In January 2026, US investors have found success in diversifying their portfolios by venturing into foreign bond markets. A comparison of various exchange-traded funds (ETFs) indicates significant outperformance of foreign bonds over their US counterparts, as illustrated by the returns reported up to January 29.
As anticipated, the Federal Reserve kept interest rates steady in its latest meeting. However, the challenge of determining the appropriate monetary policy for the future is intensifying.
Consumer confidence saw a drastic decline in January, plummeting to a level not seen in 12 years, as reported by the Conference Board’s latest survey. This sharp downturn raises concerns over future consumer spending, though it is wise to exercise caution until this sentiment is corroborated by hard data.
The Federal Reserve is anticipated to maintain its target rate in the upcoming policy meeting, signaling a shift after three consecutive rate cuts in 2025. The prevailing outlook suggests that rates will remain unchanged until June, but several variables could alter this expectation in the near future.
Raw material prices have soared at an impressive rate this year, significantly surpassing other major asset classes through the close on January 23, based on a selection of ETFs. While foreign stocks are faring well, they are trailing far behind the leaders in this space.
● Exile Economics: What Happens if Globalisation Fails
Ben Chu
Essay by the author via The Next Big Idea Club
The push to reduce reliance on foreign entities has been a recurring theme over centuries. Examples date back to the ancient Greek Cynics, including Diogenes, who famously advocated for self-sufficiency as an ideal. This notion of achieving greater safety and virtue through independence from others is deeply rooted and appears across various ideologies, whether religious or secular, left or right. Thus, it is unsurprising that this perspective resurfaces in contemporary discussions about trade and global supply chains.
According to the Bureau of Economic Analysis, economic activity expanded robustly in the second and third quarters, and forecasts indicate that this momentum continued into Q4. A prominent nowcast suggests that the solid growth witnessed in the previous quarters will accelerate as we await the delayed GDP report from the government expected next month.
In a notable address at the World Economic Forum in Davos, President Trump criticized the foundations of globalization. He emphatically claimed that “The United States is keeping the whole world afloat” and asserted that the existing order could no longer continue.
The interpretation of the phrase “for cause” is pivotal to a significant matter regarding the President’s influence over Federal Reserve monetary policy.
This year has shown a notable preference for maturity risk within the bond market. Although it is early days, the trend of investor interest in long-term bonds is becoming evident, according to a set of ETFs observed through January 16.
