Barclays: Trump’s 2026 challenge is America First without market fallout

Investing.com -- Barclays said in a note to clients that President Trump has become a central driver of market sentiment only a week into 2026, as investors weigh his effort to balance “America First policies and affordability measures aimed at Main Street, without undermining Wall Street performance.”

Analyst Emmanuel Cau wrote that last year equities “climbed the wall of worry” despite geopolitical tensions, with AI strength offsetting volatility.

But approval ratings have been “steadily declining amid tariff headwinds and elevated interest rates,” according to Barclays.

Cau said Trump appears focused on easing consumer pressure ahead of midterm elections, citing efforts to postpone tariffs on items such as “furniture, kitchen cabinets etc.”

Barclays added that recent U.S. military actions in Venezuela could help keep oil prices contained, offering households additional relief.

Still, the bank warned that more aggressive moves could unsettle investors. Barclays cited Trump’s rhetoric around “annexing Greenland,” as well as proposals to ban defense companies from capital returns and to block “large institutional investors from buying more single-family homes.” Such steps “could test market nerves,” the note said.

There are also legal and macro hurdles. Barclays flagged the Supreme Court’s expected ruling on IEEPA tariffs, noting that while Trump could reinstate tariffs “through other legal means,” the decision may “revive trade uncertainty.”

Upcoming payrolls and CPI data will be the first clean readings post-shutdown, and Cau cautioned that the “not too hot not too cool economy is a fragile balance.”

Historically, midterm years “have not been favourable for equities,” Barclays said, underscoring the challenge Trump faces in trying to boost affordability without denting market performance.

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