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Summary II. Major Asset Classes & Overseas Events & Data: Kevin Warsh: The "Top Candidate" for Fed Chair? The 10-year US Treasury yield rose rapidly, while gold and silver prices surged in tandem. During the week, the S&P 500 fell 0.4%, and the Nasdaq fell 0.7%; the 10-year US Treasury yield increased by 6.0 basis points to 4.24%; the US Dollar Index rose 0.2% to 99.37, while offshore Renminbi appreciated to 6.9690; Brent crude rose 2.9% to $53.76 per barrel, with COMEX gold and COMEX silver rising 2.6% and 12.3%, respectively.
The US TGA balance decreased, and the net issuance of US Treasuries declined. As of January 14, the US TGA balance dropped to $777.1 billion; net Treasury issuance fell during the week (January 7 - January 14), with the 15-day rolling net issuance amount declining to -$923 million. The cumulative US fiscal deficit for the 2025 calendar year reached $1.82 trillion, lower than the $1.91 trillion recorded during the same period in 2024.
US core CPI for December was weaker than expected, significantly boosting market expectations for Kevin Warsh to become the next Fed Chair. US core CPI month-over-month was 0.2% (0.24%), against market expectations of 0.3%; boosted by holiday spending, US November retail sales grew 0.6% month-over-month, exceeding the market forecast of 0.5%. This week, Trump expressed his desire for Hassett to remain at the National Economic Council (NEC).
Risk Warnings Escalation of geopolitical conflicts; US economic slowdown exceeding expectations; The Fed turning unexpectedly more hawkish.
Report Body II. Major Asset Classes & Overseas Events & Data: (A) Major Asset Classes: 10-year US Treasury Yield Rises Rapidly, Gold and Silver Prices Surge in Tandem During the week, most developed market stock indices rose, while all emerging market indices advanced. For developed markets, the Nikkei 225, Hang Seng Index, and Australia's All Ordinaries Index averaged gains of 3.8%, 2.3%, and 2.0%, respectively, while France's CAC40, Nasdaq, and S&P 500 fell 1.2%, 0.7%, and 0.4%, respectively. Among emerging markets, South Korea's KOSPI, Egypt's CASE30, and Turkey's BIST 30 Index rose 5.5%, 3.6%, and 3.1%, respectively.
During the week, most S&P 500 sectors in the US advanced. Real Estate, Consumer Staples, and Industrials rose 4.1%, 3.7%, and 3.0%, respectively, while Financials, Consumer Discretionary, and Communication Services fell 2.3%, 2.0%, and 1.5%, respectively. Most Eurozone sectors also gained, with Technology, Energy, and Industrials rising 2.9%, 2.8%, and 1.9%, respectively, while Consumer Discretionary, Communication Services, and Materials fell 4.5%, 1.9%, and 0.5%, respectively.
During the week, all Hang Seng indices rose, with most sectors posting gains. The Hang Seng Tech Index, Hang Seng Index, and Hang Seng China Enterprises Index increased by 2.4%, 2.3%, and 1.9%, respectively. By sector, Consumer Discretionary, Materials, and Conglomerates rose 5.7%, 4.3%, and 3.9%, respectively, while only the Telecommunications sector fell 1.3%.
During the week, 10-year government bond yields in most developed countries declined. Italy's 10-year yield fell 4.1 basis points to 3.42%, Germany's 10-year yield decreased 3.0 basis points to 2.89%, the UK's 10-year yield dropped 1.82 basis points to 4.38%, and France's 10-year yield edged down 0.7 basis points to 3.52%. In contrast, Japan's 10-year yield rose 6.8 basis points to 2.16%, and the US 10-year yield increased 6.0 basis points to 4.24%.
During the week, 10-year government bond yields in most emerging markets increased. Turkey's yield surged 253.5 basis points to 30.09%, Brazil's yield rose 13.2 basis points to 13.84%, India's yield climbed 4.2 basis points to 6.68%, and South Africa's yield increased 1.0 basis point to 8.35%. Conversely, Thailand's yield fell 2.0 basis points to 1.73%, and Vietnam's yield decreased 1.1 basis points to 4.27%.
During the week, the US Dollar Index appreciated, while most other currencies depreciated against the dollar. The Dollar Index rose 0.2% to 99.37. The Euro depreciated 0.3% against the USD, the British Pound fell 0.2%, the Japanese Yen weakened 0.1%, and the Canadian Dollar was flat compared to the previous week. Most major emerging market currencies also weakened against the USD: the South Korean Won fell 1.1%, the Turkish Lira depreciated 0.5%, the Indonesian Rupiah declined 0.3%, the Philippine Peso dropped 0.3%, and the Brazilian Real weakened 0.1%. The Egyptian Pound was unchanged from the prior week, while only the Mexican Peso appreciated significantly, gaining 2.1%.
During the week, the Renminbi appreciated against the US Dollar. The USD/CNY and USD/CNH rates moved to 6.9690 and 6.9774, respectively. The British Pound depreciated 0.3% against the Renminbi, the Euro weakened 0.2%, and the Japanese Yen fell 0.1%.
During the week, prices for most bulk commodities declined. Glass prices fell 3.6% to 1,103 yuan per ton, soybean meal prices dropped 2.1% to 2,727 yuan per ton, and coking coal prices decreased 2.0% to 1,171 yuan per ton. Brent crude oil prices, however, rose 2.9% to $53.76 per barrel, while WTI crude oil prices increased 0.5% to $59.4 per barrel.
During the week, prices for most non-ferrous metals fell, while precious metal prices all advanced. LME aluminum declined 0.7% to $3,138 per ton, and LME copper fell 0.5% to $12,925 per ton. Inflation expectations rose by 5 basis points to 2.33%. COMEX silver prices surged significantly by 12.3% to $89.2 per ounce, and COMEX gold prices increased 2.6% to $4,590.0 per ounce. The 10-year US Treasury real yield rose by 1 basis point to 1.91%.
(B) US Treasuries: TGA Size Decreases, Net Treasury Issuance Declines As of January 14, 2026, the US TGA balance decreased to $777.1 billion, significantly lower than at the beginning of December 2025 but still at a relatively high level. During the week (January 7, 2026 - January 14, 2026), net Treasury issuance showed a fluctuating downward trend, with short-term Treasuries experiencing several days of relatively high redemptions. The latest 15-day rolling net issuance amount for US Treasuries fell to -$923 million.
(C) US Fiscal Policy: Cumulative Fiscal Deficit Reaches $55.5 Billion as of January 9, 2026 As of January 9, 2026, the cumulative US fiscal deficit for the 2026 calendar year stood at $55.5 billion, compared to $93.8 billion during the same period last year. Cumulative expenditures were $203.0 billion, versus $227.0 billion a year earlier. Cumulative fiscal tax revenues reached $130.0 billion, up from $120.0 billion previously. Tariff revenue amounted to $2.0 billion, compared to $0.7 billion in the prior year.
(D) Federal Reserve: Trump Expresses Desire for Hassett to Remain at NEC This week, Trump indicated his hope for Hassett to stay at the National Economic Council (NEC). Market expectations for Kevin Warsh to become the next Fed Chair increased significantly. Consequently, the market pushed back its expectations for the timing of interest rate cuts within the year to June and December. Comments from Fed officials expressed optimism regarding the future US economy and labor productivity growth.
(E) Inflation: US Core Inflation for December Weaker Than Expected US core CPI for December was slightly weaker than expected, primarily due to weakness in the goods component. US December CPI rose 2.7% year-over-year and 0.3% month-over-month, meeting expectations. Core CPI increased 2.6% year-over-year (market expected 2.7%) and 0.2% (0.24%) month-over-month (market expected 0.3%). Structurally, core goods were flat (0%) month-over-month in December, compared to 0.2% in September. Core services rose 0.3% month-over-month in December, up from 0.2% in September. US inflation may remain "sticky" in the first half of 2026 but could enter a "disinflation" phase in the second half. As tax cuts take effect in H1, household income, consumption, and inflation may gradually receive a boost, reinforcing the "last mile" of tariff transmission. In H2 2026, the marginal stimulus from household tax cuts is expected to weaken, and the "first-year" transmission of tariffs will conclude, likely initiating a sustained downtrend in inflation.
(F) Retail: US November Retail Sales Stronger Than Expected US November retail sales increased 0.6% month-over-month, exceeding the market expectation of 0.5%. Structurally, motor vehicle sales and food services spending showed significant improvement, likely driven by holiday consumption, indicating overall resilience in US consumer spending. Attention is focused on the potential boost to consumer spending from tax cuts in H1 2026.
(G) High-Frequency Data: Initial Jobless Claims Below Market Expectations For the week ending January 10, 2026, US initial jobless claims were 198,000, below the market expectation of 215,000. For the week ending January 3, 2026, continuing jobless claims were 1.884 million, lower than the market expectation of 1.897 million (both figures are seasonally adjusted). On a non-seasonally adjusted basis, the data for both jobless claims measures aligned with historical patterns.
III. Global Macro Calendar: Focus on Japan's CPI
Risk Warnings 1. Escalation of geopolitical conflicts. The Russia-Ukraine conflict persists, and heightened geopolitical tensions could increase crude oil price volatility, disrupting the global "disinflation" process and "soft landing" expectations. 2. US economic slowdown exceeding expectations. Monitor risks associated with weakening US employment and consumption. 3. The Fed turning unexpectedly more hawkish. Should US inflation demonstrate greater persistence, it could influence the future pace of Fed rate cuts.
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