EXECUTIVE SUMMARY
- TRUMP WIDENS TARIFF THREATS TO CHINA, EUROPE ON DAY 2 IN OFFICE
- TRUMP PUSHES FOR EARLY RENEGOTIATION OF US TRADE DEAL WITH MEXICO, CANADA
- ECB’S KNOT COMFORTABLE WITH NEXT TWO RATE CUTS
- XI TOUTS TIES WITH RUSSIA IN PUTIN CALL AFTER TRUMP SWORN IN
Figure 1: Gold hits a new record high in € terms
NEWS
US (BBG): Trump Widens Tariff Threats to China, Europe on Day 2 in Office
President Donald Trump widened his tariff threats to include China and the European Union on his second day back in office after day one saw Canada and Mexico in his sights. “We’re talking about a tariff of 10% on China, based on the fact that they’re sending fentanyl to Mexico and Canada,” Trump said during an event at the White House on Tuesday, specifying Feb. 1 as a possible date.
“Other countries are big abusers also, you know it’s not just China,” Trump said. “We have a $350 billion deficit with the European Union. They treat us very very badly, so they’re going to be in for tariffs.”
US (WSJ): Trump Pushes for Early Renegotiation of U.S. Trade Deal With Mexico, Canada
President Trump is using the threat of imposing stiff tariffs on goods from Canada and Mexico as soon as next week to pressure the two nations to start renegotiating a continental trade deal, according to people familiar with the matter. The U.S.-Mexico-Canada (USMCA) trade agreement, which was crafted during Trump’s first term in office as a replacement for the North American Free Trade Agreement, is up for statutory review in 2026 - but Trump hopes to renegotiate it sooner, the people said.
US (FT): Donald Trump Halts More Than $300bn in US Green Infrastructure Funding
Donald Trump’s return to the White House has put more than $300bn of potential federal infrastructure funding at risk, US investors said, as they grappled with the scale of his move to unpick Joe Biden’s climate agenda. Within hours of his inauguration on Monday, Trump signed scores of executive orders rescinding Biden’s policies, including one halting federal disbursements to manufacturers and infrastructure developers.
US (WSJ): CEOs Launch War Rooms, Hotlines to Cope With Trump’s Order Blitz
JPMorgan Chase set up a war room. The law firm Fisher Phillips created an immigration hotline to help clients manage potential workplace raids. Manufacturers and retailers have teams working to soften the blow of potential new tariffs. The blitz of executive orders and memos from President Trump left business leaders - some still in the tuxedos they wore to White House inaugural galas - scrambling to make sense of sweeping changes to tax, immigration, trade and energy policies.
MNI US EARNINGS SCHEDULE: Industrials in Focus
Industrials in focus, with earnings to take some focus off Trump's first days in office. Wednesday the busiest session of the week, with S&P 500 within range of YTD highs. Netflix, Johnson & Johnson, P&G and American Express amongst the largest reports.
US/JAPAN (BBG): Japan’s Iwaya, US’s Rubio Agree to Bring Ties to New Heights
Japanese Foreign Minister Takeshi Iwaya said he and US Secretary of State Marco Rubio agreed to bring their countries’ ties to new heights in their first meeting. Earlier in the week, Iwaya became the first Japanese foreign minister to attend a US presidential inauguration ceremony. Following his meeting with Rubio, Iwaya told reporters he was able to secure understanding from him on the importance of the US-Japan economic relationship, and how much Japan contributes to the US economy.
POLITICAL RISK (MNI): WEF Speakers Include ECB President, Spanish PM, German Economy Minister
The World Economic Forum annual meeting continues in Davos, Switzerland. Notable speakers today include:
- Malaysian PM Anwar Ibrahim (0415ET/0915GMT/1015CET)
- UN Secretary-General Antonio Guterres (0530ET/1030GMT/1130CET)
- Dutch PM Dick Schoof (0715ET/1215GMT/1315CET)
- Iranian Vice-President for Strategic Affairs Javad Zarif (0730ET/1230GMT/1330CET)
- Spanish PM Pedro Sanchez (0945ET/1445GMT/1545CET)
- ECB President Christine Lagarde and German Economy Minister Robert Habeck (1015ET/1515GMT/1615CET)
ECB (MNI): Energy Prices "Might Have A Real Impact" - Lagarde
Lagarde plays down the need for forward guidance, in line with GC colleagues over the last few weeks (e,g Nagel and de Guindos): "We have a method, we will apply the method, and we will take all the data that comes in. And data is going to be fascinating, as I said, the price of energy is going to be something that might have a real impact". Earlier, when speaking about why the ECB has not cut by 50bps yet, Lagarde pointed the earlier start to the cutting cycle (e.g. compared to the Fed).
ECB (MNI): Tariff Effect Difficult to Calibrate - Escriva
Bank of Spain Governor Escriva noted that a January EC cut was a likely scenario, but re-iterated the need for a "data-dependent and meeting-by-meeting" approach given the high uncertainty facing the European and global economy. Escriva said that incoming information since June has confirmed the ECB's central scenario: Inflation converging to 2% and a (slow) recovery of economic activity. He conceded that downside risks to growth stem largely from domestic demand (consumption and investment), rather than net trade.
ECB (MNI): Knot Comfortable With Next Two ECB Rate Cuts
Dutch National Bank President Klaas Knot says he is comfortable with market expectations for interest rate cuts at the next two meetings of the ECB Governing Council. In an interview with Bloomberg TV Wednesday, Knot said he was less certain about cuts beyond that time horizon as the ECB gets closer to the neutral rate of interest.
EU/RUSSIA (BBG): EU Risks Letting Russia Sanctions Expire as Orban Stalls Renewal
The European Union is facing another potential showdown with Hungarian Prime Minister Viktor Orban over his refusal to sign off on an extension of sanctions on Russia over its war against Ukraine. Orban lashed out Tuesday at the bloc’s sanctions regime - which has to be renewed every six months and is set to expire on Jan. 31 - saying the 15 rounds of penalties are harming Europe’s economies. In December, Orban said he wanted to wait for Donald Trump’s inauguration before deciding on a renewal.
BOJ (MNI POLICY): BOJ to Hike Unless Stocks Slide
BOJ officials are watching markets closely ahead of Friday's meeting. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
UK (MNI INTERVIEW): UK Wage Growth to Slow - Brightmine's Attwood
A leading pay consultancy looks at UK earnings outlook. On MNI Policy MainWire now, for more details please contact sales@marketnews.com
CHINA/RUSSIA (BBG): Xi Touts Ties With Russia in Putin Call After Trump Sworn In
Chinese leader Xi Jinping hailed his country’s ties with Russia during a video call with Vladimir Putin a day after Donald Trump’s inauguration as US president, signaling a resolve to deepen their alliance. Xi said he’s willing to work with his Russian counterpart to take bilateral relations to new heights, vowing to leverage the resilience and stability of the ties to respond to “external uncertainties,” the official Xinhua News Agency reported Tuesday.
CHINA (BBG): China Eases Rules for Long-Term Funds to Boost Stock Market
China rolled out a basket of measures to stabilize its stock markets, including plans to boost the amount pension can invest in the nation’s listed companies, as it combats uncertainty in a second Donald Trump presidency. The central government issued a directive to “steady the stock market, and clear bottlenecks for the introduction of mid-long term capital,” according to a notice posted by the China Securities Regulatory Commission on Wednesday. CSRC Chairman Wu Qing, Deputy Finance Minister Liao Min and central bank official Zou Lan will hold a briefing at 9:00 am on Thursday.
CHINA (MNI): China to Maintain Communication With US - MOFA
China is willing to keep talking with the U.S., attempt to broach any differences and boost mutually beneficial cooperation, said Mao Ning, spokeswoman of the Ministry of Foreign Affairs on Wednesday when pressed whether the two countries are communicating on tariff issues. “China has always believed that there are no winners in trade war, and it will firmly uphold its national interests,” said Mao, when asked to comment on U.S. President Donald Trump’s latest statement that his administration is considering a 10% tariff on imports from China starting as early as February 1.
N. KOREA (BBG): North Korea Uses Neutral Tone After Trump ‘Nuclear Power’ Remark
North Korea’s state media reported on Donald Trump’s inauguration in its first direct acknowledgement of his return to the White House and adopted a neutral tone without referencing the president’s characterization of Pyongyang as a “nuclear power.” North Korea’s main newspaper, the Rodong Sinmun, reported in a two-sentence dispatch Wednesday that Trump was sworn in as the 47th president of the US, and that an inauguration ceremony was held in Washington the previous day. The report carried none of the inflammatory rhetoric often used to describe US presidents.
S. KOREA (MNI): Yoon to Attend Court Tomorrow Amid Heightened Political Tensions
President Yoon Suk-yeol is set to appear in front of the Constitutional Court for a second time on Thursday 23 January with the court to begin calling senior witnesses allegedly involved in Yoon's aborted declaration of martial law in December. Earlier today, Yoon's legal team said "As of now, we plan to attend all [trial dates] if possible." The country remains in a state of elevated political tension following the high-profile storming by the president's supporters of the courthouse where Yoon's detention was extended on 19 Jan.
MALAYSIA (BBG): Malaysia Keeps Rate Unchanged on Steady Growth, Inflation
Malaysia kept its benchmark interest rate unchanged on Wednesday, a move widely expected as officials bet they can sustain growth momentum and keep inflation under control this year. Bank Negara Malaysia left the overnight policy rate at 3% in its first meeting for 2025, as predicted by all 24 analysts in a Bloomberg News survey. Economists expect the central bank to remain on hold throughout the year.
CORPORATE (BBG): Samsung Mulls Moving Some Mexico Dryer Production to US: Daily
Samsung Electronics and LG Electronics are considering moving some home appliance production in Mexico to US to respond to President Donald Trump’s tariff policy, Korea Economic Daily reports, citing unidentified industry sources. Samsung is considering plans to move part of its dryer production from its factory in Querétaro, Mexico, to its US home appliances plant in Newberry, South Carolina.
DATA
UK DEC PSNB GBP+17.81 BN (MNI)
UK DEC PSNB-X GBP+17.81 BN (MNI)
UK DEC PSNCR GBP19.88 BN (MNI)
UK DEC CGNCR GBP19.3 BN (MNI)
UK DATA (MNI): Median Pay Awards Lowest YTD, Outlook Remains Weak for 2025: Brightmine
- UK OCT-DEC MEDIAN PAY AWARDS +3.3% :Brightmine
Brightmine median basic pay awards in the 3 months to December dropped to 3.3%, this is the second consecutive softening in pay awards following median rewards remaining at 4.0% between July and October 2024. The press release notes, "the combination of rising NICs and ongoing economic pressures is likely to result in a decrease in 2025 pay awards compared to
the median increase of 4.5% recorded in 2024."
MNI CHINA MONEY MARKET INDEX: PBOC Limits Liquidity Injections
- MNI JAN CHINA MONEY MARKET INDEX 24.4 VS DEC 36.0
Chinese short-term interbank money markets saw significant liquidity shortages around mid-January, as the People’s Bank of China limited seasonal injections and suspended bond purchases in order to support the yuan and bond yields, MNI’s China Money Market Index indicated. Liquidity deteriorated from the second week of the month due to demand for tax payments and as much as CNY995 billion in medium-term lending facilities(MLF) matured, sending the current liquidity conditions sub-index to 64.0 from 86.0 last month, with 55.8% of participants seeing tightening liquidity, traders who participated in the survey said.
AUSTRALIA DATA (MNI): Westpac Lead Index Signals Soft But Improving Growth
The Westpac lead index for December fell 0.02% m/m after rising 0.06% leaving the 6-month annualised rate slightly slower at 0.25% from 0.33%. This measure leads growth relative to trend by 3 to 9 months and it was positive throughout Q4 signalling some improvement in growth over H1 2025. Westpac expects GDP growth to reach 2.2% y/y by end-2025 but the first rate cut not until May.
NEW ZEALAND (MNI): NZ Q4 Inflation at 2.2% Y/Y
New Zealand’s Q4 inflation printed at 2.2% y/y, 10 basis points higher than expected and flat against Q3, while tradeable inflation grew 0.3% q/q, up 20bp on expectations, Stats NZ data showed Wednesday. Non-tradeable inflation grew 0.7% q/q, 10bp lower than expected and down from Q3’s 1.3% q/q increase. “The largest contributor to the annual inflation rate was rent, up 4.2%,” Stats NZ said in a statement. “Almost a fifth of the 2.2% annual increase in the CPI was due to rent prices.”
FOREX: USD Dips as Risk Backdrop Shrugs Off Fresh China Tariff Threat
- Datapoints are few and far between Tuesday, keeping focus on political uncertainty and the first few full days of the Trump White House. The slew of executive orders and memorandums across the past few days remain a background concern for markets, particularly following the downside in Chinese and Hong Kong equities overnight, which were sold on the back of Trump's threat to engage with 10% tariffs on imports from both China and the European Union.
- Despite the weakness in Chinese stocks, risk sentiment has improved across European hours, evident in the strength across AUD/USD, which is again testing the weekly high. Any rally through $0.6302 would be a bullish signal, exposing the 50-dma of 0.6332 for direction.
- The USD has traded on the backfoot across the European morning, helping EUR/USD through the week's highs of 1.0435 to narrow the gap with the 50-day EMA upside level of 1.0460. Moves came alongside firm equity demand from the cash open, which has seen both the FTSE-100 and Stoxx600 crest at another all-time high. US earnings season continues, with today the busiest session for the S&P 500. Proctor & Gamble, Halliburton and Johnson & Johnson are the highlights.
- Central bank speak is defined by the busy ECB schedule today, at which speeches from Knot, Rehn, Lagarde and Nagel are due from the ongoing WEF in Davos. Lagarde has already hit the wires this morning - disclosing little new on policy, as she continues to stress the downside risks to policy.
EGBS: Earlier Rally Fades, ECB Speakers Consistent With Market Pricing
The earlier rally in major EGB futures has largely faded, with Bund futures now little changed today at 131.94, down from a session high of 132.22. The 20-day EMA at 132.37 remains a key resistance level in Bunds.
- OAT and BTP futures led the morning rally, seemingly driven by the bid in European equities.
- Several ECB policymakers have provided comments from the Davos forum, headlined by President Lagarde. However, comments were largely consistent with current OIS pricing, limiting the market reaction.
- Books for Spain’s 10-year Obli syndicated tap are in excess of E150bln, while the spread for Finland’s new 20-year RFGB has been set. Germany will hold a 15-year Bund auction at 1030GMT/1130CET.
- German cash yields are little changed, with a light twist steepening bias seen.
- 10-year peripheral/semi-core spreads to Bunds have tightened, as European equities rally. OATs outperform, though meaningful OAT/Bund tightening below 75bps may be limited by medium-term fiscal/political risks.
- The remainder of today’s macro calendar is light, with focus on ECB speakers and any tariff-related headlines from the US.
GILTS: Back to Flat, Cross-Market Cues and Local Data Driving Things
ross-market cues dominate this morning, with a bid in equities and peripheral EGBs initially leading gilts higher, before a pullback from highs.
- Futures -3 at 92.20, range 92.12-52.
- Futures breached yesterday’s high, peaking at 92.52, but failed to challenge Fibonacci resistance at 92.75.
- The overarching technical setup remains bearish, but the recent recovery poses a risk to that trend.
- Bears need to force a move through the Jan 16 low (90.68) to assert fresh pressure.
- Yields essentially flat across the curve.
- 10-Year spread to Bunds ~1bp wider around 208.5bp after the first sub-210bp close since November.
- Higher-than-expected PSNB may have factored into the spread widening this morning.
- BoE-dated OIS shows 67bp of cuts through year-end, ~4bp more dovish on the day.
- The Brightmine wage survey (released overnight) may be having some impact in STIRs.
- Median basic pay awards in the 3 months to December dropped to 3.3%, the second consecutive softening in pay awards.
- The press release that accompanied the data noted that "the combination of rising NICs and ongoing economic pressures is likely to result in a decrease in 2025 pay awards compared to the median increase of 4.5% recorded in 2024."
- Chancellor Reeves will speak to CEOs later today, early Wednesday comments from her offered no new information.
EQUITIES: Eurostoxx 50 Futures Build on Recent Gains
A bull cycle in the Eurostoxx 50 futures contract remains intact and the contract is trading at its highs. Last week’s climb resulted in a breach of 5054.00, the Jan 8 high, to confirm a resumption of the uptrend. The focus is on a climb towards 5215.87, a Fibonacci projection point. Key short-term support has been defined at 4931.00, the Jan 13 low. Initial firm support lies at 5035.87, the 20-day EMA. S&P E-Minis are trading higher this week, marking an extension of last week’s bull phase. Gains undermine a recent bearish theme. The contract has traded through the 50-day EMA and attention is on resistance at 6107.50, the Dec 26 high. Clearance of this level would strengthen a bullish theme. Key support has been defined at 5809.00, the Jan 13 low. A reversal lower and a breach of this level would reinstate a bear theme.
- Japan's NIKKEI closed higher by 618.27 pts or +1.58% at 39646.25 and the TOPIX ended 23.69 pts higher or +0.87% at 2737.19.
- Elsewhere, in China the SHANGHAI closed lower by 28.999 pts or -0.89% at 3213.624 and the HANG SENG ended 327.78 pts lower or -1.63% at 19778.77.
- Across Europe, Germany's DAX trades higher by 216.26 pts or +1.03% at 21258.7, FTSE 100 higher by 28.86 pts or +0.34% at 8577.12, CAC 40 up 57.56 pts or +0.74% at 7828.51 and Euro Stoxx 50 up 36.3 pts or +0.7% at 5202.26.
- Dow Jones mini up 73 pts or +0.17% at 44311, S&P 500 mini up 26.5 pts or +0.44% at 6110.75, NASDAQ mini up 175.5 pts or +0.81% at 21885.
Time: 09:55 GMT
COMMODITIES: WTI Futures Trend Remains Bullish Despite Moderate Pullback
The trend structure in WTI futures remains bullish despite the latest pullback. The move down is allowing an overbought trend reading to unwind. The latest strong impulsive climb resulted in a breach of $75.91, the Oct 8 high. Attention is on $79.48, the Apr 12 ‘24 high. A clear break of this hurdle would strengthen the bullish theme and open 80.63, a 3.236 projection of the Nov 18 - 22 - Dec 6 price swing. Support to watch is the 20-day EMA, at $74.07. Gold is trading higher this week. The yellow metal has breached resistance at 2726.2, the Dec 12 high and a key short-term resistance. The clear break of this hurdle strengthens a bullish theme and signals scope for an extension higher near-term. Sights are on $2790.1, the Oct 31 all-time high. On the downside, the first key support to watch is $2675.0, the 50-day EMA. A reversal lower and a breach of this average would reinstate a bearish threat.
- WTI Crude up $0.3 or +0.4% at $76.1
- Natural Gas up $0.02 or +0.48% at $3.773
- Gold spot up $13.47 or +0.49% at $2758.66
- Copper down $2.05 or -0.47% at $432.4
- Silver up $0.15 or +0.48% at $30.9318
- Platinum up $0.78 or +0.08% at $947.75
Time: 09:55 GMT
| Date | GMT/Local | Impact | Country | Event |
| 22/01/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 22/01/2025 | 1330/0830 | * |  CA | Industrial Product and Raw Material Price Index |
| 22/01/2025 | 1355/0855 | ** | US | Redbook Retail Sales Index |
| 22/01/2025 | 1515/1615 |  EU | ECB's Lagarde in dialogue on Unlocking Europes potential | |
| 22/01/2025 | 1630/1130 | * | US | US Treasury Auction Result for Cash Management Bill |
| 22/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for 20 Year Bond |
| 23/01/2025 | 2350/0850 | ** |  JP | Trade |
| 23/01/2025 | - |  NO | NorgesBank Meeting | |
| 23/01/2025 | - | JP | Bank of Japan Meeting | |
| 23/01/2025 | 0745/0845 | ** |  FR | Manufacturing Sentiment |
| 23/01/2025 | 0900/1000 | *** | NO | Norges Bank Rate Decision |
| 23/01/2025 | 1000/1000 | ** |  GB | Gilt Outright Auction Result |
| 23/01/2025 | 1100/0600 | *** |  TR | Turkey Benchmark Rate |
| 23/01/2025 | 1100/1100 | ** | GB | CBI Industrial Trends |
| 23/01/2025 | 1330/0830 | ** | CA | Retail Trade |
| 23/01/2025 | 1330/0830 | *** | US | Jobless Claims |
| 23/01/2025 | 1500/1600 | ** | EU | Consumer Confidence Indicator (p) |
| 23/01/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 23/01/2025 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |
| 23/01/2025 | 1600/1100 | ** | US | Kansas City Fed Manufacturing Index |
| 23/01/2025 | 1630/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 23/01/2025 | 1630/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 23/01/2025 | 1800/1300 | ** | US | US Treasury Auction Result for TIPS 10 Year Note |
| 24/01/2025 | 2200/0900 | *** |  AU | Judo Bank Flash Australia PMI |
| 24/01/2025 | 2330/0830 | *** | JP | CPI |