This Week’s Market Watch (February 1, 2026)

Observation Period: 2026/01/25 (Sun) – 2026/01/31 (Sat)

【Overview】
This week felt like a “rates are broadly range-bound, but the market’s interpretation can swing on a single headline” environment. Rather than monetary policy itself, policy-operational uncertainty amplified moves in FX, yields, and risk assets—highlighting fragile sentiment. Earnings from Microsoft and Meta reaffirmed continued AI investment, yet markets became more selective given the scale of spending, so “good news” did not translate into uniform price action. Credit indicators did not signal an imminent break, but a quiet widening bias persisted, while volatility/FX reactions looked faster—tilting the week toward “Caution” on both AI expectations and liquidity.

【Variable Check (①–⑥)】

• ① Capital Cost (= Rates + Liquidity):

  • Long-term yields: □ Down ■ Flat □ Up

  • Liquidity: □ Improving ■ Flat □ Worsening

  • Comment: U.S. 10-year yields largely stayed within a range, and the main story was “interpretation drift” (e.g., mild steepening pressure: front end softer, long end stickier). Liquidity has not seized up, but headline-driven moves can become abrupt.

• ② Inflation Stickiness:

  • Data impression: □ Cooling □ Flat ■ Re-igniting

  • Rate-cut expectations: ■ Strengthening □ Unchanged □ Fading

  • Comment: Inflation is no longer perceived as a one-way cooling story; stickiness via services and cost pass-through resurfaced. At the same time, markets can still lean into rate-cut pricing—creating a “twist” where inflation concern and easing expectations don’t move neatly in the same direction, which tends to raise volatility.

• ③ Fragmentation / Supply Constraints (Resources):

  • Sharp moves: □ None ■ Watch □ Evident

  • Sanctions / export controls: □ Calm ■ Sporadic □ Cascading

  • Comment: Resource-price pressure remains a live channel for re-igniting inflation expectations. Sanctions/export-control headlines are sporadic rather than cascading, but the risk is widening gaps across countries/sectors rather than a single uniform shock.

• ④ AI Expectations (Growth & Valuation):

  • Earnings/investment continuity: ■ Maintained □ Shaky □ Retreating

  • Market reaction: □ Straightforward ■ Dull □ Perverse

  • Comment: AI spending (data centers, infrastructure, talent) remains intact—if anything, the scale appears to be accelerating—yet markets increasingly demand clarity on “when and how” payback arrives. Even under the same “AI-positive” narrative, dispersion rose across mega-tech, and semiconductors/GPU supply chains and tech-focused ETFs are more prone to “not rallying on good news.”

• ⑤ Geopolitics:

  • Sea lanes / energy / critical minerals: □ Calm ■ Watch □ Tense

  • Signs of sudden events: □ None ■ Rumors □ Materializing

  • Comment: The baseline remains “Watch,” with potential spillovers into inflation expectations, insurance premia, and transport costs. We don’t forecast events; we map transmission (resource up → inflation expectations up → yields up → risk assets reprice).

• ⑥ Stress (Speed):

  • Credit spreads: □ Tightening □ Flat ■ Widening

  • Volatility / FX swings: □ Calm ■ Watch □ Triggered

  • Comment: Credit warrants attention as a “quiet deterioration” signal. Volatility is edging higher within its range, and FX remains headline-sensitive (the yen can still move sharply), so the “speed” dimension stays in “Watch.”

【Observation Categories】
＜1. Macro Financial Conditions＞
・U.S. 10Y yield / real yield (TIPS)
・Balance-sheet trends of major central banks (e.g., the European Central Bank and the Bank of Japan)
・Policy rates and the yield curve (curve shape)
・High-yield spreads (HY OAS)
・TED spread / liquidity indicators
・Signs of policy pivot from major central banks

【Rating】Caution
【Summary】
Policy stayed broadly “on hold,” and yields themselves did not break out dramatically, but headline sensitivity made market interpretation unstable. The curve carried mild steepening pressure: the front end could soften while the long end stayed sticky on inflation and term-premium/auction-demand narratives. Real yields remain elevated enough to act as a valuation headwind. This was less about an outright liquidity event and more about fast repricing risk from shifting interpretations.

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＜2. Flows & Credit Dynamics＞
・Margin debt trends
・Money-market fund balances / ETF flows (AI & tech focus)
・HY and corporate issuance / credit spreads
・Credit-card debt / delinquency trends
・Hedge-fund leverage trends

【Rating】Caution
【Summary】
Credit is not “breaking,” but the bias has shifted to “quiet widening,” which is easy to overlook precisely because levels can still look contained. If issuance remains heavy (especially in investment grade), spreads may struggle to compress even when risk sentiment stabilizes. On the equity side, flows can still concentrate in large-cap growth, but they can also stall quickly if the AI payback narrative gets questioned. Leverage data are often lagged; for now, treat credit widening as an early-warning lens rather than forcing a definitive leverage conclusion.

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＜3. Earnings & Fundamentals＞
・S&P 500 EPS growth / guidance-revision trends
・AI-sector earnings: NVIDIA, TSMC, ASML
・Hyperscaler CapEx / investment plans
・Gaps between revenue growth and stock prices
・Margin trends (operating / net)

【Rating】Caution
【Summary】
Mega-tech results looked fundamentally resilient, while massive AI-related CapEx again moved to the center of the narrative. Markets are less focused on “whether to do AI” and more on “how quickly and how visibly returns appear,” driving wider dispersion across names. This does not necessarily mean the AI growth story is broken; it suggests the hurdle rate for valuation support has risen. Semiconductor/GPU-linked earnings momentum often becomes clearer over the following weeks, so the “quality of guidance” (real demand signal vs. spend-only story) remains the key.

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＜4. Sector Valuations＞
・Semiconductor index (SOX) vs. S&P 500 relative performance
・Overheating signals in PER/PBR/PSR (especially AI-heavy names)
・Valuation gaps vs. real-demand sectors (energy, utilities, materials)
・Flows into tech-linked ETFs (QQQ, SMH, SOXX)

【Rating】Alert
【Summary】
High-valuation areas are transitioning from “good news lifts everything” to a phase where markets demand accountability (CapEx → profits) before rewarding additional multiple expansion. Reaction dispersion around hyperscaler earnings suggests winners and losers can emerge even within the same AI theme, making index-level upside harder to sustain. Real-demand sectors can act as relative ballast, but concentrated narratives can unwind quickly when interpretation flips. This is not a call that “the bubble has burst,” but it is an “Alert” setup where chasing highs increasingly depends on the perceived speed of payback.

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＜5. Real Economy & Supply/Demand Data＞
・Semiconductor shipments / inventory ratio
・GPU / HBM pricing trends
・Global manufacturing PMIs / ISM
・China/Korea export statistics (electronics/semiconductors)
・Power supply/demand and logistics bottlenecks

【Rating】Caution
【Summary】
The week’s emphasis was less “sudden growth swing” and more inflation stickiness plus policy uncertainty. When inflation re-enters the conversation, it tends to narrow perceived easing room and pressure equity valuations. Semiconductor supply/demand is hard to judge on a single week; several items are “awaiting the latest release,” so it’s safer to defer hard conclusions and use next week’s ISM, labor data, and key earnings to triangulate. Power and data-center constraints remain a practical bottleneck that can feed directly into cost structures and margins.

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＜6. Information & Sentiment＞
・VIX
・Put/Call ratio
・Bull–bear indicators
・Fear & Greed index
・American Association of Individual Investors sentiment survey
・Google Trends (“AI,” “NVIDIA,” “generative AI”)
・IPO counts / first-day performance
・Analyst buy-rating share

【Rating】Caution
【Summary】
VIX is not “calm and pinned”; it is edging toward the upper side of its recent range, making headline spikes more likely. Fear is not permanently “on,” but discontinuous themes (politics, tariffs, nominations) can trigger reflexive shifts, and single-name moves can dominate index moves. Even traditional “safe” assets can move sharply, reminding us that risk-off is not always one-directional. Overall, sentiment reads as “hyper-reactive” rather than “structurally bearish.”

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＜7. Meta Layer (Narrative & Expectation Structure)＞
・Policy/regulatory tone for AI/tech
・Theme rotation (e.g., “GenAI → power → edge AI”)
・Tone shifts in comments by executives and investors

【Rating】Caution
【Summary】
The narrative shifted from “AI is amazing” toward “AI is expensive and payback must be proven.” This is less a collapse of expectations and more an evolution into a “capital efficiency audit” phase. Macro uncertainty (including policy credibility and geopolitics) can swing discount rates and make AI valuation more fragile to interpretation changes. A key falsifier: if upcoming earnings make “AI spend → revenue/profit visibility” more concrete, the same spending could again be rewarded more straightforwardly.

【Overall Assessment】
🟡 Caution

• AI bubble status: Investment continuity remains strong, but markets are becoming less forgiving where payback is unclear; the setup shows signs of “maturity” and higher hurdles, not a definitive collapse.

• Global market stress: Credit is quietly biased wider and volatility/FX are more headline-sensitive; not a funding crisis, but the “speed” of repricing risk has increased.

【This Week’s Scenario Positioning】
(Replace □ with ■; multiple selections allowed)
■ Scenario A (Base)
□ Scenario B (Upside-leaning)
■ Scenario C (Downside-leaning)

• Rationale: Inflation stickiness resurfaced in market psychology, while policy-operational uncertainty made the pricing of cuts unstable—leaving rates, FX, and equities prone to interpretation swings. Credit has not “broken,” but the widening bias and higher reaction speed justify keeping the base case while layering in downside vigilance.

【Action Guidelines (Simple Rules)】

• Policy: No major overhaul; avoid taking excessive risk (base = A, but stay prepared for a C-type acceleration).

• Notes (staging, caps, liquidity, rate-stability checks):

  • For high-valuation AI/tech, don’t treat dips as automatic buys; stage entries and respect time diversification.

  • If credit widening persists, correct any risk-asset overweight and prioritize liquidity/optionality.

  • For bonds/REITs, limit additions to moments when rate volatility is clearly stabilizing (avoid chasing during sharp moves).

【Key Points This Week】

• AI bubble: How strongly markets are starting to demand “payback visibility” from expanding hyperscaler CapEx (price reaction quality, not just headlines).

• Credit: Whether “low but widening” HY spreads remain a drift or become a directional move (continued widening strengthens Scenario C).

• Liquidity: More frequent headline-driven jumps in FX/yields—does “liquidity feel” worsen enough to sap risk appetite?

• Sentiment: Whether VIX “creeps higher” becomes persistent (a regime shift would raise caution/alert).

• AI supply chain: Whether upcoming key results reinforce real demand signals for GPUs/data centers rather than just confirming spending.

【Key Data Next Week】

• U.S. ISM (manufacturing/services): Strong → hawkish / risk-off; weak → dovish / short-term risk-on (unless it turns into growth scare).

• U.S. jobs data (NFP), ADP, initial claims: Strong → cuts priced out / yields up; weak → cuts priced in (but equities may still discriminate if growth fear rises).

• JOLTS: Sticky openings → wage-pressure narrative → hawkish; cooling → dovish.

• Major central bank events (ECB/BOE/RBA, etc.): Even “no change” can move markets if the statement tone shifts (forward language matters).

• Major earnings (e.g., AMD / Alphabet / Amazon): Clear AI monetization path → supports risk-on; “CapEx first” emphasis → valuation pressure.

【Tags】
Economic News / Market Watch / AI Bubble / Investment Analysis / Macro Trends

【Sources Consulted (outlet names only)】

• Reuters

• Associated Press

• Federal Reserve Board

• Federal Reserve Bank of St. Louis (FRED)

• Bank of Japan

• Kiplinger

• Barron's

• Financial Times

【Notes】
This article was created with the assistance of ChatGPT (GPT-5.2 Thinking). The content is based on publicly available information considered reliable; however, due to reporting lags and differences in interpretation, some statements may be incomplete or inaccurate. Investment decisions should be made at the reader’s own discretion and responsibility.