Our Weekly Cross Asset Views - Risks vs risk perception

After a bull 1st week, markets have been more sideways for the 2nd (full) week of 2026 with a flattish MSCI World $ (+0.2% wtd at Thursday’s close), range bound trading on rates with geographical dispersion, stable volatilities and US dollar. Commodity were again the exception with surging precious metal prices (Silver +14% wtd, gold +2%) and a volatile crude oil price (Brent +2% wtd); they are so far the only ones to react to the very tumultuous geopolitical scene of early 2026. The US December CPI was the key macro release of the week but was not a game changer (details show a mix bag despite lower-than-expected core), while earnings season starts -no surprise! - very well (92% of positive earnings surprise for the 27 first reports within the SPX). AI remains key, with a short-live US Tech sell-off Wednesday (leading to a flight to quality) followed by a rebound driven by record TSMC results.The start of start seems like another episode of disconnection between risks and risk perception. Despite growing tensions (geopolitics, political uncertainty, US Fed independence), vols and spreads remain low. Our Risk Perception Index (NXSRRPI Index) touched 9% last week (lowest since May 2024), our index is barely up this week to 15%. Equity option metrics also show benign risk perception at this stage with low short-term skews, steep vol curves and low implied correlations. We think that this can last as long as macro / micro both remain supportive (we believe it will) and of course if (geo)political threats remain threats (US intervention in Iran is probably the closest call in the short run today).