US CPI & NFP January 2026: Markets Brace as Warsh Nomination Adds a Fed Twist

Traders head into the week of 9 February facing an unusually dense macro setup. The January Nonfarm Payrolls (NFP) report, delayed by a brief government shutdown, is now scheduled for Wednesday, 11 February at 8:30 a.m. ET. Just 24 hours later, the January Consumer Price Index (CPI) will be released on Friday, 13 February, also at 8:30 a.m. ET. The close proximity of these two high-impact data points may set the stage for heightened market volatility (though only time will tell what actually lies ahead).

Adding to the complexity, on 30 January 2026, President Donald Trump nominated Kevin Warsh as the next Federal Reserve Chair. Markets initially reacted by pushing Treasury yields higher and selling gold, reflecting expectations of a more hawkish policy stance under Warsh compared with the current leadership. Pending Senate confirmation, Warsh would succeed Jerome Powell when Powell’s term ends in May. 

Let’s take a closer look at the week ahead:

TL;DR

• January NFP is due Wednesday, 11 February; January CPI follows Friday, 13 February. Both were delayed by a partial government shutdown.

• December payrolls rose by just 50,000, with unemployment at 4.4%. January ADP private payrolls came in at 22,000, well below the 45,000 consensus.

• Challenger reported 108,435 job cut announcements in January, the highest for the month since 2009.

• December CPI stood at 2.7% year-on-year (headline) and 2.6% (core).

• The ISM Manufacturing PMI jumped to 52.6 in January from 47.9, its first expansion in 12 months.

• The VIX Volatility Index closed Friday, 6 February, at 17.76, after spiking above 21 earlier in the week.

What Happened Last Week

Before diving deeper into the new week, traders and investors may want to keep tabs on last week’s market swings to better understand the current financial landscape. 

The past week delivered sharp swings. The Dow Jones Industrial Average closed Friday at 50,115.67, crossing the 50,000 mark for the first time, while the S&P 500 finished at 6,932.30, up 1.97% on the day. The rally came after steep midweek losses driven by tech selling and weak labour data.

Gold experienced two-way volatility, trading near $4,965 at Friday's close after falling sharply from its late-January record high near $5,600. The metal collapsed on the Warsh news before stabilising as softer US labour data reignited expectations for rate cuts later in 2026 . Silver also saw heavy liquidation tied to leveraged positions and increased margin requirements.

Meanwhile, the US Dollar Index ended the week at 97.543. The Reserve Bank of Australia (RBA) increased its cash rate to 3.85% as inflation rates showed a substantial increase during the second half of 2025. Governor Michele Bullock noted that private demand growth had been stronger than expected. Traders may want to keep tabs on AUD/USD among other forex pairs in case further movement, depending on the direction of US data this week, materialises.

US NFP & CPI: Two Key Reports This Week

The January Nonfarm Payrolls (NFP) release contains essential market data. The report contains annual benchmark revisions and updated seasonal adjustment factors, which could change payroll figures. Consensus forecasts point to 68,000 new jobs, up from 50,000 in December, with the unemployment rate expected to hold at 4.4%.

However, proxy indicators have been soft. ADP reported just 22,000 private jobs added in January, the weakest for the month since 2021. Challenger data showed January job cut announcements at 108,435, up 205% from December, with transportation and technology leading the losses. Layoffs in January were the highest to start a year since 2009,

Furthermore, the Friday release of January CPI data could reveal whether inflation rates continue at their current levels or if they are undergoing any changes. The December reading showed headline CPI at 2.7% year-over-year and core inflation at 2.6% year-over-year. (Source: BLS)

What to Watch Inside the Reports

The January NFP report gains its importance from the specific job-producing sectors more than the overall employment numbers. The non-cyclical healthcare and social assistance sector drove December’s gains, a defensive trend that often masks weakness elsewhere in the economy. Excluding that sector, December nonfarm payrolls rose by just 11,500.

Alongside employment, average hourly earnings will be closely scrutinised. In December, wage growth stood at 3.8% year-on-year, while KPMG’s pre-release estimate for January points to a 0.3% month-on-month increase and a moderation to around 3.6% year-on-year.

Inflation dynamics add further context. The CPI release showed that shelter expenses drove price increases during December, while medical care services experienced a 3.2% price increase, and household furnishings prices rose 4.0% compared to the previous year. Meanwhile, the Conference Board's labour differential index,which tracks the gap between consumers reporting jobs as "plentiful" versus "hard to get,” fell in January to the lowest since February 2021, according to BBH.

The Warsh Factor

Most attention may be focused on whether the data will push out or pull forward rate cuts. But the bigger question may be whether the data matters as much under a Warsh-led Fed. During his previous tenure as Fed Governor from 2006 to 2011, Warsh prioritised financial conditions and inflation expectations over backwards-looking employment data 

Warsh presented himself as a hawkish candidate at first, but now supports monetary policy relaxation in 2026 because he predicts productivity growth will boost economic growth without leading to inflation. His confirmation, however, is not yet certain. Senator Thom Tillis has indicated he will block any Fed nominees until a DOJ investigation into the Fed's building renovation is resolved.

Risk Management Around High-Impact Data

Back-to-back releases could sometimes create conditions for whipsaw price action. The VIX, which closed Friday at 17.76 after spiking above 21 mid-week, may suggest markets are pricing in elevated uncertainty.

Against this backdrop, market participants may consider approaching upcoming data releases with an added degree of caution.

Conclusion

This week's back-to-back data releases arrive at a time of shifting expectations around the Fed. While proxy labour indicators have softened, manufacturing statistics have exceeded market expectations. The combination of Wednesday's NFP and Friday CPI could provide the first comprehensive read on the US economy in 2026, and may set the tone for rate expectations through the spring.

*Past performance does not reflect future results. The above is for marketing and general informational purposes only, and are only projections and should not be taken as investment research, investment advice or a personal recommendation.