Weekly Macro Brief Ending January 5, 2026
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The biggest macro risk for 2026 is policy — especially tariffs and the bond market — not the usual economic data: JPM-AM expects the Supreme Court to overturn “reciprocal tariffs” around mid-2026, lowering the effective tariff rate on goods from ~11% to ~7.5%. That would support growth and lower inflation later in the year, but it would also worsen the fiscal outlook. Yardeni separately warns this ruling could hit as early as January and shock markets.[JPM-AM][EY]
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Bond yields are the main channel through which things can break: BlackRock says rising government debt and heavy issuance are pushing up term premium, making long-dated U.S. Treasuries less reliable as a hedge. Yardeni agrees and warns that a mix of large deficits and “too-easy” monetary optics could trigger a fast jump in 10-year yields, similar to 2023. [BLK][EY]
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The economy looks resilient, but the data are noisy and partly misleading: JPM-AM highlights three distortions: consumer confidence is extremely weak even though the economy is holding up; inflation and labor data are distorted or missing; and major 2026 policy decisions (tariffs, courts, elections) could quickly change the outlook. Markets are priced for a smooth path despite this uncertainty. [JPM-AM]
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AI remains the main growth engine — but valuations leave little room for mistakes: BlackRock estimates AI-related investment drove roughly half of U.S. growth in 2025, with business investment contributing nearly three times its pre-pandemic average. This supports staying risk-on. JPM-AM agrees earnings can stay solid due to productivity gains, but warns equity valuations are already high. [BLK][JPM-AM]
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