytime soon as job market does not seem to deteriorate.

Nothing new, the White House sees room for interest-rate cuts. The Federal Reserve may not, at least not yet. Today’s data strengthens the Fed’s position: inflation is easing, but not decisively enough to warrant policy action, especially with the 2% inflation target still clearly out of reach.

The Fed will remain in focus—not only because of rate decisions, but also due to renewed debate around its independence and the expected announcement of a new Fed chair in the coming days or weeks.

Central-bank independence is a cornerstone of market stability. As such, it should not, by itself, trigger major market disruptions.

That said, political pressure is rising. Donald Trump has increasingly sought to influence monetary policy and push for lower rates. Yesterday’s developments marked another chapter in this ongoing tension. The session opened under a cloud following reports that the Department of Justice was considering actions involving Jerome Powell, linked to developments at the Fed’s headquarters.

This should be interpreted less as a narrow legal matter and more as part of the broader tug-of-war between central-bank independence and political impatience.

For investors, the takeaway is clear: inflation is moving in the right direction, but the path toward easier monetary policy remains uncertain— and more rate cuts could be seen rather later than sooner. Which could lead to some disappointments followed by investors repositioning their assets, reducing risk assets in case they adapt to this scenario.

Today, Bank of Japan (BoJ) raises interest rates. The central bank expectedly hiked its benchmark rate by 25 basis points to 0.75%, the highest level since 1995.

Fresh inflation data underpins the move: a key consumer price gauge rose 3% year-on-year in November, extending the run of inflation at or above the BOJ’s 2% target to 44 consecutive months.

Markets:

• Equities: The Nikkei 225 held most of its earlier gains, indicating no immediate shock to risk sentiment.

• Bonds: Japanese government bond yields moved higher, with the 10-year yield climbing above 2%, a level not seen since 2006.

• JPY: The yen weakened by more than 1% to 157.10 versus the US dollar

My View: Japan is no longer the anchor of global zero-interest-rate liquidity it once was. While markets appear calm for now, the shift in Japanese monetary policy has the potential to ripple across currencies, bond markets, and leveraged risk positions globally.

This policy shift matters less for today’s market reaction and more for what comes next.

• Rising borrowing costs in yen terms change the global funding landscape. For years, Japan has been a key source of cheap leverage. As rates rise, that assumption starts to break.

• The yen remains structurally weak, which is a growing risk for Japan itself. A falling yen keeps import prices elevated and sustains inflation — potentially forcing the BOJ into a more aggressive tightening path than markets currently expect.

• Deleveraging risk: Many global investors have borrowed in yen to fund positions elsewhere. Higher Japanese rates increase funding costs and raise the risk of sudden, disorderly deleveraging, similar to episodes already seen earlier this year.

• Swiss franc back in focus: In a world where yen funding is no longer “free,” currencies associated with stability and low rates, such as the Swiss franc, could regain importance as alternative funding or safe-haven currencies.

The long-awaited US CPI (Consumer Price Index) report delivered a clear upside surprise for markets.
Headline inflation eased to 2.7%, while core inflation fell to 2.6%, both well below expectations of 3.1% and 3.0%, respectively.

This release was the first consumer price report from the Bureau of Labor Statistics since the U.S. government shutdown ended. October’s CPI figures were never published, as the agency was “unable to retroactively collect these data.”

Importantly, the shutdown appears to have impaired the calculation of key housing components, particularly rents. As a result, rental inflation came in surprisingly and abnormally low, raising questions about data quality rather than signalling a sudden structural disinflation in housing costs.

On the labour side, weekly jobless claims were in line with expectations, steady and uneventful — neither flashing warning signs nor signalling renewed strength.

Markets: US equities rebounded, led by the Tech sector, with investors welcoming the softer inflation print and reading it as supportive for a more dovish Federal Reserve.
US yields moved slightly lower with the 10-year yield down to 4.13%.

My View: November’s data suggests that the widely feared tariff-driven inflation shock has not yet arrived. That said, caution is warranted. Tariff inflation is the most awkward kind of inflation. Historically, it tends to build slowly — then arrive all at once. The fact that it has not yet shown up meaningfully does not mean it will not.

The labour market tells a similar story. Employment is cooling, but not collapsing. This matters because the Fed has made its priorities clear. With inflation easing and jobs still holding up, policymakers can afford to wait, rather than rush into aggressive easing. However, the data set off excitement, hope and spreadsheets full of rate-cut fantasies.

Crucially, November CPI should not be over-celebrated. Missing October data and distortions in housing calculations mean this print may not fully reflect underlying inflation dynamics. In other words, this report likely paints a cleaner picture than reality currently deserves.

In short: the direction of travel is encouraging, but the data quality is questionable. One soft CPI print — especially a distorted one — does not make a trend.

Yesterday, the latest released Bank of America Fund Manager Survey (FMS) shows cash allocations dropping to 3.3% in December, the lowest level on record. This signals extremely high risk appetite and heavy positioning in equities.

Markets: Markets appear largely unbothered by this data point. Equity indices continue to trade near record highs, volatility remains compressed, and risk assets are priced for near-perfect conditions. Positioning suggests investors are already fully invested, leaving little room for incremental buying power.

My View: This is a data point markets should not ignore:

• Such low reported cash levels are usually a good selling signal (contrarian)

• With cash levels at record lows, there is very little fresh money left to chase equities.

• Any disappointment, unexpected macro data, or exogenous shock could trigger a sharp and disorderly sell-off, as positioning is stretched and crowded.

• Incoming data does not point to a booming economy. Growth signals are mixed, and the Fed remains in a “wait-and-see” mode, notably lacking the dovish tone that would normally justify such aggressive risk allocation.

In short: valuations and positioning are running far ahead of fundamentals.

ETFMandate Portfolio Positioning

ETFMandate continues to run a contrarian stance, focused on capital preservation and optionality:

• Equity exposure steadily reduced during recent months

• Cash levels increased to maintain flexibility

• Short positions added or increased in some of the most crowded trades, particularly:

  • AI-related stocks

  • The broader technology sector

  • The defense sector

  where expectations have become increasingly one-sided

• Long volatility exposure added, as volatility remains artificially suppressed and is likely to rise sharply in the event of a macro, policy, or geopolitical shock.

I am waiting for better entry points, which could arrive sooner than expected. History shows that when cash levels are depleted and positioning is stretched, corrections often come out of the blue — and tend to be faster and deeper than anticipated.

ETFMandate remains focused on asymmetric risk-reward setups, prioritizing protection and optionality over chasing late-cycle momentum.