Geopolitics continued to dominate headlines and weigh on investor sentiment this week as the US Administration pushed to assert greater control over Greenland. As a result, the World Economic Forum in Davos, Switzerland, where political leaders and captains of industry gather every year, was marked by a confrontational tone although the heated rhetoric eased after President Trump arrived and announced a framework for a deal on Greenland had been reached and walked back tariff threats on allies.

On the economic data front, third quarter GDP was revised slightly higher from an annualized rate of 4.3% to 4.4%. The personal consumption component of GDP remained strong at 3.5% on an annualized basis, highlighting the ongoing strength of the US consumer.

Turning to inflation, the personal consumption expenditure (PCE) index, the Federal Reserve’s preferred gauge, rose by 0.2% month-on-month and 2.7% year-on-year in November (data releases are still behind schedule due to the government shutdown). On a core basis, stripping out the more volatile components of food and energy, PCE rose 0.2% month on month and 2.8% year on year. Although inflation remains above the Fed’s 2% target, monthly readings continue to indicate that it is slowly declining.

The Fed will meet next Tuesday and Wednesday and after reducing interest rates by 0.25% at its last three meetings, is expected to hold steady at a target range of 3.50-3.75% and await more data to signal whether further easing is required. The Chandler team expects the economic backdrop to remain robust, supported by tax reductions in last year’s One Big Beautiful Bill, and just one more 0.25% reduction in the federal funds rate in the first half of 2026.

Yields rose marginally on the week with the 2-year Treasury at 3.61% and 10-year at 4.25% at the time of writing. The S&P500 was marginally lower at 6,913. Amidst all the geopolitical tensions, gold continued its climb to new highs of $4,946/oz.