Update From the Flightdeck

Maybe we shouldn’t be surprised that the US has arrested the head of a sovereign state, or that the Trump administration is openly flirting with the idea of invading Greenland, Colombia, Cuba, and perhaps even Mexico or Canada. What is startling, however, is not the geopolitics but the market response, or lack of one, with equities continuing to push on to fresh record highs.

Europe and emerging markets have once again shone a little brighter than US stocks, in what is starting to feel like a recurring first-quarter pattern. Elsewhere, bond markets have remained resilient, as expectations of further interest-rate cuts continue to drive short-term yields lower. Long-term yields, not so much — a divergence that bears watching for signs of trouble ahead.

The dollar has been stronger than expected, and performance may continue to surprise investors for no other reason than that almost no one believes it should be rising in 2026. That scepticism is reminiscent of what happened to the euro last year. Meanwhile, there are clearly bigger forces at work in China, where upward pressure on the yuan sits alongside a record trade surplus.

Oil has been all over the place, yet still trades near four-year lows despite renewed upheaval in the Middle East. Gold and silver, by contrast, continue to chase new record highs with remarkable consistency. Base metals have tried to join the party, but with little in the way of fundamental demand, one wonders if retail and speculative flows are enough to sustain recent performance.

Finally, Bitcoin has had a good start to the year, underpinned by strong institutional interest, but the altcoins are still struggling. If January really does set the tone for the year ahead, investors may want to brace for impact and hope for the best in 2026. For more insights into the financial markets, please join us this Thursday at 14:00 for our quarterly webinar: New World Order