2026 got off to a positive start with the S&P 500 up nearly 2% after six days of trading. The rally had a cyclical tilt with equal-weight version of the index outperforming. The broadening theme is also apparent down the capitalization scale with small/mid cap indices up ~5% YTD. Global markets largely shrugged off the increasing geopolitical risks though this added to volatility in commodity markets sending oil and precious metals higher.

Iran has quickly moved to the forefront of geopolitical risks while we await another potential round of Russian sanction and meetings in Greenland. The weekend was reasonably ahead of the start of earnings season until Sunday evening when it was disclosed that the DOJ had opened an investigation into Fed Chair Powell over testimony given before Congress about the central bank’s building renovation project. Chair Powell released a response saying that the investigation was the pretext to the pressure from the White House to lower rates and vowed to defend the independence of the central bank. The news sent US futures lower overnight, put some upward pressure on longer dated yields and added to the surge in precious metals. The market response has been US centric with S&P futures down ~0.5%, but global markets didn’t react overnight.