Markets navigated a busy week of inflation data, government funding headlines, and shifting geopolitical rhetoric. Inflation remains sticky but stable, with the Fed’s preferred measure—the Personal Consumption Expenditures (PCE) index—showing prices running at 2.8% year-over-year in November, up slightly from October but in line with expectations. Monthly inflation held at 0.2%, reinforcing the message that progress toward the Fed’s 2% target has slowed but not reversed. At the same time, consumer spending remained resilient, rising 0.5% in both October and November, suggesting households are still driving economic growth even as income growth cools modestly.
On the policy front, Washington moved closer to avoiding another government shutdown. The U.S. House of Representatives passed the final major group of funding bills totaling roughly $1.2 trillion, covering defense, homeland security, education, transportation, and other key agencies. The bills are now headed to the U.S. Senate, where timing remains tight ahead of the January 30 deadline. While bipartisan motivation to avoid another shutdown is strong, the situation is not fully resolved, keeping a degree of political uncertainty in the background.
Globally, markets reacted positively after President Trump backed away from imposing new tariffs on European countries, easing immediate trade fears. However, confusion remains around his comments about a Greenland “framework” tied to NATO, with European leaders and analysts questioning the lack of details and credibility. Many observers believe the softer tone was driven less by diplomacy and more by rising bond yields and market discomfort. With trade-war risks resurfacing, financial markets appear to be serving as a check on how far policy escalation can go.
Earnings season added another layer to the narrative over the week. Technology—particularly semiconductors—continues to stand out, supported by strong demand tied to AI and data infrastructure. Financials have delivered mixed but generally solid results, while industrials and consumer staples showed resilience. On the weaker side, energy and consumer discretionary have lagged, reflecting softer commodity pricing and cautious consumer behavior. Across sectors, post-earnings commentary so far has emphasized disciplined spending, selective hiring, and cautious optimism rather than aggressive expansion.
Interesting to Know
Between the upcoming Super Bowl, Olympic buzz, and renewed interest in space exploration (Lunar mission), the next few weeks offer plenty of reminders that not all milestones are measured in numbers—and some are just meant to be enjoyed. Some levity and community are things I think we all need right now.
Looking Ahead
- Fed Watch: The Fed meets next week, with rates widely expected to stay unchanged as officials balance steady growth against lingering inflation.
- Shutdown Deadline: Senate action on government funding will be critical ahead of the January 30 deadline.
- Earnings Momentum: More companies will report, with guidance and margin commentary likely to matter more than headline beats.
- Markets & Rates: Bond yields and geopolitical headlines remain key drivers of short-term market moves.
Have a nice weekend and stay safe out there, it might be a wild one!
https://www.cnbc.com/2026/01/22/trumps-greenland-deal-framework-and-tariff-backdown-confuse.html?&qsearchterm=trump%20tariff%20threats%20with%20greenland
https://www.cnbc.com/2026/01/22/pce-inflation-november-2026.html
https://www.cnbc.com/2026/01/22/government-funding-shutdown-house.html
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
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