China’s Purchasing Managers’ Index (PMI) returned to contraction territory in January 2026. The manufacturing index fell to 49.3 and the services index declined to 49.4, indicating simultaneous weakness in both domestic and external demand. This decline has intensified doubts about the effectiveness of the government’s recent support measures and shows that China’s economy continues to face persistent challenges in household demand and the property sector.

Gold and silver fell by 7 percent and 11 percent respectively on the first trading day of the week, and the decline is still ongoing. The price drop began after the unveiling of the new Federal Reserve chair. Mr. Kevin Warsh, who is often associated with hawkish monetary policy views, surprised markets. Morgan Stanley strategists also argue that despite policies aimed at weakening the dollar to support industrial competitiveness, the recent pace of dollar movement has likely been undesirable for the government.

The Reserve Bank of Australia is likely to approve an interest rate hike to 3.85 percent this week, moving against the global trend. This shift in stance comes in response to stubborn inflation, an unexpected decline in the unemployment rate, and rising housing prices. This would be the first rate increase since November 2023. Stephen Miller, an investment strategist at GSFM, said, “Inflation is a clear risk, and addressing this risk now through an interest rate increase may be the most appropriate response. Failing to do so could require more aggressive use of interest rate tools in the future.” The final decision will be announced on Tuesday.

Kevin Hass, an economic adviser to Trump, believes that the Federal Reserve should focus as much as possible on reducing the size of its balance sheet. In this context, he supported the selection of Kevin Warsh and said that Trump now believes the economy has experienced a positive supply shock. Reducing balance sheet assets could lead to consequences such as higher long term interest rates and reduced liquidity.