Celestino Brunetti
Italy
1mo
Dear copiers, investors, and followers, I would like to recap some of the key events that impacted our portfolio throughout January. After a series of cuts delivered in autumn 2025, the Federal Reserve, at its January 28 meeting, kept interest rates unchanged in the 3.50%–3.75% range. The decision was largely expected: markets had already priced in a pause and, over the near term, the base case remains a broadly steady monetary policy. Despite political pressure for further easing, Jerome Powell maintained a cautious stance. The key reason is inflation, which is still described as “somewhat elevated”: although easing, it continues to be influenced by goods-price dynamics, including the impact of recent trade tariffs. In short, the Fed does not want to rush additional cuts without more convincing evidence of sustained disinflation and labor-market resilience. The biggest driver for FX this month, however, came from Japan. Even as the Bank of Japan has hinted at potential future hikes, the yen experienced extreme volatility, nearing the 160 psychological area versus the US dollar—a critical level watched by many desks. Around January 26, a sudden rebound toward 154–155 fueled rumors of direct intervention by the Ministry of Finance to support the currency, typically via USD selling. Talk of a “rate check” also circulated; this is an operational step often interpreted as a precursor to more direct (or even coordinated) stabilization measures. At the same time, the announcement of a snap election on February 8 has added political and fiscal uncertainty, increasing the yen’s sensitivity to speculative flows and headline risk. In the next few days, I'll share my outlook about the upcoming events considering the announcement of the new Fed Chair, Kevin Warsh. Ad maiora
1 reply
1 reply
null
.