Global News Summary : 17-23 January 2026

This week was defined by a tug-of-war between “risk assets” and the cost of capital, with Japan’s bond-market volatility and earnings-driven AI positioning doing much of the heavy lifting. In the US, equities were choppy as investors digested big-tech/semiconductor updates (including a sharp sell-off in one major chip name) while Treasury yields eased slightly and gold pushed to fresh records, signalling a more defensive undertone beneath the surface. In the UK, the tone improved: January business activity strengthened (PMI 53.9) and December retail sales rose 0.4%, but policymakers warned that sticky wage growth could limit how quickly rates can fall. In the Eurozone, inflation data around this window reinforced the “closer to target” narrative, keeping the focus on policy optionality rather than recession panic.

In China, the message remained steady and cautious as Loan Prime Rates were left unchanged (1Y 3.0%, 5Y 3.5%). The biggest global macro impulse came from Japan, where the BoJ held rates around 0.75% but flagged readiness to respond to disorderly moves as 10-year JGB yields surged to ~2.26%, with politics/fiscal headlines adding fuel to the volatility. Meanwhile Switzerland was unusually “macro-relevant” because Davos (19–23 Jan) concentrated global AI/jobs and ESG-style transition themes into one week, alongside an SNB message that inflation could even dip below zero without necessarily forcing immediate action.

USA

Debt securities

US Treasuries were a key swing factor for risk appetite; the 10-year yield was cited around ~4.23% late-week as markets weighed earnings, geopolitics and the global rates backdrop.

AI

“AI trade” leadership looked less one-way: a major chipmaker’s weak forward guidance triggered a double-digit share-price drop and contributed to a more selective tone in AI-linked equities.

Recession / growth

Market pricing still looked consistent with continued expansion rather than imminent recession, but the week’s cross-asset mix (record gold + choppy equities) suggested investors remain sensitive to surprises.

UK

Economic growth

UK activity surprised to the upside: the flash composite PMI rose to 53.9 (expansion), and services hit a 21-month high in the same survey commentary.

Retail sales rose 0.4% in December, reversing prior weakness (though the broader quarter remained soft in tone).

Inflation / jobs

Policymaker commentary emphasised that inflation is still above target (3.4% in December) and that wage growth could keep price pressures sticky, potentially delaying or reducing the scale of rate cuts.

Debt securities

With wages and inflation still uncomfortable, the market debate centred on how many cuts the BoE can realistically deliver in 2026 (rather than “cuts are guaranteed”).

EU (Eurozone)

Inflation

Eurostat communications around this window continued to frame euro-area inflation as near target, with December 2025 figures formally scheduled/released mid-January.

Debt securities

The rates story remained “measured”: euro government bond yields were being watched for spillover from global duration moves (especially Japan), rather than for a fresh ECB shock.

China

Debt securities / credit

China kept benchmark lending rates unchanged: 1-year LPR 3.0% and 5-year LPR 3.5% (announced 20 Jan 2026), reinforcing a “steady policy” stance rather than an urgency to reflate.

Japan

Debt securities / policy

The BoJ held its policy rate around ~0.75%, but the market focus was the bond shock: 10-year JGB yields reportedly hit ~2.26% (highest since 1999), prompting signals the BoJ could increase bond buying if moves became disorderly.

Economic growth / fiscal impulse

Political and fiscal headlines amplified the volatility narrative, with investors increasingly focused on how Japan’s fiscal direction interacts with higher rates and yen stability.

Australia

Jobs

Australia’s labour market printed strong late-2025 momentum: reports pointed to ~65,200 jobs added in December and unemployment around ~4.1% (with some official framing around ~4.2% trend).

Debt securities / policy

That jobs strength lifted market talk of an RBA hike risk at the early-February meeting, putting rates back in focus for AUD assets.

New Zealand

NZ headlines in the material surfaced were primarily non-macro and the next major CPI milestone was imminent rather than inside the week’s core market narrative.

Singapore

Singapore discussion during this window leaned more toward regional spillovers (US tech/earnings and Japan-driven rates/FX volatility) than a specific domestic release.

Switzerland

AI / ESG / jobs

Davos (19–23 Jan) concentrated global themes: senior officials warned AI could reshape large shares of jobs (with one widely circulated estimate: ~60% of jobs in advanced economies affected in some form), sharpening the “productivity upside vs labour disruption” debate.

OpenAI messaging at Davos also leaned into the idea that productivity gains depend not just on model capability, but on adoption (closing the “usage gap”).

Inflation / policy

Swiss central bank commentary suggested inflation could briefly dip below zero again in 2026 without necessarily being alarming, while policy remains highly optional (including FX tools).

What this implied for markets

• Japan became the global rates “spark plug” again: higher JGB yields raise the risk of knock-on moves in US/EU duration and FX hedging costs.

• AI positioning looked more selective: investors were still willing to own the theme, but punished weak guidance and rewarded clearer execution.

• UK resilience improved the narrative: but sticky wages kept the BoE path cautious—good for growth headlines, less clear-cut for rapid easing.