General Market News

The Federal Reserve has not yet complied with grand jury subpoenas issued in a criminal investigation of Fed Chair Jerome Powell by federal prosecutors in Washington, D.C., according to a source. Powell revealed the investigation on January 11, stating it relates to his June Senate testimony about the central bank's independence. The probe is ongoing, though the deadline for document submission remains unclear.

• The investigation is being conducted by U.S. Attorney Jeanine Pirro for the District of Columbia, with subpoenas demanding Fed documents but no clear compliance deadline
• Powell stated the investigation stems from President Trump's frustration over the Fed's refusal to cut interest rates as quickly as the president wanted in the previous year
• Powell characterized the criminal charges threat as 'a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President'

The Federal Reserve held interest rates steady at 3.5%-3.75% on Wednesday, pausing its rate-cutting cycle after three consecutive cuts in late 2024. The decision reflects uncertainty over persistent inflation running above the Fed's 2% target and signs of labor market weakness, with policymakers voting 10-2 to maintain current rates.

• The FOMC voted 10-2 to hold rates unchanged, with dissents from Fed Governors Stephen Miran and Christopher Waller who both favored a 25 basis point cut
• The pause follows three consecutive 25 basis point rate cuts in September, October, and December 2024 that brought rates down from higher levels
• The Fed's statement acknowledged the economy is 'expanding at a solid pace' but noted inflation remains 'somewhat elevated' above the 2% target while job gains have been low

The Federal Reserve voted 10-2 to hold interest rates steady at 3.50% to 3.75%, citing elevated economic uncertainty and risks to both employment and inflation goals. The decision was expected by markets, with two members dissenting in favor of a 0.25% rate cut. Gold prices showed minimal reaction, trading at $5,285.60 per ounce, up 2.03%.

• The FOMC maintained rates with a 10-2 vote, with dissenters Stephen Miran and Christopher Waller advocating for a 0.25% rate cut
• The Fed acknowledged that economic activity is expanding solidly but noted job gains remain low, unemployment shows signs of stabilization, and inflation remains somewhat elevated
• The central bank emphasized that 'uncertainty about the economic outlook remains elevated' and is monitoring risks to both sides of its dual mandate of maximum employment and 2% inflation

The US Federal Reserve held its benchmark interest rate steady at 3.5%-3.75% on January 28, 2026, pausing its rate-cutting cycle from 2025. The decision reflects persistent inflation above the 2% target, solid economic growth of 4.4% in Q3, and a cooling labor market with stalled job gains. Markets now expect only one rate cut in 2026, likely around mid-year.

• The Fed voted 10-2 to hold rates, with two dissenters (Stephen Miran and Christopher Waller) favoring an immediate cut due to labor market concerns
• Economic growth hit 4.4% in Q3 2025, nearly double the long-term trend, while unemployment has stabilized and job gains 'remained low'
• The decision reinforces Fed independence amid political pressure, as Chair Powell faces calls from the White House for cuts and Justice Department subpoenas

The Federal Reserve held interest rates steady at 3.5-3.75% on January 29, 2025, despite intense pressure from President Trump to cut rates. Trump has launched personal attacks on Fed Chair Jerome Powell and the Justice Department opened a criminal investigation into Powell's handling of office renovations. Powell defended the Fed's independence, calling the investigation a 'pretext' and warning that political interference would damage the institution's credibility.

• The Fed paused rate cuts after three reductions in fall 2024, with Powell stating rates are at a 'neutral level' and policy is not 'significantly restrictive'
• Trump has escalated pressure tactics including public criticism and a DOJ criminal investigation into Powell over headquarters renovation testimony, which Powell characterized as politically motivated
• Powell's term as Fed chair expires in May 2025, but his board term runs until 2028; he emphasized the importance of Fed independence and warned that losing public faith in the Fed's non-partisan decision-making would be 'hard to restore'

The Federal Reserve released its latest Federal Open Market Committee (FOMC) statement following its January 2026 meeting, showing changes from the previous December statement. CNBC provided a redline comparison highlighting text that was removed or added between the two policy statements. The article format allows readers to track evolving Fed language on monetary policy.

• The article presents a side-by-side comparison with deleted December text marked in red strikethrough and new January text in red underline
• This represents the first FOMC statement of 2026, following the December 2025 policy meeting
• The full content of the statement changes was not accessible in the provided article text due to technical loading issues

The Federal Reserve held its benchmark interest rate steady at 3.5%-3.75% on Wednesday, pausing after three consecutive quarter-point cuts. The decision reflects an improved economic outlook, with the committee upgrading its growth assessment and removing language about elevated labor market risks. Chair Jerome Powell has just two meetings remaining before his term ends amid ongoing political tensions with President Trump.

• The Fed removed a key clause indicating higher risk to the labor market than inflation, signaling a more balanced view of its dual mandate and suggesting a patient approach to future rate adjustments
• Two Trump-appointed governors, Stephen Miran and Christopher Waller, dissented by advocating for another quarter-point cut, marking unusual disagreement within the committee
• Markets expect no rate changes until at least June 2026, with futures pricing in at most two cuts in 2026 and none in 2027, as inflation remains near 3% versus the Fed's 2% target

The Federal Reserve held interest rates steady at 3.5% to 3.75% in a 10-2 vote at its first 2025 meeting, despite mounting pressure from President Trump for rate cuts and an ongoing DOJ criminal probe into Fed Chair Jerome Powell. The decision reflects a wait-and-see approach amid strong GDP figures and a resilient labor market, with rates currently in a 'neutral' range.

• Powell is under DOJ criminal investigation for allegedly lying to Congress about the Fed's $2.5 billion headquarters renovation, which he characterized as politically motivated intimidation
• Three new voting members added to the Fed's 12-person committee have previously opposed last year's rate cuts, favoring a more cautious approach
• Powell's term expires in May, with Trump's preferred candidates circulating on prediction markets as potential replacements amid the president's repeated attacks calling Powell 'stupid' and claiming he has 'mental problems'

The Nasdaq Composite approached a record high on Wednesday, driven by strong earnings from AI infrastructure companies like ASML Holdings. The rally comes ahead of critical earnings reports from Microsoft and Meta, which will test whether massive AI investments are generating returns and could revive concerns about an AI bubble.

• The Nasdaq opened at 23,986, near its October record of 23,958.47, as semiconductor and chip equipment stocks rallied on surging demand for AI infrastructure
• ASML Holdings reported record quarterly orders as chipmakers like TSMC dramatically increase investments, while Corning secured fiber optic supply deals with Meta for data centers
• High expectations pose risks as some AI-related stocks underperformed despite beating estimates, with investors closely watching whether Microsoft and Meta can demonstrate returns on their increased AI spending

While inverted yield curves typically signal recessions, steepening yield curves are not always positive indicators. Japan's recent yield curve steepening, driven by inflation concerns and debt sustainability fears rather than economic growth, illustrates how rising longer-term yields can pose risks to global markets and reduce bonds' effectiveness as portfolio diversifiers.

• Japan's longer-term yields have risen sharply due to inflation and debt sustainability concerns, with gross debt at 230% of GDP (1.2 quadrillion yen), making this a 'bad steepening' scenario
• Rising Japanese yields threaten the global carry trade as borrowing costs increase, potentially triggering unwinding of positions that could hurt asset prices worldwide
• When yields rise due to inflation or debt fears rather than growth expectations, bonds lose their portfolio stabilization properties, requiring investors to diversify defense with cash, commodities, or alternative strategies

Bank of Canada Governor Tiff Macklem warned that threats to U.S. Federal Reserve independence are increasing global economic uncertainty. U.S. President Donald Trump has repeatedly criticized Fed Chairman Jerome Powell, demanded rate cuts, and the Department of Justice has threatened Powell with criminal indictment. Macklem emphasized that the Fed's independence is crucial for global economic stability, particularly for Canada given its close economic ties to the United States.

• Trump is seeking to remove Fed governor Lisa Cook while the DOJ has threatened Chairman Powell with criminal indictment, marking an escalation in political pressure on the central bank
• Macklem stated that 'a loss of independence of the Fed would affect us all' and that the Fed is 'the biggest, most important central bank in the world'
• Bank of Canada senior deputy governor Carolyn Rogers noted that a strong, independent Fed benefits virtually every economy by keeping markets and inflation stable, contributing to predictability and less volatility

Palladyne AI stock surged over 20% Wednesday after securing an Air Force Research Laboratory contract for its SwarmOS software platform, which coordinates autonomous drones, robots and sensors. Meanwhile, defense contractors General Dynamics and Textron both declined after reporting quarterly earnings, with General Dynamics falling out of its buy zone and Textron dropping 8% on weaker-than-expected 2026 earnings guidance.

• Palladyne AI's SwarmOS platform will enable the Air Force to connect satellite, aerial, and ground systems for real-time battlefield coordination, though contract financial details were not disclosed
• General Dynamics reported Q4 earnings of $4.17 per share (up 0.5%) on revenue of $13.6 billion, with a backlog exceeding $96 billion, but stock slipped 2.7% out of its buy zone
• Textron's Q4 earnings rose 29% to $1.73 per share, but shares plunged 8% after the company guided 2026 earnings to $7.75-$7.95 per share, below analyst expectations of $8.18

The Federal Reserve is widely expected to hold interest rates steady at 3.50%-3.75% when it announces its policy decision on Wednesday, with markets pricing in less than a 3% chance of a cut. The focus shifts to Chair Jerome Powell's guidance as he navigates resilient economic growth, above-target inflation, and political scrutiny during his final months in office, which end in May.

• Recent US data complicates the case for rate cuts: unemployment at 4.4%, Q4 GDP tracking above 5.4%, headline inflation at 2.7%, and core inflation at 2.6%—all above the Fed's 2% target
• Analysts expect the Fed to signal that rates remain on a downward path, with Deutsche Bank and LPL Financial anticipating at least one or two cuts later in 2026, likely in September
• Powell faces questions beyond economics, including Justice Department subpoenas, challenges involving Fed Governor Lisa Cook, and uncertainty over his successor when his term expires in May

Economist Peter Schiff warned that the U.S. is headed for a financial crisis that will eclipse the 2008 collapse, citing rising gold prices as a signal of declining dollar confidence and accelerating inflation. He claims central banks are abandoning U.S. treasuries and dollars in favor of gold, predicting a sovereign debt crisis and dollar collapse. Other analysts dispute his forecast, pointing to solid economic indicators under the Trump administration including 4.4% GDP growth and lower inflation than the Biden era.

• Schiff predicts a U.S. dollar and sovereign debt crisis in late 2025 or 2026, claiming central banks are dumping treasuries and buying gold to back their currencies
• Counter-analysis notes inflation averaged 2.7% during Trump's second term versus 5.0% under Biden, with GDP growth reaching 4.4% in Q3 2025 and projected 5.4% in Q4
• Schiff argues the coming crisis will be uniquely American rather than global, as the world moves away from dollar reliance, while critics suggest his forecasts are exaggerated

Treasury Secretary Scott Bessent denied reports that the U.S. is intervening in currency markets, despite the dollar index falling to its lowest level since 2022. His comments followed President Trump's remarks calling the weaker dollar 'great' and come amid speculation about potential intervention after the New York Fed reviewed dollar-yen rates with dealers.

• The U.S. dollar index fell 1.3% on Tuesday and has declined more than 10% compared to 12 months ago, reaching its lowest level since 2022
• Bessent reaffirmed the U.S. 'strong dollar policy' but emphasized it means 'setting the right fundamentals' rather than direct market intervention
• The New York Federal Reserve reviewed dollar-to-yen rates with dealers last week, a move typically viewed as a precursor to currency intervention

The Federal Reserve meeting outcome is expected to hold rates steady, with markets pricing in only 3% odds of a rate cut. However, Fed Chairman Jerome Powell's 2:30 p.m. ET press conference could move markets based on his labor market assessment and whether he plans to continue serving after his chairmanship ends May 15, amid a DOJ investigation he says is political pressure.

• Markets price in just 3% odds of a rate cut at today's meeting and only 18% for the March 18 meeting, with 60% odds of at least 50 basis points in cuts by year-end
• Powell faces pressure from a DOJ criminal investigation into his congressional testimony, which he called 'pretexts' aimed at applying political pressure on Fed independence
• The S&P 500 briefly topped 7,000 for the first time Wednesday morning, extending its winning streak to potentially six sessions

A senior UBS trader warned that a surge in demand for U.S. dollar hedging by investors could strain banks' capacity to provide these services. The dollar has fallen nearly 10% last year and is down another 2% this month due to U.S. policy uncertainty, prompting investors to seek more protection for their U.S. holdings. Banks may need to make difficult choices about which clients receive access to hedging services if demand increases materially.

• A 5-percentage-point rise in hedge ratios for all foreign holders of U.S. assets would imply roughly $1.5 trillion of dollar selling, potentially exceeding available bank balance sheet capacity
• Investors currently hedge approximately 48% of their U.S. dollar assets, with ratios fluctuating between 46-50% over the past year according to Barclays estimates
• Banks providing hedging services may need to exit other trades quickly to free up funds and meet client demands, potentially leading to selective client access during capacity constraints

US stocks opened higher on Wednesday, with the S&P 500 breaching 7,000 for the first time, while the Nasdaq gained 0.7%. Investors positioned ahead of the Federal Reserve's interest rate decision and major tech earnings, with AI-driven sectors leading gains as semiconductor and storage companies reported strong results tied to artificial intelligence demand.

• The S&P 500 reached an intraday high of 7,002.28, more than doubling from pandemic-era lows, driven by strong corporate earnings and AI investment
• ASML and Seagate Technology posted strong earnings, citing sustained demand for chipmaking tools and data storage driven by AI workloads; Nvidia shares rose after China approved ByteDance, Alibaba, and Tencent to purchase H200 AI chips
• The Federal Reserve is expected to hold rates steady at 3.5%-3.75%, with futures markets pricing in two quarter-point cuts by end of 2026

A historic short position has developed in US Treasury bonds, with futures shorts reaching 1.97 million contracts and ETF short interest totaling $12.4 billion. Market observers warn that the Federal Reserve's next move could trigger a short squeeze, as yields on the long bond approach 4.85% amid reduced inflation and strengthening dollar fundamentals.

• The current US Treasury futures short position of 1.97 million contracts may be the most crowded in history, with total ETF short interest at $12.4 billion
• China has reduced its Treasury holdings from a peak of $1.32 trillion in 2013 to $682.6 billion as of November 2025, selling roughly $700 billion since 2016
• Economists expect a 25-50 basis point move could occur shortly, though panicky short covering could trigger moves of 20+ basis points per day, potentially forcing margin calls and liquidations

Hughes Beuzelin, CEO of French asset manager BDL Capital Management, criticized excessive EU financial regulation for weakening European stock markets and driving capital toward passive investing dominated by U.S. firms. He argues that regulatory burdens are pushing investors away from EU public equities into private markets and U.S.-focused index funds, effectively exporting European savings abroad. BDL manages 3.5 billion euros in assets through active equity strategies.

• Passive funds have overtaken actively managed funds in U.S. equities, and their prevalence in Europe channels EU savings into U.S. companies rather than local markets
• Excessive regulation is driving capital from public to private markets, which Beuzelin views as problematic since private equity is 'for the happy few' while public equity allows broader participation
• BDL manages 3.5 billion euros in assets and warns that regulatory agenda is 'driving Europe into a wall' amid fraying transatlantic relations and rising geopolitical risks