Scouting the Tape - Jan 20, 2026

I’m trying something new here with a short weekly brief that is a culmination of my weekly markets review, summarized down into a few key takeaways or areas I’m watching. The goal is to deliver unique insights and ideas that help spark readers’ own creativity or just add value to your process and portfolio. The cadence and length may vary, depending on what is speaking to me. I am seeking quality over quantity.

Let’s dig in.

It seems likely to me that front end rates are topping out here locally. This has implications across asset classes, most specifically for FX and commodities.

1. Previous instances of falling short-term rates have coincided with strong forward gold and metals returns. The gold run is showing no signs of stopping - let’s see if oil and energy joins in as well.

2. Market does not currently believe Trump’s new Fed chair will get big cuts through as there’s still a ~44% chance of 1 or fewer cuts before midterms. This is too low in my opinion - providing further fuel to this notion.

3. Equity leadership has already noticeably began moving away from US, big tech and towards gold, commodities and rest of world - corroborating a weaker dollar picture. This has all started happening pre-Greenland noise.

Trump continues to be the human steepener. He is like an elephant on a seesaw sitting on the front end of the curve and instigating the long end with his every move and tweet. I believe this trend goes into overdrive before it slows down.

1. Fed policy of $40B/month RMP + 2 or more rate cuts keeps a lid on the front end while supporting growth (and the long end)

2. Other Fed policy prong of duration tightening to reduce duration of balance sheet portfolio adds upward pressure to long end yields

3. Bessent’s weekend interview with Larry Kudlow confirmed they 1) are looking for a Fed chair who will be a Greenspan-like supporter of productivity, aka cut into a hot economy and 2) will continue to use all means necessary to make sure Powell doesn’t stay on the board after his Chair tenor ends.

4. This policy mix is in many ways opposite of that which has existed since the October 2022 bear market bottom where policymakers supported the long end at the expense of an otherwise abnormally high front end. This effect flows into asset winners and losers in almost an equally opposite effect (e.g. long small caps and cyclicals instead of big tech).

Here’s a thought on crypto. ETHBTC looks horrible to me and that jives with my view that there is a new policy in town of letting the long end find fair value while keeping the front end low to help main street. This is bad for long duration assets of all kinds.

1. -10% in the ETHBTC pair seems reasonable to me. Very weak momentum.

   

2. As does a revisit to ETH’s multi-year range low in the low $2,000s. Not a good look on the weekly.

   

For a parting thought - the market general needs some work.

Probably a good time to resurface this meme.

Hope everyone has a great holiday-shortened week.