Markets Stabilize as U.S. Treasury Yields Ease and Corporate Spreads Hit Historic Lows
January 26, 2026
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Last week, U.S. interest rates and equities ended on a more stable note than where they began. The prior week opened with rates higher following the spike in the Japanese Government Bond (JGB) curve. As the week progressed, tensions around tariffs and Greenland eased, helping to temper both volatility and the absolute levels of rates. The 10-year U.S. Treasury finished at 4.22% after nearly reaching 4.3% earlier in the week.1
Treasury rates were not the only measure falling throughout the week. The spread on the investment-grade corporate index narrowed to 71 basis points (bps) on Thursday, marking its lowest level this century and tightest since 1997.2 One trading desk described a fitting analogy comparing today’s dealer inventories of investment-grade corporate bonds to grocery store shelves ahead of a winter storm: nearly empty. The week is starting off quieter, but slightly softer as gold is now over $5,000 for the first time, natural gas prices continue to jump higher and the dollar is moving lower.3
The week ahead is scheduled to be busy, with approximately 20% of the S&P 500 Index set to report earnings.4 Those companies account for more than $20 trillion in combined market capitalization.5 The week ahead could also bring the announcement of the next Federal Reserve Chair as well as the Supreme Court ruling on tariffs. On Wednesday, the Federal Open Market Committee (FOMC) will release its rate decision, with expectations that policymakers will hold rates steady at 3.5% to 3.75%.6 Investors will also be watching Friday’s release of the December Producer Price Index (PPI), with expectations for a month-over-month increase of 0.2%.7 We will continue to monitor the potential for a partial government shutdown as early as this weekend as Congress approaches its January 30 funding deadline.
Sources:
1,2,4-7Bloomberg
3The Wall Street Journal – Stock Market Today: Gold Price Tops $5,000 for First Time; Yen Rallies; 1/26/26
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