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January 18, 20263 min read

Monthly Wrap: Bond Vigilantes Return—10Y Hits 4.23% as Trump Trade Stalls

The "Trump Trade" hit a wall in January as bond vigilantes drove the 10-year Treasury yield to a 4-month high of 4.23%, overshadowing a strong start to earnings season. Despite JPMorgan ([[JPM]]) and Morgan Stanley ([[MS]]) beating estimates and inflation data softening, the S&P 500 stalled at 6,940 as markets priced in rising fiscal and personnel risk. The divergence is extreme: The Semiconductor Index (SOX) gained 1.15% on a historic $250B US-Taiwan trade deal, while Constellation Energy ([[CEG]]) plunged 10% on grid overhaul fears—confirming that policy proximity, not just macro, is driving alpha. The variant view: rising yields despite cool inflation signals a supply problem, not a price problem. Watch the Fed Chair nomination closely; continued ambiguity regarding Kevin Hassett could push the 10-year through 4.30%, a level that likely breaks the equity valuation floor regardless of Q4's +8% earnings growth.

Market Close: S&P 500 Knocks on 6,000 in Best Week Since Nov

Markets

January 18, 20263 min read

Market Close: S&P 500 Knocks on 6,000 in Best Week Since Nov

The S&P 500 surged 1.0% to close at 5,996.66, falling just three points short of the historic 6,000 milestone but securing its best weekly gain (+2.9%) in two months. A "Goldilocks" Retail Sales print (+0.4% vs. +0.7% est) fueled the risk-on tone by tempering rate fears without signaling recession, keeping the 10-year yield anchored at 4.61%. While the Nasdaq (+1.5%) led on renewed AI strength and Intel (+9.3%) M&A rumors, the Russell 2000 lagged (+0.4%)—a divergence suggesting investors are prioritizing mega-cap liquidity over small-cap exposure ahead of the long weekend. With U.S. equities closed Monday for MLK Day, the primary sentiment gauge shifts to Bitcoin, which broke out above $105,000. Watch the $105k level over the weekend; holding it would signal strong risk appetite heading into Tuesday’s post-inauguration session.

Monthly Outlook: Bond Vigilantes Return at 4.23% to Cap AI Rally

Markets

January 18, 20264 min read

Monthly Outlook: Bond Vigilantes Return at 4.23% to Cap AI Rally

The "January Effect" has collided with a reality check as the 10-Year Treasury yield spikes to a four-month high of 4.23%, threatening to cap equity valuations despite robust AI fundamentals. While Taiwan Semiconductor (TSM) surged 4.4% on blowout earnings and Micron (MU) rallied 7.8%, the S&P 500 stalled at 6,940 as rate-sensitive sectors capitulated—Constellation Energy (CEG) plunged 10% on fears of a Trump administration grid overhaul. The variant view: Consensus dismisses the Fed Chair selection as noise, but the bond market is violently pricing in a "Warsh Premium"—a hawkish pivot that could reprice the curve higher. The next two weeks are critical: with Q4 GDP tracking at a scorching 4.3% (due Jan 22) and Netflix (NFLX) earnings on Tuesday, a "good news is bad news" print could push yields through 4.30%, triggering systematic de-leveraging.

Week Ahead: 'Sell-the-News' Hits Banks—Can Netflix Clear the Bar?

Markets

January 18, 20264 min read

Week Ahead: 'Sell-the-News' Hits Banks—Can Netflix Clear the Bar?

The 'sell-the-news' regime has officially arrived, stalling the S&P 500 at 6,940 as strong bank earnings failed to sustain the rally. Despite JPMorgan delivering $46.77B in revenue (+6.9% YoY) and Bank of America beating EPS estimates, the sector retreated (BAC -3.8%), signaling that "good" is no longer good enough for a market priced for perfection. Concurrently, the 10-year Treasury yield crept back to 4.23%, pressuring valuations just as the index tests the psychological 7,000 barrier. While financials fade, semiconductors are decoupling—Micron surged 7.8% on a $250B US-Taiwan trade investment—suggesting capital is rotating into structural policy plays rather than exiting equities entirely. The burden of proof now shifts to Netflix (Tuesday PM), where consensus revenue of $11.97B (+16.8%) must be accompanied by flawless guidance to prevent a broader tech correction; meanwhile, watch for volatility from any Fed Chair nomination rumors (Warsh vs. Hassett) emerging from Davos.