Heading into the second half of January, the market calm was shattered by President Trump's moves over the weekend to gain support for taking Greenland, threaten another tariff war against the EU, and build the controversial “Peace Board”, and markets are grappling with resilient U.S. economic signals increasing geopolitical tensions, causing the CBOE Volatility index to spike to over 20.  Equity indexes showed modest fluctuations but held near recent highs, while Treasury yields ticked higher on policy uncertainty. Commodities, including oil, faced mixed pressures from global supply dynamics and trade rhetoric. This week's update centers on recent inflation and housing releases, international GDP figures, mortgage trends, and the administration's high-profile moves at Davos.

Market Overview

U.S. equities navigated choppy trading but maintained resilience, with major indexes posting small weekly changes amid mixed economic signals and geopolitical developments. Fixed income markets experienced upward pressure on yields, reflecting uncertainty around fiscal and trade policies. Commodities were volatile, with oil influenced by broader energy market sentiment and international relations.

Key Economic Releases: Recent data painted a picture of a U.S. economy with contained inflation pressures and a housing sector showing signs of recovery in resales, though new construction activity remained subdued.

December 2025 Consumer Price Index (CPI): Headline CPI rose 0.3% month-over-month, holding the year-over-year rate steady at 2.7%. Core CPI (excluding food and energy) increased 0.2% monthly and 2.6% annually, signaling persistent but controlled underlying inflation despite lingering effects from prior data collection disruptions.¹  

November 2025 Producer Price Index (PPI): The final demand PPI advanced 0.2% month-over-month (seasonally adjusted), with the index up 3.0% year-over-year. Core measures (excluding food, energy, and trade services) rose notably over the trailing 12 months, reflecting some upstream price pressures.²  

October 2025 New Single-Family Home Sales: Sales held nearly steady at a seasonally adjusted annual rate of 737,000 units, down 0.1% from the prior month but up significantly from year-ago levels. Median prices eased to $392,300, with inventory stable at 7.9 months' supply.³  

December 2025 Existing Home Sales: Sales surged 5.1% month-over-month to a seasonally adjusted annual rate of 4.35 million units, the strongest pace in nearly three years. The median price rose modestly to $405,400 year-over-year, while inventory tightened to 3.3 months' supply amid improved buyer interest from lower rates.⁴  

German Q3 2025 Real GDP: The German economy stagnated at 0.0% quarter-over-quarter (price-, seasonally-, and calendar-adjusted), following a prior contraction. Year-over-year growth held at +0.3%, highlighting ongoing challenges in Europe's largest economy.⁵  

U.S. Weekly 30-Year Mortgage Rate: The average 30-year fixed-rate mortgage declined further, averaging around 6.06% for the week ending January 15, down from prior levels and supporting renewed housing momentum.⁶  

Trump Administration's Geopolitical Push at Davos

President Trump dominated headlines from the World Economic Forum in Davos with the launch of his "Board of Peace" initiative, initially focused on Gaza reconstruction and ceasefire oversight but with broader global ambitions. The proposed board, chaired indefinitely by Trump, invites nations to join—offering permanent seats for $1 billion contributions—and has drawn cautious or skeptical responses from many governments amid concerns it could sideline established institutions like the United Nations.⁷  

Compounding tensions, the administration escalated pressure on European allies by threatening escalating tariffs (starting at 10% and rising to 25%) on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland unless they agree to U.S. acquisition of Greenland. European leaders, including those from affected NATO members, condemned the threats as unacceptable and held emergency consultations, warning of risks to transatlantic relations and global stability.⁸  

These developments introduce fresh uncertainties for global trade, energy security, and alliances, potentially influencing sector rotations and commodity pricing.

Outlook

Inflation remains anchored near the Fed's target zone, housing shows tentative improvement with lower mortgage rates, and international data reflects divergence. However, the administration's assertive foreign policy stance—including Davos initiatives and tariff leverage—adds layers of risk that could weigh on sentiment and cross-border flows. Our team continues to prioritize diversified, high-quality portfolios to navigate this evolving landscape.

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Best regards,  

Richard Barnett  

Chief Investment Officer  

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Footnotes:

¹ U.S. Bureau of Labor Statistics, Consumer Price Index - December 2025, https://www.bls.gov/news.release/cpi.nr0.htm  

² U.S. Bureau of Labor Statistics, Producer Price Indexes - November 2025, https://www.bls.gov/news.release/ppi.nr0.htm  

³ U.S. Census Bureau and U.S. Department of Housing and Urban Development, New Residential Sales - October 2025, https://www.census.gov/construction/nrs/current/index.html  

⁴ National Association of Realtors, Existing-Home Sales - December 2025, https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales  

⁵ German Federal Statistical Office (Destatis), Gross Domestic Product - Third Quarter 2025, https://www.destatis.de/EN/Press/2025/11/PE25_418_811.html  

⁶ Freddie Mac, Primary Mortgage Market Survey - Week ending January 15, 2026, https://www.freddiemac.com/pmms  

⁷ Reuters, "World leaders show caution on Trump's broader 'Board of Peace' amid fears for UN," January 18, 2026, https://www.reuters.com/world/europe/world-leaders-show-caution-trumps-broader-board-peace-amid-fears-un-2026-01-18  

⁸ The Guardian, "Trump threatens 25% tariff on European allies until Denmark sells Greenland to US," January 17, 2026, https://www.theguardian.com/us-news/2026/jan/17/trump-tariff-european-countries-greenland  

Researched and compiled with the assistance of Grok.  This newsletter represents our opined general assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future performance or results. The opinions and statements expressed are intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities or investment strategies to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed as of January 20, 2026, and are subject to change without notice. Investing involves risks. Past performance is not a reliable indicator of current or future results, and index returns do not account for fees. It is not possible to invest directly in an index.

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