Market update report

President Trump nominates the next Federal Reserve Chairman.

Kevin Warsh was nominated as the next Chairman of the Federal Reserve (Fed). While among the top candidates, his selection took many by surprise given his preference for more restrictive monetary policy in the past. If confirmed by the Senate, Warsh faces a Fed Committee with divergent interest rate policy and strong political pressure to ease monetary policy. His term would be set to begin in May 2026.

Labor market softens.

Longer term trends in the unemployment rate and total hires appear to indicate some softening in the labor market. Nonfarm business productivity strengthened in Q2 and Q3 2025, suggesting labor demand may continue to weaken as artificial intelligence and other efficiency measures come into effect. Despite these trends, layoffs, discharges and job openings are trending sideways, albeit with some volatility.

Inflation remains above Fed target.

Inflation growth remains above the Federal Reserve’s long‑term target. While consumer spending remains a core economic driver, elevated prices for housing, services and everyday expenses are weighing on household budgets. Persistently elevated interest rates will make it difficult for the Fed to cut interest rates as well as exert upward pressure on long-dated treasury yields.

Precious metal prices surged.

Gold and silver prices surged to record highs in January, but fell commensurately following the nomination of Kevin Warsh. Prices are stabilized as of the writing of this report. Rapid price changes in precious metals typically reflect elevated economic and/or geopolitical risk. Increased demand may be coming from investors and central banks in response to surging U.S. federal deficits, loss of confidence in the U.S. dollar and/or escalating geopolitical conflicts.

Gold and silver prices

Source: Investing.com.

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