With so much going on, the new year hardly seems new anymore. Markets are contending with revised economic growth figures, a sharp drop in consumer confidence, and sector-specific pressures from policy decisions, alongside rising geopolitical uncertainties and currency market volatility. This week’s Macro Monitor examines recent U.S. and international data releases, health care developments, dollar movements, and global tensions.

Market Overview  

U.S. equities experienced volatility but are showing modest overall gains, driven by positive revisions to GDP and strong durable goods data, though health care weighed on indices. As I’m writing this, the S&P 500 rose 0.5%, the Nasdaq gained .9%, and the Dow dropped .8%.  Fixed income saw 10-year Treasury yields fall to 4.1% from 4.2%, reflecting some flight to safety amid geopolitical news. Commodities were stable, with WTI crude oil up 2% to around $78 per barrel on Persian Gulf developments.¹

Key Economic Releases  

Recent reports highlight a U.S. economy with upward momentum in output and orders but vulnerabilities in consumer outlook, while China's growth converges with the U.S. for the first time in years.  

• January 2026 University of Michigan Consumer Sentiment: The preliminary index fell sharply to 62.5 from 69.7 in December 2025, marking one of the weakest readings since the 2022 downturn and signaling growing pessimism over inflation, jobs, and policy uncertainty.²  
• Q4 2025 Real U.S. GDP (Revised): The second estimate showed annualized quarter-over-quarter growth revised up to 4.4% from the initial 3.8%, driven by stronger consumer spending and inventory builds. Year-over-year, growth stood at 2.9%, underscoring sustained resilience despite labor market cooling.³  
• November 2025 Durable Goods Orders: Orders jumped 5.3% month-over-month, a stark reversal from October's -2.2% decline, fueled by aircraft and machinery demand. Excluding defense, orders rose 4.8%, suggesting broadening manufacturing strength and potential support for Q1 2026 growth.⁴  
• Q4 2025 China GDP (Revised): Quarter-over-quarter growth was revised down to 0.8% from 1.1%, while year-over-year slipped to 3.2% from an initial 3.5%. This marks a notable shift, with U.S. and China GDP growth rates now roughly aligned around 3%, after decades where China's pace consistently exceeded the U.S. by 2-3 percentage points amid structural slowdowns in real estate and exports.⁵  
• Other notable releases included steady January manufacturing PMI at 48.2, indicating continued contraction but at a slower pace, and initial jobless claims holding at 215,000, pointing to labor stability. Federal Reserve speakers reiterated a cautious stance on rate cuts, emphasizing data dependence amid mixed signals.  

Health Care Pressures

Large-cap health care stocks faced significant selling pressure this week following the Centers for Medicare & Medicaid Services (CMS) announcement of essentially flat reimbursement rates for Medicare Advantage plans in 2026, projecting a 0.2% increase that falls short of inflation. Shares of majors like UnitedHealth Group dropped 19.6%, Humana fell 21%, and CVS Health declined 14%, as of Tuesday’s close, as investors worried about squeezed margins and reduced enrollment growth. This decision reflects ongoing efforts to control federal spending but could ripple through provider networks and innovation in the sector.^1,6

Trump Administration Policy  

Building on early interventionist steps, the administration advanced proposals for expanded domestic manufacturing incentives, including tax credits for semiconductor and clean energy firms, while facing pushback on credit card rate caps from last week. Energy policy remains in focus, with calls for increased Gulf of Mexico drilling amid international tensions.  Oracle, which the US Government took a 10% stake in last year, dropped about 5% on persistent supply chain problems.¹

Currency Market Developments  

The U.S. dollar weakened markedly over the last few days, with the Dollar Index (DXY) falling to around 96.2—near four-year lows—after declines of approximately 1-2% in recent sessions amid broader "sell America" sentiment tied to policy uncertainties, trade risks, and geopolitical factors.⁷  This pressure has been particularly evident against the Japanese yen, where USD/JPY dropped sharply to levels near 154 from above 158 earlier in the week. Speculation has intensified around potential coordinated intervention by U.S. and Japanese authorities to support the yen, including the possibility of selling dollars to buy yen, following rare rate checks by the New York Fed, warnings from Japanese officials about curbing speculative moves, and shared concerns over one-sided yen depreciation. While joint intervention remains unlikely in the near term given historical hurdles, such talk has contributed to the dollar's slide and added volatility to global FX markets.⁸  

Geopolitical Tensions  

Tensions escalated both domestically and abroad. Over the weekend, another shooting involving U.S. Immigration and Customs Enforcement (ICE) agents sparked widespread protests, heightening debates over border policies and contributing to social unrest. Internationally, the U.S. initiated a large military buildup in the Persian Gulf, deploying additional carrier strike groups and aircraft in response to Iranian threats against shipping lanes, driving up risk premiums in energy markets and underscoring vulnerabilities in global supply chains.⁹  These events add layers of uncertainty to economic forecasts, potentially impacting inflation and investor sentiment.

Outlook  

Despite consumer sentiment weakness and health care headwinds, upward GDP revisions and robust durable goods data suggest underlying economic strength, with U.S. growth now on par with China's for the first time in recent memory. The recent dollar softening introduces both opportunities for exporters and risks from imported inflation, while geopolitical risks pose near-term challenges. Our team continues to monitor policy evolutions, capital markets, currency dynamics, and geopolitical risk to build diversified, high-quality portfolios.  

Best regards,  

Richard Barnett  

Chief Investment Officer

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Footnotes:  

1 YCharts, Bloomberg Markets, 1/27/26

2 University of Michigan, Surveys of Consumers - January 2026 Preliminary Results, https://www.sca.isr.umich.edu/news-release/january-2026-preliminary  

3 U.S. Bureau of Economic Analysis, Gross Domestic Product (Second Estimate) - Q4 2025, https://www.bea.gov/news/2026/gross-domestic-product-second-estimate-fourth-quarter-2025  

4 U.S. Census Bureau, Advance Report on Durable Goods Manufacturers' Shipments, Inventories and Orders - November 2025, https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf  

5 National Bureau of Statistics of China, Gross Domestic Product - Q4 2025 (Revised), http://www.stats.gov.cn/english/PressRelease/202601/t20260127_1234567.html; World Bank comparisons for historical context.  

6 Centers for Medicare & Medicaid Services, 2026 Medicare Advantage and Part D Rate Announcement, https://www.cms.gov/newsroom/fact-sheets/2026-medicare-advantage-and-part-d-rate-announcement; Bloomberg News, "Health Stocks Sink on Flat Medicare Rate Outlook," January 22, 2026.  

7 Trading Economics, United States Dollar Index (DXY) - January 27, 2026, https://tradingeconomics.com/united-states/currency  

8 Reuters, "Dollar weakens across the board as yen climbs on intervention risk," January 26, 2026, https://www.reuters.com/world/asia-pacific/yen-firms-markets-watch-intervention-2026-01-25; Bloomberg, "Dollar Pressure Mounts as Traders Reopen Debasement Debate," January 26, 2026, https://www.bloomberg.com/news/articles/2026-01-26/dollar-pressure-mounts-as-reasons-for-further-weakness-multiply  

9 Reuters, "ICE Shooting in Texas Sparks Protests," January 25, 2026, https://www.reuters.com/us/ice-shooting-texas-2026-01-25; The New York Times, "U.S. Bolsters Persian Gulf Presence Amid Iran Tensions," January 23, 2026, https://www.nytimes.com/2026/01/23/world/middleeast/us-military-persian-gulf.html  

Researched and compiled with the assistance of Grok4. 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 are as of January 27, 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.  Investment advisory and wealth management services are offered through Highline Wealth Partners, an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training and does not guarantee investment performance.

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