Global Macro Insights: January 2026

Key takeaways

January overview: There was some modest positive news on growth across a number of economies, though there are still areas of concern. Most central banks left interest rates on hold in January, amid signs that the global easing cycle is nearing its end. Inflation is diverging somewhat among developed economies but remains fairly contained among a variety of emerging markets (EM). The US dollar (USD) was weaker again in January, depreciating against a range of currencies. Developed market bond yields were generally modestly higher during the month, although a relatively sharp rise was seen in Japan, while some euro area (EA) yields fell. Yields were mostly higher in emerging Asia but generally lower among other EM. US President Donald Trump nominated Kevin Warsh as the next chair of the US Federal Reserve (Fed). Geopolitics remained a source of uncertainty: US troops captured President Nicolás Maduro and his wife in Venezuela and brought him back to the United States to stand trial, the Trump administration vocalized its desire to bring Greenland under US control, and in the Middle East, protests in Iran were notable.

Outlook: Uncertainty remains a pervasive issue globally. Whereas it had seemed like some tariff-related uncertainty was lessening with the conclusion of various trade agreements, more recent events have thrown some of these into doubt. In addition to trade policy, geopolitical events have resurfaced as a source of potential instability. A number of sources of potential economic policy concern in major economies have also surfaced. Financial markets also still await the Supreme Court ruling on the legality of tariffs imposed by the president rather than Congress; the ruling may take some months yet. While uncertainty remains on a number of fronts, in general we see global growth as being quite resilient. The global monetary policy easing cycle is in its late stages and pauses or increases in rates seem the most likely outcome across a range of countries. Our core themes of improving EM fundamentals, USD weakening and global rewiring (such as geopolitically induced shifts in global supply chains) remain intact. Although data has been fairly resilient to date, risks remain from US tariff and trade policy. In addition to this, domestic political developments are of potential concern in some countries, particularly with respect to fiscal policy outcomes, while elections are also due in a number of countries this year, including a snap election called in Japan during January for February. 

Continue reading further by downloading the PDF, which highlights the Templeton Global Macro team’s market and economic overview, and outlook for the month.