Sliding Confidence
Janaury 28, 2026
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–Curve steepened Tuesday with the dollar center-stage, like a bad lounge act (“Murph and the Magic Tones?”). Trump accelerated the move with late comments that he didn’t think the dollar had weakened too much; “it’s great”. Late DXY price 95.74; the low in 2025 was 96.22 coinciding with the September ease, Low yesterday was 95.55. Gold (GCG6) exploded on the comments, rising almost $100 from 5088 to 5180; 5253 at last glance. It’s amazing how Trump regularly undermines his own goals. New challenge for Bessent…
–In May of 2021, DXY was 89.69. By the first tightening of the cycle which was March 16, 2022, DXY was 99.10 (the day prior to the ease). On May 4, the day before the next hike (which was 50 bps up to a target of 0.75-1.0%), DXY was 103.74, eventually surging to 112.60 by September 2022. DXY now below where it was prior to first hike.
–At the futures close, 2y note was down 1.9 bps to 3.569% and tens were +1 bp to 4.221%. High of the move so far in 2/10 is 71.2. USD will get no help from the Fed today, expected to stand pat with a bias toward ease. Will a shift to higher long-end yields finally spark a bid in implied vol? Yesterday settles: TYH6 111-24 with 111.75^ 0’55 (3.8). TYM6 111-20 with April 111.5^ 1’28 (4.0). 7-yr auction tomorrow.
–Chart of Consumer Confidence and Expectations attached. Expectations well underneath COVID low, while current Confidence just clipped that low. Both measures well below Trump.1. However, if you own hard assets denominated in dollars, perhaps leveraged with fixed rates, then happy days.
A few upcoming earnings reports:
28-Jan
META
MSFT
TSLA
IBM
29-Jan
AAPL
SNDK
