Maturity risk has been in favor so far this year in the bond market. A couple of weeks may be misleading, but so far in 2026 the crowd’s appetite for longer maturities is resonating in fixed income, based on a set of ETFs through Friday’s close (Jan. 16).
Monthly Archives: January 2026
Book Bits: 17 January 2026
● The Making of a Permabear: The Perils of Long-term Investing in a Short-term World
Jeremy Grantham with Edward Chancellor
Review via The Wall Street Journal
Buy low, sell high, get rich. Jeremy Grantham’s Wall Street career exactly conforms to this charmed sequence, but with what troubles along the way. The reader, at least, will be glad for them. They constitute the breath and the life of “The Making of a Permabear,” a memoir written with the financial journalist Edward Chancellor.
Mr. Grantham, a co-founder and longtime investment strategist at the Boston-based money-management firm GMO, can be said to have dug the ruts and potholes on his own bumpy road. He is a nonconformist. Worse, in the context of today’s flyaway stock market, he is a principled, value-minded, dogmatic nonconformist. He has nailed his colors to the mast of investment value (don’t overpay for stocks and bonds) and to the idea that profit margins and equity valuations never stray far from their respective long-term averages. He lays down the rule that “capital moves toward profits: excess returns attract competition and bad returns drive capital away. Pretty soon you have mean reversion.” Who can disagree?
Are The Stars Aligning For A New Bull Run In Homebuilder Stocks?
The relatively weak performance of shares in the homebuilder industry for the past two calendar years is, on first glance, surprising. A long-running under-investment in home building has created a housing shortage at a time of a demographic-drive rise in demand. But holding an ETF that tracks shares in the homebuilding industry has only matched the return of the broad equity market over the past five years but at a cost of sharply higher volatility.
Materials And Energy Stocks Take Early Lead in 2026
The ledger of stock market’s winners and losers is highlighting a substantially different race so far in 2026, based on a review equity sectors. The year is still young and so it’s unclear if a durable change in leadership is unfolding relative to last year’s bull run. But for now, it’s obvious that sentiment has shifted in favor of shares in the materials and energy sectors, based on a set of ETFs through yesterday’s close (Jan. 14).
Market Premium For 10-Year Yield Holds Near Fair Value Estimate
The market premium for the US 10-year Treasury yield continues to trade near a fair value estimate, based on the average estimate of three models run by CapitalSpectator.com. Today’s update shows an ongoing extension of the near-neutral level for the benchmark rate in recent months, following several years of a high market premium.
Micro-caps Lead The Stock Market So Far In 2026–Can It Last?
It’s still too early to draw conclusions about how or if the new year will differ from 2025 from a US equity market perspective. But a possible early clue that a shift is underway can be gleaned from reviewing performances for US equity factors so far in 2026.
Will Markets React To The US Investigation Of Fed’s Powell?
Another week, and another new risk factor to digest. This time it’s a sharp escalation in President Donald Trump’s struggle with the Federal Reserve, which critics charge is a thinly-veiled effort to force the central bank to lower interest rates.
Book Bits: 10 January 2026
● Blood and Treasure: The Economics of Conflict from the Vikings to the Modern Era
Duncan Weldon
Review via The Economist
Of all human activities, war is the least rational. It costs a fortune. It spreads death and misery, from the killing fields of Sudan to the tunnels of Gaza. It is often started out of personal hubris or blind patriotic zeal: think of Napoleon’s invasion of Russia or Japan’s decision in 1941 to provoke a war with a superpower it could not hope to defeat. So you might think economics—a discipline associated with rational self-interest—would have little to say about it. You would be wrong, argues Duncan Weldon, a former writer for and occasional contributor to The Economist, in “Blood and Treasure”.
Research Review | 9 January 2026 | Tariffs and Trade Wars
Tariff Pass-through into Retail Prices: Measurement, Replacement, and Shrink-flation
Liang Bai (King’s College London), et al.
December 2025
To what extent do import tariffs pass-through into retail prices? Existing estimates for the U.S.-China trade war present a puzzle: pass-through into U.S. border prices was complete with seemingly no effect on retail prices. We combine barcode country-of-origin data with retail scanner data to address this apparent discrepancy in the context of consumer goods. Within barcodes, tariff pass-through into retail prices is 14%, yet pass-through into aggregated price per unit weight is 44%. This discrepancy is attributable to product replacement bias: pass-through occurs predominantly via product turn-over towards barcodes with smaller package size, even within narrow firm-product combinations. Confidence intervals overlap considerably with existing estimates of the foreign cost share of U.S. retail imports, which we validate, such that we cannot reject full tariff pass-through into retail prices.
Will The Supreme Court Rule Against Trump’s Tariffs?
The answer is pending as early as tomorrow (Friday, Jan. 9), when the High Court is expected to issue rulings, which could include a decision on the legality of President Trump’s global tariffs. Hanging in the balance: the potential for billions of dollars in tariff refunds, along with a major setback for Trump’s use of presidential authority over trade policy. Add in a hefty dose of confusion about the implications for markets and the economy and it’s clear that Supreme Court’s decision on tariffs could be a significant event that reverberates through the months and years ahead.