Global DM 2026 W1 Recap
As the BoJ propels yields to a 27-year high while the Fed remains deeply divided on further easing, are we witnessing the definitive end of global monetary synchronization in 2026?
Macro Overview
Global markets concluded 2025 with strong annual equity gains despite a mixed performance in the holiday-shortened final week. Key trends included easing inflation in some European regions (Spain) but persistent concerns elsewhere. Housing markets in the US showed signs of recovery driven by lower mortgage rates and wage growth. While unemployment claims decreased in the US and France, the UK saw unexpected weakening in house prices. China's manufacturing sector showed a a modest rebound, ending an extended contraction period, indicating a potential shift in its economic trajectory.
Policy Insights
Central banks globally are navigating complex policy landscapes. The US Federal Reserve implemented a 25 basis point rate cut in December, though future easing paths show division among policymakers, with a low probability for a January cut. The European Central Bank maintained its rates, while the Swedish Riksbank indicated a steady rate through 2026. In contrast, the Bank of Japan raised its key interest rate by 25 basis points, leading to surging government bond yields and fueling speculation about further tightening and potential currency intervention. China is expected to adopt a measured stimulus approach in 2026, balancing economic support with structural adjustments.
