Εβδομαδιαία Επισκόπηση: Διεθνής Οικονομία & Αγορές, 20/01/26
Recent geopolitical flare ups, including Greenland, dent risk appetite
Global equity markets entered the current week in the red, as policy uncertainty is again on the rise, with heightened tensions related to Iran, while the US is stepping up the push towards taking control of Greenland. Note that Greenland forms part, with extended autonomy, of the Danish Kingdom, a fellow member of the North Atlantic Treaty Organization.
The S&P500 decreased by -0.4% wow, while appearing poised for losses at the start of the current week according to futures pricing. The EuroStoxx was up by +0.5% wow in the past week, albeit shedding c. -1.5% on Monday and entering Tuesday with further c.-1% losses.
Precious metals posted further strong gains. The price of gold increased by +1.9% wow and of silver by +12.5% wow, with further sharp gains to $4671/ounce and $95 per troy ounce, respectively, on Monday, to fresh record highs.
Seven European countries, i.e. Germany, France, the United Kingdom, Norway, The Netherlands, Sweden and Finland issued a joint statement pledging solidarity with Denmark and Greenland. Soon after, US President announced extra tariffs of +10% on imports of goods from the aforementioned countries to take effect on February 1st, due to increase to +25% as of June 1st, bearing a deal for the US to purchase Greenland.
The countries affected are contemplating retaliatory trade measures. At the European Union (EU) level, inter alia, a tariff hike package affecting c.€93 bn worth of imports of goods from the US or c.¼ of total EU imports from the US, is reportedly being considered. Note also that the tentative trade deal framework agreed upon between the European Union and the US back in July 2025, is still pending ratification, with the latest developments casting doubts.
Meanwhile, US President Trump expressed his goal for military spending to increase sharply in 2027, to $1.5 trillion from $0.9 tn budgeted for 2026 (3% of GDP). Under these conditions, defense stocks have overperformed the market sharply in the past trading days.
Comments on Friday from the US President that he intends to keep Mr. Hassett as director of the US National Economic Council, likely contributed to US Treasury bond yields rising, by +7 bps in the 10-year tenor to 4.23%, a c.4-month high. Recall that Mr. Hassett is a proponent of looser monetary policy and was formerly considered the favorite to replace Mr. Powell as Chair of the Federal Reserve after the latter’s term ends in May 2026. Concerns over the Federal Reserve’s independence remain.
In Japan, snap Parliamentary elections are set to take place on February 8th, as Prime Minister Takaichi, a proponent of fiscal expansion, aims at a fresh public mandate. The Cabinet had recently approved a record ¥122.3 trillion ($768 billion) budget for the fiscal year 2026 (starts on April 2026), representing c. 18% of GDP and a +6.2% increase versus the respective one for fiscal year 2025.
The prospect of further expansionary fiscal policy has led long-term Japanese government bond yields to another sharp rise, at fresh multi-year highs. In the event, the 10-year yield was hovering at 2.34% on Tuesday versus 2.09% on January 9th. Its 30-year peer was hovering at 3.85% versus 3.41% respectively, a record (i.e. since 1999) high, with the curve extremely steep.
Global equity markets entered the current week in the red, as policy uncertainty is again on the rise, with heightened tensions related to Iran, while the US is stepping up the push towards taking control of Greenland. Note that Greenland forms part, with extended autonomy, of the Danish Kingdom, a fellow member of the North Atlantic Treaty Organization.
The S&P500 decreased by -0.4% wow, while appearing poised for losses at the start of the current week according to futures pricing. The EuroStoxx was up by +0.5% wow in the past week, albeit shedding c. -1.5% on Monday and entering Tuesday with further c.-1% losses.
Precious metals posted further strong gains. The price of gold increased by +1.9% wow and of silver by +12.5% wow, with further sharp gains to $4671/ounce and $95 per troy ounce, respectively, on Monday, to fresh record highs.
Seven European countries, i.e. Germany, France, the United Kingdom, Norway, The Netherlands, Sweden and Finland issued a joint statement pledging solidarity with Denmark and Greenland. Soon after, US President announced extra tariffs of +10% on imports of goods from the aforementioned countries to take effect on February 1st, due to increase to +25% as of June 1st, bearing a deal for the US to purchase Greenland.
The countries affected are contemplating retaliatory trade measures. At the European Union (EU) level, inter alia, a tariff hike package affecting c.€93 bn worth of imports of goods from the US or c.¼ of total EU imports from the US, is reportedly being considered. Note also that the tentative trade deal framework agreed upon between the European Union and the US back in July 2025, is still pending ratification, with the latest developments casting doubts.
Meanwhile, US President Trump expressed his goal for military spending to increase sharply in 2027, to $1.5 trillion from $0.9 tn budgeted for 2026 (3% of GDP). Under these conditions, defense stocks have overperformed the market sharply in the past trading days.
Comments on Friday from the US President that he intends to keep Mr. Hassett as director of the US National Economic Council, likely contributed to US Treasury bond yields rising, by +7 bps in the 10-year tenor to 4.23%, a c.4-month high. Recall that Mr. Hassett is a proponent of looser monetary policy and was formerly considered the favorite to replace Mr. Powell as Chair of the Federal Reserve after the latter’s term ends in May 2026. Concerns over the Federal Reserve’s independence remain.
In Japan, snap Parliamentary elections are set to take place on February 8th, as Prime Minister Takaichi, a proponent of fiscal expansion, aims at a fresh public mandate. The Cabinet had recently approved a record ¥122.3 trillion ($768 billion) budget for the fiscal year 2026 (starts on April 2026), representing c. 18% of GDP and a +6.2% increase versus the respective one for fiscal year 2025.
The prospect of further expansionary fiscal policy has led long-term Japanese government bond yields to another sharp rise, at fresh multi-year highs. In the event, the 10-year yield was hovering at 2.34% on Tuesday versus 2.09% on January 9th. Its 30-year peer was hovering at 3.85% versus 3.41% respectively, a record (i.e. since 1999) high, with the curve extremely steep.