State of Market: Open 01/01/26
Markets begin 2026 on the back foot as long rates stay elevated, metals cool, and policy divides linger
Equities trade below prior closes across large caps, tech, and small caps; bond ETFs soften alongside a 4.14% 10-year yield; precious metals ease after a record 2025; euro trades near 1.174; crypto steadies. Focus turns to wage increases, Fed path, China’s tentative uptick, and fiscal risks.
TendieTensor.com State of Market Open
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Overview
U.S. markets are setting a cautious tone to start 2026. The major equity ETFs last traded below their previous closes into the opening bell, with broad weakness across large caps (SPY), tech-heavy benchmarks (QQQ), industrial blue chips (DIA), and small caps (IWM). Bond proxies are similarly softer, consistent with a Treasury curve that remains elevated at the long end. Commodities, led by precious metals and energy proxies, are also down versus prior closes, while the euro trades near 1.174 against the dollar and major cryptocurrencies are little changed to slightly firmer.
The macro backdrop remains nuanced. November’s CPI and core CPI index levels are steady reference points, while model-based inflation expectations continue to show a notable gap between the near-term (1-year) and the medium/long-term (5- to 30-year) horizons. Meanwhile, recently released Federal Reserve minutes highlight a divided committee on the pace and extent of further policy moves, and incoming news on wages, claims, and fiscal risks adds complexity to the early-year setup.
Macro: Yields, inflation, and expectations
Treasury yields, as of December 30 data, show a curve with a relatively stable short end and an elevated long end. The 2-year stands at 3.45%, the 5-year at 3.68%, the 10-year at 4.14%, and the 30-year at 4.81%. This shape underscores that while policy-sensitive maturities have retraced, term premium and growth/inflation uncertainty are still embedded in the long end. Equity and duration-sensitive assets are responding accordingly to start the year.
On inflation, the latest November CPI index level is 325.031 with core CPI at 331.068 (index levels; year-over-year changes not provided). Inflation expectations modeled for December show a 1-year horizon at 3.20%, stepping down to 2.42% for 5-year, 2.34% for 10-year, and 2.44% for 30-year. The profile suggests markets and models anticipate near-term price pressures that moderate toward—though not decisively below—the mid-2% range over the medium to long term.
Policy signals were mixed into year-end. Minutes reported a 9–3 vote on the latest move, with differing views on the necessity and pace of additional rate cuts, and MarketWatch separately noted the potential for rates to remain on hold “for some time” as officials assess the impact of prior easing. Labor conditions remain a key swing factor: new claims have declined for three straight weeks and were recently below 200,000, a sign of steady labor-market conditions. At the same time, a new round of minimum wage increases in 19 states took effect today, adding to the tug-of-war between wage-driven cost pressures and the disinflation narrative. Fiscal developments also bear watching, with another potential government shutdown risk highlighted as Congress returns with a deadline looming.
Internationally, China-specific headlines contribute to the macro mosaic. December’s official manufacturing PMI moved back above 50 (to 50.1), ending an eight-month contraction streak, while authorities outlined nearly $9 billion in 2026 consumer trade-in subsidies to spur domestic demand. The near-term global growth impulse remains tentative, but these steps could support commodity demand and supply chains as the year progresses.
Equities: Soft start across styles and sizes
Major U.S. equity ETFs are positioned below prior closes heading into the first trades of 2026:
- SPY last traded at 681.84 versus a previous close of 687.01, down about 0.75%.
- QQQ last traded at 614.28 versus 619.43, down about 0.83%.
- DIA last traded at 480.61 versus 483.59, down roughly 0.62%.
- IWM last traded at 246.19 versus 248.03, down about 0.74%.
The tone reflects a combination of still-elevated long rates and a modest risk-off bias after a strong 2025 for many equity segments. Articles highlight that Wall Street begins 2026 with echoes of early-2000s questions around leadership and breadth, and separate commentary points to the potential for small-cap value to reassert itself over time. For now, the opening indication is broad-based softness rather than a distinct rotation.
Sector dynamics
Sector ETFs also point lower against their prior closes:
- Financials (XLF) last traded at 54.77 versus 55.18, down roughly 0.74%.
- Technology (XLK) last traded at 143.96 versus 145.41, down about 1.0%.
- Utilities (XLU; via the provided symbol) last traded at 42.70 versus 42.96, down around 0.62%.
- Health Care (XLV) last traded at 154.81 versus 155.68, down roughly 0.56%.
Notably, an outlook piece flagged 2026 as potentially constructive for regional banks given a steepening curve, a looser regulatory backdrop, and possible M&A, all of which would flow through to the broader Financials complex if realized. Technology begins the year digesting a strong multi-quarter run and ongoing AI investment narratives, with end-of-year deal activity among mega-cap platforms emphasizing the race for AI capability.
Fixed income: Duration under pressure as long yields hold
Bond proxies are softer, consistent with long-end yields holding above 4%:
- TLT last traded at 87.17 versus 87.86, down about 0.79%.
- IEF last traded at 96.16 versus 96.48, down roughly 0.33%.
- SHY last traded at 82.83 versus 82.85, effectively flat to slightly lower (about -0.02%).
The pattern—greater weakness at the long end—aligns with the 10-year at 4.14% and 30-year at 4.81% as of December 30. Minutes revealing a divided Fed, combined with steady claims and wage developments, may encourage investors to demand term premium until inflation progress reaccelerates or growth slows more visibly.
Commodities: Precious metals cool; energy and broad commodities lower
- Gold (GLD) last traded at 396.30 versus 398.89, down approximately 0.65%.
- Silver (SLV) last traded at 64.44 versus 68.98, down about 6.6%, reflecting ongoing volatility after a record-setting year. Several articles underscored silver’s outsized gains in 2025, late-year profit-taking, and heightened sensitivity to policy and margin dynamics. One note highlighted that the silver-to-oil relationship has shifted in unusual ways, and another flagged that China—controlling roughly 70% of key silver supply for tech, AI, and solar—was set to tighten trade gates as of January 1, a potential source of future price and supply tension.
- Oil proxy (USO) last traded at 69.15 versus 69.74, off roughly 0.85%.
- Natural gas (UNG) last traded at 12.245 versus 13.12, down about 6.7%.
- Broad commodities (DBC) last traded at 22.37 versus 22.64, down about 1.2%.
The combination of softer metals and lower energy proxies into the open contrasts with the strong backward-looking performance of precious metals in 2025. China’s modest PMI improvement and consumption subsidies could provide a floor for industrial metals demand later, but near-term commodity positioning appears cautious.
FX and crypto
- EURUSD is marked near 1.1741 based on the provided quote. No prior-day reference levels were provided, so directional context versus yesterday is not available.
- Bitcoin (BTCUSD) is relatively steady, with a mark around 87,766, a narrow intraday range between roughly 87,425 and 87,918, and modestly above the provided open level. An item noted that one listed company’s repeated share issuance to buy bitcoin coincided with stock pressure into year-end, while another company has pivoted away from holding bitcoin as a treasury asset—together suggesting that treasury-adoption narratives remain mixed even as price action holds firm early today.
- Ethereum (ETHUSD) similarly trades near its mark of about 2,975, with a tight range and slightly above its indicated open.
Company and thematic headlines
- Wages and consumption: Minimum wage hikes took effect in 19 states today, potentially supporting consumption but also adding to service-sector cost pressures. The net impact on margins and pricing bears monitoring as 2026 unfolds.
- Fed and rates: Multiple items highlighted divided Fed minutes and the possibility of a policy pause “for some time,” reinforcing the market’s focus on growth versus inflation risk. This helps explain why long-end yields remain sticky and why duration-sensitive assets are digesting.
- Labor and claims: Jobless claims fell for a third straight week and recently slipped below 200,000, pointing to steady conditions—supportive for spending, but possibly a headwind to rapid disinflation if wage gains persist.
- China: December PMI back into expansion (50.1) and a $9 billion consumer trade-in subsidy plan for 2026 aim to stabilize domestic demand, with potential second-order effects on commodities and global earnings exposed to China.
- Metals: Multiple pieces emphasized a record year for gold and silver in 2025, followed by late-year pullbacks. China’s potential influence on silver flows, and the unusual behavior of silver relative to oil, were highlighted as 2026 watchpoints.
- Select corporate items: Nike shares drew support from insider buying by the CEO and a director late in 2025, while Tesla’s fourth-quarter sales outlook appeared cautious relative to prior years. These illustrate disparate micro drivers into 2026 even within consumer and growth narratives.
Outlook: What to watch next
- Policy path and yields: With committee divisions in focus, markets will look for signals that either validate a pause or re-accelerate the path toward additional easing. Long-end yields near 4.1%–4.8% remain an important barometer for equity multiples and duration trades.
- Labor and wages: The intersection of falling claims and new minimum wage floors could keep service inflation sticky if demand holds. Monitor company commentary on labor costs and pricing power.
- China demand pulse: The PMI move above 50 and announced subsidies bear watching for follow-through—in industrial metals, energy demand, and global revenue exposures.
- Earnings setup: As 2026 begins, investors will parse guidance for capex, AI spend, and cost structures, particularly in tech, financials (including regionals), and consumer sectors sensitive to wage trends.
- Fiscal risk: The possibility of another government shutdown introduces near-term headline risk that could weigh on sentiment if deadlines loom without resolution.
Risks
- Policy misread: If inflation progress stalls while growth softens, markets could be wrong-footed on both rates and earnings.
- Wage-push inflation: Minimum wage hikes and tight labor signals could sustain service inflation longer than expected.
- China execution risk: PMI and subsidies may not translate into durable demand if property or broader confidence remains weak.
- Liquidity and volatility: Precious metals’ recent swings highlight the potential for abrupt moves around margin changes, policy headlines, or positioning.
- Fiscal brinkmanship: A protracted negotiation over funding could dampen risk appetite and delay investment plans.
Bottom line
The first ticks of 2026 point to a mild de-risking across equities, duration, and commodities, consistent with a macro mix of steady labor, elevated long rates, and policy uncertainty. Precious metals are retracing after a banner 2025, oil and gas proxies are softer, and the euro and major cryptocurrencies are broadly steady. Near-term, the path of long-end yields, wage dynamics, and China’s follow-through on demand support will likely set the tone for risk assets as the new year gets underway.
Overview
U.S. markets are setting a cautious tone to start 2026. The major equity ETFs last traded below their previous closes into the opening bell, with broad weakness across large caps (SPY), tech-heavy benchmarks (QQQ), industrial blue chips (DIA), and small caps (IWM). Bond proxies are similarly softer, consistent with a Treasury curve that remains elevated at the long end. Commodities, led by precious metals and energy proxies, are also down versus prior closes, while the euro trades near 1.174 against the dollar and major cryptocurrencies are little changed to slightly firmer.
The macro backdrop remains nuanced. November’s CPI and core CPI index levels are steady reference points, while model-based inflation expectations continue to show a notable gap between the near-term (1-year) and the medium/long-term (5- to 30-year) horizons. Meanwhile, recently released Federal Reserve minutes highlight a divided committee on the pace and extent of further policy moves, and incoming news on wages, claims, and fiscal risks adds complexity to the early-year setup.
Macro: Yields, inflation, and expectations
Treasury yields, as of December 30 data, show a curve with a relatively stable short end and an elevated long end. The 2-year stands at 3.45%, the 5-year at 3.68%, the 10-year at 4.14%, and the 30-year at 4.81%. This shape underscores that while policy-sensitive maturities have retraced, term premium and growth/inflation uncertainty are still embedded in the long end. Equity and duration-sensitive assets are responding accordingly to start the year.
On inflation, the latest November CPI index level is 325.031 with core CPI at 331.068 (index levels; year-over-year changes not provided). Inflation expectations modeled for December show a 1-year horizon at 3.20%, stepping down to 2.42% for 5-year, 2.34% for 10-year, and 2.44% for 30-year. The profile suggests markets and models anticipate near-term price pressures that moderate toward—though not decisively below—the mid-2% range over the medium to long term.
Policy signals were mixed into year-end. Minutes reported a 9–3 vote on the latest move, with differing views on the necessity and pace of additional rate cuts, and MarketWatch separately noted the potential for rates to remain on hold “for some time” as officials assess the impact of prior easing. Labor conditions remain a key swing factor: new claims have declined for three straight weeks and were recently below 200,000, a sign of steady labor-market conditions. At the same time, a new round of minimum wage increases in 19 states took effect today, adding to the tug-of-war between wage-driven cost pressures and the disinflation narrative. Fiscal developments also bear watching, with another potential government shutdown risk highlighted as Congress returns with a deadline looming.
Internationally, China-specific headlines contribute to the macro mosaic. December’s official manufacturing PMI moved back above 50 (to 50.1), ending an eight-month contraction streak, while authorities outlined nearly $9 billion in 2026 consumer trade-in subsidies to spur domestic demand. The near-term global growth impulse remains tentative, but these steps could support commodity demand and supply chains as the year progresses.
Equities: Soft start across styles and sizes
Major U.S. equity ETFs are positioned below prior closes heading into the first trades of 2026:
- SPY last traded at 681.84 versus a previous close of 687.01, down about 0.75%.
- QQQ last traded at 614.28 versus 619.43, down about 0.83%.
- DIA last traded at 480.61 versus 483.59, down roughly 0.62%.
- IWM last traded at 246.19 versus 248.03, down about 0.74%.
The tone reflects a combination of still-elevated long rates and a modest risk-off bias after a strong 2025 for many equity segments. Articles highlight that Wall Street begins 2026 with echoes of early-2000s questions around leadership and breadth, and separate commentary points to the potential for small-cap value to reassert itself over time. For now, the opening indication is broad-based softness rather than a distinct rotation.
Sector dynamics
Sector ETFs also point lower against their prior closes:
- Financials (XLF) last traded at 54.77 versus 55.18, down roughly 0.74%.
- Technology (XLK) last traded at 143.96 versus 145.41, down about 1.0%.
- Utilities (XLU; via the provided symbol) last traded at 42.70 versus 42.96, down around 0.62%.
- Health Care (XLV) last traded at 154.81 versus 155.68, down roughly 0.56%.
Notably, an outlook piece flagged 2026 as potentially constructive for regional banks given a steepening curve, a looser regulatory backdrop, and possible M&A, all of which would flow through to the broader Financials complex if realized. Technology begins the year digesting a strong multi-quarter run and ongoing AI investment narratives, with end-of-year deal activity among mega-cap platforms emphasizing the race for AI capability.
Fixed income: Duration under pressure as long yields hold
Bond proxies are softer, consistent with long-end yields holding above 4%:
- TLT last traded at 87.17 versus 87.86, down about 0.79%.
- IEF last traded at 96.16 versus 96.48, down roughly 0.33%.
- SHY last traded at 82.83 versus 82.85, effectively flat to slightly lower (about -0.02%).
The pattern—greater weakness at the long end—aligns with the 10-year at 4.14% and 30-year at 4.81% as of December 30. Minutes revealing a divided Fed, combined with steady claims and wage developments, may encourage investors to demand term premium until inflation progress reaccelerates or growth slows more visibly.
Commodities: Precious metals cool; energy and broad commodities lower
- Gold (GLD) last traded at 396.30 versus 398.89, down approximately 0.65%.
- Silver (SLV) last traded at 64.44 versus 68.98, down about 6.6%, reflecting ongoing volatility after a record-setting year. Several articles underscored silver’s outsized gains in 2025, late-year profit-taking, and heightened sensitivity to policy and margin dynamics. One note highlighted that the silver-to-oil relationship has shifted in unusual ways, and another flagged that China—controlling roughly 70% of key silver supply for tech, AI, and solar—was set to tighten trade gates as of January 1, a potential source of future price and supply tension.
- Oil proxy (USO) last traded at 69.15 versus 69.74, off roughly 0.85%.
- Natural gas (UNG) last traded at 12.245 versus 13.12, down about 6.7%.
- Broad commodities (DBC) last traded at 22.37 versus 22.64, down about 1.2%.
The combination of softer metals and lower energy proxies into the open contrasts with the strong backward-looking performance of precious metals in 2025. China’s modest PMI improvement and consumption subsidies could provide a floor for industrial metals demand later, but near-term commodity positioning appears cautious.
FX and crypto
- EURUSD is marked near 1.1741 based on the provided quote. No prior-day reference levels were provided, so directional context versus yesterday is not available.
- Bitcoin (BTCUSD) is relatively steady, with a mark around 87,766, a narrow intraday range between roughly 87,425 and 87,918, and modestly above the provided open level. An item noted that one listed company’s repeated share issuance to buy bitcoin coincided with stock pressure into year-end, while another company has pivoted away from holding bitcoin as a treasury asset—together suggesting that treasury-adoption narratives remain mixed even as price action holds firm early today.
- Ethereum (ETHUSD) similarly trades near its mark of about 2,975, with a tight range and slightly above its indicated open.
Company and thematic headlines
- Wages and consumption: Minimum wage hikes took effect in 19 states today, potentially supporting consumption but also adding to service-sector cost pressures. The net impact on margins and pricing bears monitoring as 2026 unfolds.
- Fed and rates: Multiple items highlighted divided Fed minutes and the possibility of a policy pause “for some time,” reinforcing the market’s focus on growth versus inflation risk. This helps explain why long-end yields remain sticky and why duration-sensitive assets are digesting.
- Labor and claims: Jobless claims fell for a third straight week and recently slipped below 200,000, pointing to steady conditions—supportive for spending, but possibly a headwind to rapid disinflation if wage gains persist.
- China: December PMI back into expansion (50.1) and a $9 billion consumer trade-in subsidy plan for 2026 aim to stabilize domestic demand, with potential second-order effects on commodities and global earnings exposed to China.
- Metals: Multiple pieces emphasized a record year for gold and silver in 2025, followed by late-year pullbacks. China’s potential influence on silver flows, and the unusual behavior of silver relative to oil, were highlighted as 2026 watchpoints.
- Select corporate items: Nike shares drew support from insider buying by the CEO and a director late in 2025, while Tesla’s fourth-quarter sales outlook appeared cautious relative to prior years. These illustrate disparate micro drivers into 2026 even within consumer and growth narratives.
Outlook: What to watch next
- Policy path and yields: With committee divisions in focus, markets will look for signals that either validate a pause or re-accelerate the path toward additional easing. Long-end yields near 4.1%–4.8% remain an important barometer for equity multiples and duration trades.
- Labor and wages: The intersection of falling claims and new minimum wage floors could keep service inflation sticky if demand holds. Monitor company commentary on labor costs and pricing power.
- China demand pulse: The PMI move above 50 and announced subsidies bear watching for follow-through—in industrial metals, energy demand, and global revenue exposures.
- Earnings setup: As 2026 begins, investors will parse guidance for capex, AI spend, and cost structures, particularly in tech, financials (including regionals), and consumer sectors sensitive to wage trends.
- Fiscal risk: The possibility of another government shutdown introduces near-term headline risk that could weigh on sentiment if deadlines loom without resolution.
Risks
- Policy misread: If inflation progress stalls while growth softens, markets could be wrong-footed on both rates and earnings.
- Wage-push inflation: Minimum wage hikes and tight labor signals could sustain service inflation longer than expected.
- China execution risk: PMI and subsidies may not translate into durable demand if property or broader confidence remains weak.
- Liquidity and volatility: Precious metals’ recent swings highlight the potential for abrupt moves around margin changes, policy headlines, or positioning.
- Fiscal brinkmanship: A protracted negotiation over funding could dampen risk appetite and delay investment plans.
Bottom line
The first ticks of 2026 point to a mild de-risking across equities, duration, and commodities, consistent with a macro mix of steady labor, elevated long rates, and policy uncertainty. Precious metals are retracing after a banner 2025, oil and gas proxies are softer, and the euro and major cryptocurrencies are broadly steady. Near-term, the path of long-end yields, wage dynamics, and China’s follow-through on demand support will likely set the tone for risk assets as the new year gets underway.