The Chicago PMI index, a key indicator of manufacturing health in the US, stood at 54 in January, surpassing expectations of 44. This unexpected reading suggests a stronger expansion in the manufacturing sector.<\/p>\n
In related financial market movements, the Dow Jones Industrial Average has seen a decline, linked to uncertainty raised by the nomination of a new Federal Reserve chair. Gold experienced a sharp drop but managed to recover above the $5,000 mark due to a firmer US Dollar and profit-taking across commodities. Additionally, major cryptocurrencies like Bitcoin, Ethereum, and Ripple have seen considerable weekly losses, dragged down by increased selling pressure.<\/p>\n
Microsoft’s stock saw a massive sell-off, carving out $400 billion from its market valuation, marking it as the second-largest drop on record. Stellar cryptocurrency also hit a three-month low, driven by bearish market sentiment and negative derivative market trends.<\/p>\n
On a broader scale, forex brokerages are preparing for 2026, focusing on offering various services like low spreads, high leverage, and accommodating specific trading styles. However, potential investors are advised to conduct thorough research and assess risks, ensuring that they do not take financial advice solely based on forward-looking statements or shared opinions.<\/p>\n
The unexpected strength in the Chicago PMI, hitting 54 against a 44 forecast, confirms the economy is running hotter than we thought. This reading, the largest positive surprise we’ve seen since the post-pandemic recovery years, gives a clear green light for a more aggressive Federal Reserve. The nomination of Kevin Warsh, a known hawk, as the next Fed chair solidifies this view, meaning we must prepare for higher interest rates.<\/p>\n
We should anticipate higher rates for longer, a stark reversal from the sentiment in late 2025. Fed funds futures are now pricing in an almost 80% chance of a 50-basis-point hike in March, a dramatic shift from just a week ago. This suggests positioning for a flatter yield curve, using options on 2-year and 10-year Treasury futures to capitalize on rising short-term rates.<\/p>\n
The US dollar\u2019s surge is the most direct consequence, and we expect this trend to continue through the coming weeks. Options strategies favoring further downside in EUR\/USD, such as buying puts with a 1.1800 strike, offer a clear way to play this momentum. The dollar’s strength is broad-based, punishing currencies that we previously favored in the last quarter of 2025.<\/p>\n
In equity markets, the Microsoft sell-off shows that high-duration growth stocks are extremely vulnerable to rising rates. The VIX has spiked above 25, a level not sustained since the regional banking stress we observed in early 2025. This environment calls for buying protection through index put options or establishing collar strategies on existing long positions.<\/p>\n
The violent collapse in gold and silver is a direct reaction to surging real yields, which increases the opportunity cost of holding non-yielding metals. This washout is similar to historic capitulation events, suggesting that any short-term bounces will likely be met with further selling. We should see rallies as opportunities to initiate new short positions or sell out-of-the-money call spreads.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Chicago PMI beats expectations; Dow drops on Fed chair news; Microsoft sees historic $400B valuation loss.<\/p>\n","protected":false},"author":62,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40567","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=40567"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40567\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=40567"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=40567"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=40567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}