The views expressed are Ed le Feuvre's personal market observations and do not constitute investment advice, a financial promotion or a recommendation to buy or sell any security. Read the full disclaimer.

Dear Quay Financials,

Sunday morning arrives under grey skies for many across the UK. Storms have battered coastlines, transport plans have been disrupted, and routines quietly redrawn. To everyone who braved the weather regardless, boots on, umbrellas inverted, still determined to meet friends for that habitual Sunday brunch, I hope the coffee was strong, the company warm, and the sense of normality intact.

Markets this week shared something of that same spirit. Outwardly calm, even polite, but with just enough undercurrents to remind us that stability is often conditional.

Last week was about thin liquidity and a market reopening without much conviction. This week brought broader participation, a louder geopolitical signal from Venezuela, and a sharper move in gold and oil, yet the overall tape remained surprisingly composed.

Let us turn to the week.

Recap: Where We Left Off (Week 1)

Week 1 opened the year with thin liquidity and hesitant participation. Markets drifted higher, not because of renewed conviction, but because there was little to challenge the prevailing soft-landing narrative.

Our assessment was deliberately restrained. Risk appetite existed, but remained narrow. Volatility was suppressed rather than resolved. Central banks appeared content to observe rather than intervene. Prices were rising, but belief was not.

One week on, most of that judgement still holds. The surprise was breadth. Small caps and international markets joined the move more convincingly, while gold and oil began to register geopolitical tension that equities largely compartmentalised.

This Week: Calm Markets, Loud Signals, and a Weekend Trip to Venezuela; When Stability Becomes Conditional

Weekly Market Table

Weekly closes and changes are reproduced from the Week 2 market table supplied for this publication.

US & Global Equities

• US equities extended their early-year gains, with technology and growth-sensitive names again leading the move.
• The NASDAQ outperformed, while the Russell 2000's 4.6% advance was the more interesting signal because it showed participation broadening beyond the usual large-cap leadership.
• European equities followed the US higher. The STOXX Europe 600 gained 2.3% and the FTSE 100 1.7%, suggesting that the risk bid was not confined to Wall Street.
• Japan and Hong Kong also advanced, with the Nikkei supported by yen weakness and the Hang Seng showing continued stabilisation rather than acceleration.

Gold, Digital Assets and Other Assets

• Gold rose 4.2% to $4,510/oz. The move looked more like a geopolitical hedge bid than an inflation panic, particularly as bond yields barely moved.
• WTI crude gained 3.1% to $59.12/bbl as supply risk returned to the price, giving energy a different tone from the otherwise orderly risk-on week.
• Bitcoin futures slipped 1.3% to $90,570. It behaved more like a high-beta risk asset in consolidation than a defensive hedge.
• The dollar index strengthened 0.7% to 99.1 as yield support returned at the margin.

Macro & Policy

• The US 10-year Treasury finished at 4.19%, only 1 basis point higher, while the 2-year rose 2 basis points to 3.49%. The curve was steady rather than signalling a policy rethink.
• Rate cuts remained priced for later in 2026, but without urgency. Markets appeared comfortable with a policy pause.
• Central banks were notably quiet. In this environment, the absence of a policy surprise became a source of stability in itself.
• Recent data offered no catalyst strong enough to challenge the prevailing macro narrative, leaving investors willing to broaden risk rather than retreat from it.

Geopolitical Analysis

• Venezuela became the week's dominant geopolitical development after the previous weekend's direct US intervention culminated in the removal of Nicolás Maduro from power.
• US officials then signalled a willingness to revisit elements of the sanctions regime linked to energy production and exports. The market interpretation was pragmatic: optional access to Venezuelan crude mattered more than ideology at a time when spare capacity remained constrained.
• Energy reacted more visibly than equities. Oil repriced supply risk quickly, while broader markets remained orderly, reinforcing the idea that geopolitical shocks are increasingly being compartmentalised by asset class.
• The key distinction is between signalling and substance. This was not a broad reopening of sanctioned markets. It was conditional engagement designed to increase flexibility in global energy supply.

What's Pertinent This Week (Week 2)?

Breadth mattered more than the headline gain. The Russell 2000's 4.6% advance, alongside firmer European and Asian equities, suggested capital was testing a wider opportunity set. For allocation, that matters because a rally supported by more than a handful of megacaps is structurally different from one carried by narrow leadership.

Gold and oil heard the geopolitical signal that equities largely ignored. Gold's 4.2% rise and WTI's 3.1% gain showed that investors were willing to pay for hedging and supply optionality even while equity volatility stayed subdued. Cross-asset behaviour was less complacent than the headline indices implied.

Policy calm remains conditional. Treasury yields barely moved and central banks stayed quiet, allowing risk assets to advance without a fresh discount-rate shock. That comfort is useful, but it depends on incoming inflation and consumption data continuing to fit the soft-landing story.

What Will Week 3 Bring?

Tuesday: US CPI

December inflation is the clearest event capable of challenging current pricing. A benign print would leave the market's relaxed rate assumptions broadly intact. A material upside surprise would matter because investors have become comfortable with policy remaining in the background.

Other catalysts:

US retail sales will test whether the consumer is slowing without breaking. Jobless claims may remain noisy after the recent federal furlough, which reduces the signal value of individual prints. China's activity data should help distinguish stabilisation from genuine acceleration, with implications for commodities and emerging-market risk.

Strategic positioning:

The useful posture is optionality rather than prediction. Broader equity participation is constructive, but the simultaneous bid in gold and oil argues for keeping hedges and liquidity intact. With data quality still uneven, confirmation matters more than reacting to every headline.

Ed's Closing Bell

Markets rarely announce that they are changing character. They simply stop forgiving.

Over the first two weeks of the year, investors have been remarkably tolerant. Data imperfections have been overlooked. Geopolitical shocks have been compartmentalised. Policy ambiguity has been interpreted as reassurance rather than risk.

That tolerance has not disappeared, but it is no longer unconditional. Participation is broadening, leadership is rotating, and signals are getting louder even as volatility remains subdued. This is often the phase when markets feel most comfortable, not because risks have vanished, but because they have not yet demanded a price.

Final Words

The year has not found its rhythm yet, but it is starting to test its tempo. The important change this week was not direction, but texture. Risk moved beyond its familiar hiding places, while gold and oil reminded us that calm in one market can coexist with caution in another.

From Gibraltar

Calm markets are not a signal of certainty. They are a test of attention.

Further Reading

• Week 1, 2026: Thin Air, Quiet Markets, and the Stillness Before Reopening