highlights

Meet the new boss…

Same as the old boss

January 30, 2026

HT @paulomacro lol

Current Views

Exiting the last bit of the AUD today and…

Flat

Fed

After months and months of back and forth, and sturm and drang over loss of Fed Independence and a radical reshaping of the Fed, the president has picked the most vanilla, elite, insider Wall Street, Harvard lawyer candidate to run the Fed. A Morgan Stanley alum who has been at the Fed for 20 years, Kevin Warsh was appointed by George W. Bush and is about as steady as she goes as you could possibly get. The Fed will continue to operate much like it has always operated.

This nomination cements my view that we get a consolidation/correction phase here for the USD and precious metals as the start of February is not a great seasonal window for precious, and pension fund USD selling is likely to cool once month end is over. Pension funds are less likely to be active USD sellers next week as they have just spent a busy week putting on USD hedges and early in the month is not their busy time.

I agree with the market reaction: The nomination of Warsh is a mild USD positive and precious metals negative as it takes a more rogue candidate like Hassett out of the picture, but in the end there was nothing much priced in for the Fed before and there will be nothing much priced in for the Fed now. The US economy continues to chug along fine and after six rate cuts, Fed Funds are in their happy place. You can see that expectations for the September 2026 implied rate have really not moved since Liberation Day as the market expects Fed Funds to land somewhere around 3.0%/3.25% at that meeting.

I think Greg Marks makes a good case for why Warsh is bullish XLF:

https://gregoryalexandermarks.substack.com/p/wsj-warsh-signaling

Calendar

Next week’s calendar is decent with some central bank meetings and jobs reports. Kiwi jobs are in focus with Anna Breman’s first RBNZ meeting coming up and the NZ economy showing some signs that prior rate cuts are flowing through.