Risk aversion pushes up interest rate futures, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on January 26

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell, with the Dow futures falling 0.00%, the S&P 500 futures falling 0.07%, and the Nasdaq futures falling 0.18%. Germany's DAX index rose 0.10%, Britain's FTSE 100 index rose 0.17%, France's CAC 40 index fell 0.21%, and Europe's Stoxx 50 index fell 0.08%.

2. Interpretation of market news

Risk aversion pushed up interest rate futures, and the market awaited corporate bond issuance and FOMC resolution

(1) Overnight financing rate futures strengthened on Monday, with contracts of all terms rising by 0.625 to 3.5 basis points, with green contracts leading the gains. ⑵ This is consistent with the weakness of the stock market (Nikkei fell 1.8%) and the stagnant German IFO business climate index. ⑶ U.S. Treasury bonds rose across the board, with the 10-year Treasury yield leading the decline by 3.4 basis points, while the 2-year and 30-year yields fell by 1.9 and 2.8 basis points respectively. ⑷The drop in the 10-year U.S. bond yield matched the 3 basis point drop in the 10-year German bond yield. ⑸The performance of the 2-year U.S. Treasury bond lags behind the 10-year bond, which is consistent with today's 2-year Treasury auction forcing the curve to flatten, and market expectations that Wednesday's FOMC policy statement will show reluctance for interest rate cuts. ⑹ The red contract package, which closely follows the 2-year U.S. Treasury bond, lagged the green and blue contract packages by 0.875 and 0.75 basis points. ⑺The market focus turns to corporate bond issuance, but the weekend snowstorm and subsequent cleanup may lead to insufficient manpower on the trading desk and capital flow may slow down. ⑻The signal model based on the intersection of the 13-day and 38-day moving averages shows that multiple Sofr futures contracts and Treasury bond varieties are currently issuing "sell" signals. ⑼ Short-term Treasury bill rates opened flat ahead of today's 3-month and 6-month Treasury bond auctions, as well as purchases of 1- to 4-month Treasury bonds. ⑽ Overall, risk aversion and expectations that U.S. interest rates will remain high have www.xmtraders.combined to push interest rate futures higher, but technical indicators suggest some contracts may be overbought.

The interest rate spread between France and Germany has narrowed extremely, and the valuation of 30-year French government bonds has reached a historical high

(1) Following the sharp narrowing last Friday, the interest rate spread between French government bonds and German government bonds further tightened on Monday. ⑵ After adjusting the direction, the interest rate spread between 30-year French and German government bonds appears extremely tight. ⑶Based on three-month regression analysis of constant yield to maturity, the yield of 30-year French government bonds is 9.9 basis points higher than that of beta-adjusted 30-year German government bonds. ⑷ This price difference has reached a huge deviation of 4.1 standard deviations, showing that the valuation of French long-term bonds is at an extremely high level in history. ⑸ The sharp www.xmtraders.compression of interest rate spreads to such extreme levels in the short term usually means that the market is too optimistic about French fiscal risks, or is driven by technical trading factors. ⑹ In the future, we need to be wary of the adjustment risk of interest rate spreads reverting to the mean, especially in the context that the overall fiscal outlook of the Eurozone still faces uncertainty.

Economic momentum exceeded expectations, and the Central Bank of Pakistan unexpectedly suspended its interest rate cut cycle

⑴ The Central Bank of Pakistan unexpectedly kept its key policy interest rate unchanged at 10.5% on Monday, a move that ran contrary to market expectations of further interest rate cuts. ⑵ The central bank governor said at the press conference that the move is to ensure price stability and support sustainable economic growth. ⑶ The market had previously widely expected the central bank to cut interest rates by 50 basis points, citing reasons including slowing inflation, strengthening foreign exchange reserves and stabilizing the rupee exchange rate. ⑷This suspension of interest rate cuts occurred after an unexpected 50 basis point cut in December last year (ending the suspension of four consecutive meetings). ⑸ Since mid-2024, Pakistan has cut interest rates by a total of 1,150 basis points. The interest rate previously reached a historical peak of 22% in 2023. ⑹ The Central Bank’s Monetary Policy www.xmtraders.committee believes that the actual policy interest rate is already at a moderately positive level, which is sufficient to stabilize inflation within the medium-term target range of 5-7%. ⑺ However, the central bank also pointed out that inflation may temporarily exceed the upper limit of the target range for several months this year and peak in June. ⑻Policymakers said that economic activity has recovered faster than expected, mainly driven by inward-looking sectors, while the trade deficit has widened due to rising imports and weak exports. ⑼ The central bank’s tentative report shows that real GDP will grow by 3.7% year-on-year in the first quarter of fiscal year 2026, and the full-year growth forecast will be raised to a range of 3.75%-4.75%. ⑽ Foreign exchange reserves are expected to exceed US$18 billion by June and are expected to exceed US$20 billion by the end of 2026, setting a record high. ⑾In addition, the central bank lowered the average cash reserve ratio of banks from 6% to 5% to encourage privateDepartment Credit. ⑿ The International Monetary Fund had warned in its report that premature easing of monetary policy should be avoided under Pakistan's $7 billion loan program, urging policymakers to remain data-dependent to anchor inflation expectations and rebuild external buffers.

Brazil’s external account has stabilized, and the structure of foreign investment has changed under high interest rates

⑴ Data from the Brazilian Central Bank shows that the country’s current account deficit will account for 3.02% of GDP in 2025, which is basically the same as 3.03% in 2024, reversing the worsening trend earlier in the year. ⑵Foreign direct investment accounted for 3.41% of GDP last year, which is similar to 3.39% in 2024, generally covering the current account deficit. ⑶Early last year, due to strong domestic demand and import growth faster than exports, the 12-month rolling deficit rate expanded to nearly 3.7%. ⑷The economy showed clearer signs of cooling at the end of the year, as the central bank maintained interest rates at 15%, the highest level in nearly two decades, to curb inflation. ⑸The current account deficit in December was US$3.4 billion, far lower than the expected US$5.3 billion, mainly due to the strong trade surplus of US$8.8 billion, which was more than twice the size of the same period last year. ⑹ However, foreign direct investment unexpectedly recorded a net outflow of US$5.2 billion in December, while the market expected a net inflow of US$1 billion. ⑺The central bank pointed out that this was mainly driven by a net outflow of US$11.4 billion in "reinvestment of earnings" projects, indicating that the amount of profit remitted that month exceeded the profits earned domestically. ⑻ Starting from January 2026, the Brazilian government will impose a 10% withholding income tax on all profits remitted abroad. ⑼ While the high interest rate environment stabilizes external accounts, it also affects the www.xmtraders.composition and flow of foreign capital. The implementation of profit remittance tax may further change the behavior pattern of long-term capital.

The UK 10-year government bond yield fell below 4.5% due to the geopolitical situation and the Federal Reserve’s expectations

⑴ The UK 10-year government bond yield fell below 4.5% on Monday, mainly affected by multiple factors. ⑵ Continued geopolitical tensions put pressure on the market. ⑶ U.S. President Trump once threatened to impose new tariffs on multiple European countries over the Greenland issue, although he later withdrew after reaching a framework agreement. ⑷ Domestic political uncertainty has eased, with the Labor Party blocking potential leadership challenger Andy Burnham from running for a parliamentary seat, thus ending his path to the prime ministership. ⑸ The market is also paying close attention to the Federal Reserve's policy decision to be announced on Wednesday, and it is widely expected that it will keep interest rates unchanged. ⑹ Market speculation that a successor to the Federal Reserve chairman who may be more dovish may be announced as early as this week, adding to uncertainty.

Hamas spokesperson called on Israel to implement the relevant www.xmtraders.commitments of the Gaza ceasefire agreement

On January 26, local time, Palestinian Islamic Resistance Movement (Hamas) spokesperson Qasim issued a statement stating that the Israeli army has recently been escalating military operations in the Gaza Strip, including bombings, ground infiltrations, etc., causing more casualties and displacement. He pointed out that these actions mean that Israel is continuing its extermination campaign against the people of Gaza.Absolute war. Qasim called on all parties in the international www.xmtraders.community to take concrete actions to put pressure on Israel to stop its attacks on Gaza, lift the blockade of Gaza, and implement the relevant www.xmtraders.commitments of the Gaza ceasefire agreement.

Fatal shootings have torn consensus, and rifts have emerged between gun rights groups and Republican allies

⑴ After a federal Border Patrol agent shot a gun-carrying protester in Minnesota, some Republicans criticized the protesters' gun-holding behavior. ⑵The move is being resisted by gun rights groups that have traditionally supported the Republican Party. ⑶ A spokesman for a gun rights organization said that politicians tend to blame guns first, emphasizing that gun ownership is a constitutional right and calling for a thorough investigation. ⑷The National Rifle Association of the United States initially stated in a statement that it accused "radical politicians of inciting violence against law enforcement officers." ⑸But when a Republican official made a statement that "approaching law enforcement officers with a gun may result in a legal shooting," the NRA instead condemned the statement as "dangerous and wrong" and emphasized that a full investigation should be awaited. ⑹ Other gun rights groups also criticized the remarks, insisting that the Second Amendment protects the right to bear arms during protests. ⑺Senior Trump administration officials have suggested that carrying guns during protests is inappropriate and may even be illegal. ⑻ Gun rights groups countered that the relevant interpretation of the law was "completely incorrect." ⑼ This incident revealed that there are significant differences within the traditional political alliance over disputes over specific law enforcement situations and the boundaries of constitutional rights.

The production reduction alliance remains unchanged, and supply risks support high oil prices

⑴ Multiple sources revealed that at the February 1 meeting, OPEC+ is likely to maintain the current policy of suspending oil production increases until March. ⑵ This expectation is made against the background that international oil prices have risen by 8% this month, exceeding US$66 per barrel. ⑶The alliance increased production by approximately 2.9 million barrels per day from April to December 2025, and then decided to suspend monthly production increases from January to March 2026 due to weak demand forecasts. ⑷The decline in Kazakhstan’s crude oil production is one of the factors that has pushed up oil prices recently. ⑸ Some institutions predict that the country's Tengiz oil field will remain suspended until the end of January. Its crude oil production in January is expected to be between 1 million and 1.1 million barrels per day, far below the usual level of 1.8 million barrels. ⑹ Sources said that the recovery of Venezuelan production will take time and will not yet have a major impact on the balance of the global oil market. ⑺Geopolitical risks and technical problems with facilities continue to disrupt the supply of some oil-producing countries. ⑻ OPEC+ maintains its output policy unchanged, showing that the alliance prefers to maintain tight market balance and stable oil prices by controlling supply between demand concerns and supply risks.

Lebanon submitted a formal www.xmtraders.complaint to the United Nations accusing Israel of 2,036 violations

On January 26, local time, the Lebanese Ministry of Foreign Affairs, through its Permanent Mission to the United Nations, submitted a formal www.xmtraders.complaint to the United Nations Security Council and the Secretary-General regarding Israel’s continued violations of Lebanese sovereignty in recent months. The Lebanese Ministry of Foreign Affairs requested that the www.xmtraders.complaint be published as an official United Nations document andDistributed to all Member States. The www.xmtraders.complaint contains three detailed tables, recording Israel's daily violations of Lebanese sovereignty in October, November and December 2025, which were 542, 691 and 803 respectively, with a total of 2,036 cases.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1840, an increase of 0.07%. The price of EURUSD fell in the last trading session before the New York session, trying to gain bullish momentum that may help it recover and rise again, trying to escape some clear overbought conditions on the relative strength indicator, especially with negative signals emerging there, trading along a steep minor trendline, dominated by the main bullish trend in the short term, with continued positive support above the EMA50, showing the dominance of this track.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3652, an increase of 0.03%. Before the New York session, the GBPUSD remained positive in the last session of the session, the dynamic pressure represented by its exchange above the EMA50 continues, reinforcing the stability and dominance of the main bullish trend in the short term, its trading is accompanied by the supporting trend line of this trend, noting the relative strength indicator that has emerged as a positive signal, although it stabilizes at overbought levels.

Spot gold: As of 21:20 Beijing time, spot gold has risen, now trading at 5079.05, an increase of 1.79%. Gold prices held on to early gains in the last intraday trade before the New York session, taking a break to gather gains from the previous move in an attempt to unload some overbought conditions based on the relative strength indicator to gather bullish momentum that could help resume the rally and hit new all-time highs, especially if the short-term primary bullish trend dominates and its trading is accompanied by a supportive secondary trendline for that trend.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 110.060, an increase of 6.55%. Pre-market in New York, (silver) prices have stabilized on the last session of gains after reaching the $110.00 resistance expected in our previous analysis, trying to collect gains from the previous rise, trying to offload some apparent overbought conditions onto the relative strength indicator, especially in the event of a negative signal there, to gather its bullish momentum, which may help break out of the current resistance, with it trading above the dynamic support represented by the EMA50Support continues to exist, reinforcing the stability and dominance of the main short-term bullish trend.

Crude oil market: As of 21:20 Beijing time, U.S. oil fell, now trading at 60.800, a decrease of 0.44%. Pre-market in New York, (crude oil) prices are trading around last session's levels, trying to unload some clear overbought conditions on the relative strength indicator, especially in the event of negative signals emerging there, in order to gather its bullish momentum, which could help it rise again, with the primary bullish trend dominating on a short-term basis and its trading along the trend's supportive secondary trendline. Furthermore, as it trades above the EMA50, it continues to provide positive support, strengthening the chances of a near-term recovery.

4. Institutional perspective

JPMorgan Chase: Corporate growth momentum is spreading from the technology industry to other areas

⑴ The JPMorgan Chase strategist team pointed out that the current situation at the beginning of the US earnings season shows that corporate growth momentum in 2026 is spreading from the technology industry to more other industries. ⑵ Take Dubravko? Strategists led by Rakos-Buas pointed out that about 70% of www.xmtraders.companies that have released financial reports have given performance guidance for 2026. ⑶Among the www.xmtraders.companies that gave guidance, about half of the performance outlook exceeded market expectations. ⑷ Strategists emphasized that because most of these www.xmtraders.companies whose performance exceeded expectations do not belong to the technology industry, this shows that corporate growth is gradually spreading to many other fields. ⑸The team expects that in the next two weeks as the financial reporting season enters a period of intensive disclosure, the market will receive clearer signals about the growth diffusion trend.

Morgan Stanley research: Artificial intelligence has caused the UK to lose jobs at the fastest rate among www.xmtraders.comparable economies

Morgan Stanley’s latest research shows that artificial intelligence technology has caused job losses in the UK to be lost significantly faster than in other major economies. The study points out that while the adoption of artificial intelligence has brought significant benefits to www.xmtraders.companies, it has taken a particularly heavy toll on British workers, adding pressure to an already cooling labor market. Data shows that over the past 12 months, UK www.xmtraders.companies have reported 8% net job losses due to artificial intelligence. This ratio is among the highest in international www.xmtraders.comparisons including Germany, the United States, Japan and Australia, reaching twice the international average. The report believes that the number of jobs lost due to artificial intelligence in the UK has exceeded the number of new jobs created.

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