DENMARK: Greenland PM To Meet w/King Following Trump Jr. Visit
Greenlandic Prime Minister Múte Egede will meet with King Frederik X at 1400CET amid intense national and international political focus on the future of Greenland. The meeting was initially called off by Egede on the evening of 7 Jan citing 'calendar gymnastics' but was this morning reinstated at an earlier time. This followed the controversial visit of Donald Trump Jr. to the capital, Nuuk, on the same day.
- Speaking at a presser on 7 Jan, US President-elect Donald Trump when asked whether he would rule out using military or economic force to take control of Greenland (or indeed the Panama Canal) Trump responded "No, I can't assure you either of those two. But I can say this: we need them for economic security. We need Greenland for national security purposes."
- In response to Trump Jr.'s visit, Danish PM Mette Frederiksen, only months ago seen as a contender to be the next NATO secretary general, sought to downplay the likelihood of direct US-Danish conflict while also advocating for Greenland's right to choose its path.
- As well as sitting under the shortest aerial route between North America and Europe, Greenland has significant reserves of rare earth elements crucial in manufacturing high-tech equipment such as batteries and semiconductors. Given the prospect of an escalation in trade tensions between the US, Europe, and China in the coming months and years ensuring a stable supply chain for such REEs will be a key economic and military priority for Washington.
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EU: Top Court Cancels Presidential Race, Fresh Election Expected Around March
Romanian law enforcement authorities raided the houses of several suspects on Saturday after the Constitutional Court unanimously annulled the result of the first round of the presidential election even as thousands of voters abroad had already cast their ballots in the run-off. The apex court ordered a full restart of the electoral process amid suspicions that front-runner Calin Georgescu's campaign benefitted from foreign meddling linked to Russia, scrapping the run-off originally scheduled for December 8.
- The Constitutional Court rowed back on its earlier decision to accept first-round results after President Klaus Iohannis allowed secret services to declassify intelligence alleging that Russia helped promote Georgescu's presidential bid, helping him emerge from relative obscurity and win the first round of the race.
- The government will now set a new date for the election, with several observers noting that it will likely take place in March 2025. President Klaus Iohannis will likely remain in office until the election of his successor after the Constitutional Court allowed him to stay on even after his term expires on December 21.
- While staving off the risk of an pro-Russia candidate becoming head of state, the top court's decision raises the risk of undermining public trust in the electoral process and state institutions, which may resurface further down the road.
EGBS: Bund Futures Off Lows As Equites and Oil Fade
Bund futures have moved away from intraday lows, now +11 ticks today at 136.19. Bunds were pressured by the contained risk-positive move following China’s dovish monetary policy stance tweak earlier, but have since recovered as European equity and crude oil futures move off highs.
- The December Eurozone Sentix investor confidence survey was weaker-than-expected at -17.5 (vs -12.3 cons, -12.8 prior), but had little market impact.
- German yields are within 0.5bps of Friday’s close, while 10-year EGB spreads to Bunds are a little tighter (albeit off narrowest levels).
- Political machinations in France following last week’s no confidence vote remain a key focus for EGB markets. President Macron is set to meet with parliamentary groups this morning, with Le Parisien reporting that he hopes to name a PM tomorrow. The 10-year OAT/Bund spread is ~1bp tighter at 76bps.
- We estimate EGB net flows at negative E6.6bln this week, versus negative E29.0bln last week, with issuance starting to wrap up for the year.
- Regional focus remains on Thursday’s ECB decision, MNI’s preview will be released later this week.
EUR: Finding a broader bid
- The EUR is extending higher, printed a new high versus the USD, CNH, and the Yen, with some of the move being more a Function of the Dollar.
- Initial resistance in the EURUSD is above the figure, up to 1.0630 High Dec 06, but there's also 1.04bn worth of Option expiry for today at 1.0600, ahead of that Tech level.
