Market Moving News - January 26

Trump Taps Kevin Warsh for Fed Chair

President Trump announced plans to nominate Kevin Warsh as the next chair of the Federal Reserve. Warsh served on the Fed's Board of Governors from 2006 to 2011 and, if confirmed, would succeed Jerome Powell when his term expires in May. Long viewed as an inflation hawk, Warsh has more recently argued the Fed should move more quickly to cut rates.

Fed Pauses Rate Cuts, Two Officials Dissent

The Fed held the Federal Funds Rate steady at 3.50%-3.75% following three consecutive cuts late last year. Governors Miran and Waller favored another quarter-point cut, highlighting the balancing act between above-target inflation and a cooling labor market. The Fed also removed language about rising downside risks to employment. This was a change Waller sharply contested. Markets expect rates to hold at the next two meetings, though new data could shift that outlook.

Buyer Demand Supports Home Prices

Case-Shiller showed a seasonally adjusted 0.4% monthly gain, with prices up 1.4% year over year. The FHFA Index was even stronger at 0.6% monthly and 1.9% annually. Easing mortgage rates have lifted buyer demand, and with builders unable to quickly add supply, continued rate declines could push prices higher.

Key Labor and Inflation Updates

Initial jobless claims fell to 209,000, while continuing claims dropped to 1.827 million but remain elevated. December's Producer Price Index came in hotter than expected at 0.5% monthly and 3.0% annually, though increases were concentrated in machinery and equipment margins.

Key Events to Watch This Week

It's all about the labor market and earnings this week.

Tuesday – December JOLTS Job Openings

The Job Openings and Labor Turnover Survey shows how many positions employers are actively trying to fill. Fewer openings suggest a cooling labor market, which would support lower rates. A surprise increase could signal continued tightness and keep upward pressure on rates.

Wednesday – Alphabet (GOOGL) Earnings

Big tech earnings influence broader market sentiment. Strong results can boost investor confidence and push money into stocks and away from bonds, which typically nudges rates higher. Disappointing numbers can trigger a flight to safety into bonds, helping rates improve.

Thursday – Initial Jobless Claims

This weekly snapshot shows how many people filed for unemployment for the first time. Rising claims point to labor market softening, which is generally favorable for rates. Continued low claims suggest employer demand remains strong, limiting room for rate relief.

Thursday – Amazon (AMZN) Earnings

Like Alphabet, Amazon's results move markets. As a bellwether for consumer spending and economic activity, strong earnings could pressure rates higher, while a miss may help bonds and support lower rates.

Friday – January Jobs Report

The week's main event. Nonfarm payrolls and the unemployment rate give the clearest picture of labor market health. The Fed is watching closely, and so are we. Weak job growth could accelerate rate cuts, while a hot report may keep the Fed cautious and rates elevated. A hot job market means the economy is growing, and there’s no need to cut rates unless we are trying to speed up growth.

All eyes on Friday’s Jobs Report.

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