European Oil and Gas names sidelined from Venezuela opportunity as Trump claims loot

EU mid-market update: EU bond yields track lower as inflation cools; European oil & gas names sidelined from Venezuela opportunity as Trump claims loot.

Notes/observations

- Europe trades mixed, with oil and gas names weighing on underperformers, such as bp and Shell in FTSE100. Trump’s comments that Venezuela’s interim authorities would “turn over” ~30-50M bbl to the US has pushed crude lower and pressured European oil players.

- Remaining on Venezuela, mining optimism appears limited. Fitch sees little medium-term upside for Venezuelan mining even after a political transition: nationalization legacy, underinvestment, weak rail/logistics, and poor geological data imply long lead-times and heavy exploration spend before capital can realistically follow-though a “Ukraine-style” minerals agreement with the US is seen as plausible in concept. According to Rystad Energy, restoring Venezuela's oil production to 3 million barrels per day would require a staggering $183 billion investment through 2040, as only a limited 300-350K barrels per day can be recovered in the near term.

- Supreme court ruling on Trump tariffs is set to drop on Friday at approx. 10:00ET. Analysts flag downside risk to the dollar if they rule against Trump’s emergency-powers tariff mechanism. US dollar is flat this morning. A 6-3 or 5-4 decision striking down the tariffs is widely expected, led by a coalition including Justices Roberts, Gorsuch, Barrett, and Sotomayor, while Justices Thomas and Jackson likely dissent in favor of the administration, leaving Justice Alito as the pivotal swing vote to architect a "soft landing."

- While betting markets assign an 80% probability that the Supreme Court will strike down the administration's IEEPA tariffs as early as January 9th, the White House has potentially prepared a "bureaucratic bestiary" of dormant statutes, likely specifically Section 338 and Section 122, to immediately reimpose protectionist measures. The administration may utilize Section 122's 150-day authority to enact a temporary 15% surcharge, effectively bridging the gap until a permanent Section 232 national security tariff can be finalized.

- Eurozone bond yields extended lower after weak German inflation yesterday. Eurozone CPI a few minutes ago was in line with cooling theme, as core dropped to 2.3% YoY. UK gilts following EU lower. UK DMO 2031 gilt auction expected to yield decent demand.

- Copper is off early but still holding above ~$13,000/t near record highs, supported by structurally tight balances and tariff uncertainty.

- Major FX pairs are muted, as traders focus on Canadian dollar and Norwegian Krone, both seeing volatility after Venezuela developments and impacts on oil economy.

- Maersk is saying the Asia-Pacific ocean freight market is entering 2026 with cautious optimism, driven by increasing intra-Asia volumes and a focus on agility ahead of the Chinese New Year. Conversely, severe winter weather in Northern Europe is hampering operations at key terminals, particularly in Rotterdam and Hamburg. These adverse conditions have reduced productivity and disrupted inland transport networks, resulting in significant traffic congestion and delays for trucks.

- The empty Russian tanker Marinera, formerly known as Bella 1, is currently traversing Iceland’s exclusive economic zone en route to Murmansk after evading a U.S. blockade near Venezuela and repelling Coast Guard boarding attempts. While the U.S. continues to trail the vessel, reports indicate Russia has deployed a submarine to escort the tanker, likely heightening diplomatic tensions amid ongoing negotiations between Washington and Moscow regarding the Ukraine conflict.

- During yesterday's firechat with analysts, Nvidia CEO Jensen Huang signaled a quiet regulatory approach, stating that China export license approvals for the H200 will be confirmed via customer purchase orders rather than a formal announcement. Operationally, H200 production is already "flowing through lines," with the chip expected to contribute to a strong year alongside rising pricing and demand for Hopper cloud instances.

- Upcoming catalysts include US ADP employment and Jolts job openings at 08:15 ET and 10:00 ET respectively

- Asia closed mixed with Nikkei225 underperforming -1.0%. EU indices -0.5% to +0.6%. US futures -0.3% to +0.1%. Gold -0.7%, DXY 0.0%; Commodity: Brent -0.8%, WTI -1.1%; Crypto: BTC -2.0%, ETH -0.8%

Asia

- Australia Nov CPI M/M: 0.0% v 0.0% prior; Y/Y: 3.4% v 3.6%e (**Note: Lower CPI said to reassure the RBA further rate cuts are not required in the near term.

- Australia Nov Building Approvals M/M: 15.2% v 2.0%e.

- Japan Dec Final PMI Services: 51.6 v 52.5 prelim (confirmed 14th month of expansion).

- South Korea President Lee stated that saw no need to unnecessarily confront China; most important task was restoration of trust; Relations with Japan was as important as those with China.

Global conflict/tensions

- Iranian authorities met a large protest in the Tehran Grand Bazaar on Tuesday (Jan 7th).

Europe

- US Sec of State Rubio told lawmakers that recent administration threats against Greenland did not signal an imminent invasion and that the goal was to buy the island from Denmark.

Americas

- US Supreme Court named Fri (Jan 9th) as Opinion day as tariff case pending.

- President Trump said tell Venezuela to sever ties with China, Russia and Iran. pushing Venezuela to expel, China, Russia and Cuba advisers.

- Venezuela’s Rodríguez stated that no foreign power governs the nation.

Trade

- Japanese Chief Cabinet Sec Kihara stated that would consider necessary response to China’s export curbs as its assessed details; China’s curbs targeting only Japan were regrettable.

Energy

- Weekly API Crude Oil Inventories: -2.8M v +1.7M prior.

- President Trump stated that Venezuela to give up to 50 million barrels of oil to US.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.02% at 605.16, FTSE -0.54% at 10,068.30, DAX +0.57% at 25,038.63, CAC-40 -0.20% at 8,221.12, IBEX-35 0.00% at 17,646.36, FTSE MIB -0.10% at 45,707.50, SMI +0.23% at 13,371.20, S&P 500 Futures -0.14%].

Market focal points/key themes: European indices opened generally higher and generally lacked momentum through the early part of the session; among better performing sectors are materials and real estate; underperforming sectors include energy and consumer discretionary; oil & gas subsector weighted down after Trump announced plans to sell Venezuelan oil; Diageo’s Kenia unit seeking to block deal with Asahi; reportedly Chevron partnering with Quantum Energy to buy Lukoil’s foreign assets; reportedly Thyssenkrupp looking to sell TKSE to Jindal Steel; earnings expected in the upcoming US session include Constellation Brands.

Equities

- Consumer discretionary: Lufthansa [LHA.DE] +2.5% (double upgrade), LVMH [MC.FR] -2.5%, Hermes [RMS.FR] -2.5% (China-Japan trade tensions).

- Consumer staples: Diageo [DGE.UK] -2.0% (Diageo Kenya is seeking for court to block $2.3B deal with Japan Asahi).

- Healthcare: GSK [GSK.UK] -1.0% (trial data).

- Industrials: Maersk [MAERSKB.DK] +0.5% (market update), Thales [HO.FR] +4.5% (Covivio creates JV with Blue Owl funds for Thales Sites in Vélizy).

- Technology: Thyssenkrupp [TKA.DE] +4.5% (said to consider sale of TKSE to Jindal Steel in several steps), STMicroelectronics [STM.FR] -2.5% (Morgan Stanley analysts: Apple is discussing adopting STMicroelectronics’ LiDAR sensors for the iPhone 18, diversifying from Sony).

Speakers

- China Foreign Ministry stated that US had brazenly used force in Venezuela, demanding priority on oil sources, this is typical bullying. Legitimate rights in Venezuela must be protected.

- China MIIT issued action plan on industrial internet and AI integration; Vowed to strengthen supply of computing power.

Currencies/fixed income

- USD firmer against the major pairs with focus on US jobs data in the upcoming sessions. ADP Employment due out later today and Non-Farm Payrolls set for release on Friday. Dealers noted that further signs of labor market weakness would possibly prompt markets to bring forward the expected timing of the next rate cut. Markets currently 50-50 calling for the next fed rate cut in March.

- EUR/USD at 1.1685

- USD/JPY at 156.50

- EU bond yields lower. 10-year German Bund yield last at 2.80%, France 10-year Oat at 3.56% and 10-year Gilt yield at 4.51% 10-year Treasury yield: 4.17%; 10-year JGB: 2.12%

Economic data

- (NL) Netherlands Dec Preliminary CPI Y/Y: 2.8% v 2.9% prior; CPI EU Harmonized M/M: +0.2% v -1.4% prior; Y/Y: 2.5% v 2.6% prior

- (DE) Germany Nov Retail Sales M/M: -0.6% v +0.2%e; Y/Y: -1.8% v +0.1%e.

- (SE) Sweden Dec PMI Services: 56.7 v 59.2 prior; PMI Composite: 56.3 v 57.9 prior.

- (HU) Hungary Nov Unemployment Rate: 4.4% v 4.4% prior.

- (HU) Hungary Nov PPI M/M: -0.3% v +0.4% prior; Y/Y: -2.7% v +1.8% prior.

- (FR) France Dec Consumer Confidence: 90 v 90e.

- (CZ) Czech Dec Preliminary CPI M/M: -0.3% v -0.1%e; Y/Y: 2.1% v 2.3%e.

- (AT) Austria Dec Preliminary CPI M/M: 0.4% v 0.3% prior; Y/Y: 3.8% v 4.0% prior.

- (AT) Austria Dec Wholesale Price Index M/M: -0.9% v +0.9% prior; Y/Y: 0.1% v 0.9% prior.

- (TW) Taiwan Dec CPI Y/Y: 1.3% v 1.3%e; CPI Core Y/Y: 1.8% v 1.7%e; PPI Y/Y: -2.6% v -2.8% prior.

- (CN) China Dec Foreign Reserves:$3.358 $3.360Te.

- (DE) Germany Dec Construction PMI: 50.3 v 45.2 prior.

- (HK) Hong Kong Dec Foreign Reserves: $427.9B v $429.4B prior.

- (DE) Germany Dec Unemployment Change: +3.0K v +5.0Ke; Claims Rate: 6.3% v 6.3%e.

- (DE) Germany Dec CPI Bavaria M/M: 0.0% v -0.2% prior; Y/Y: 1.7% v 2.2% prior.

- (CZ) Czech Dec International Reserves: $175.8B v $172.7B prior.

- (SG) Singapore Dec Foreign Reserves: $409.3B v $400.0B prior.

- (UK) Dec Construction PMI: 40.1 v 42.3e (12th month of contraction).

- (EU) Euro Zone Dec Preliminary CPI Estimate Y/Y: 2.0% v 2.0%e; CPI Core Y/Y: 2.3% v 2.4%e.

- (IT) Italy Dec Preliminary CPI M/M: 0.2% v 0.2%e; Y/Y: 1.2% v 1.2%e.

- (IT) Italy Dec Preliminary CPI EU Harmonized M/M: 0.2% v 0.2%e; Y/Y: 1.2% v 1.2%e.

Fixed income issuance

- (IN) India sold total INR290B vs. INR290B indicated in 3-month, 6-month and 12-month bills.

- (BE) Belgium Debt Agency (BDA) opened its book to sell EUR-denominated 10-year OLO bonds.

- (AT) Austria Debt Agency (AFFA) to sell CHF-denominated 1.0075% 2045 green bonds; guidance seen +25bps to Saron mid-swaps.

- (DK) Denmark sold total DKK480M in 2027 and 2035 DGB Bonds.

- (UK) DMO sold £4.25B in 4.125% Mar 2031 Gilts; Avg Yield: 3.980% v 4.093% prior; bid-to-cover: 3.50x v 3.23x prior; Tail: 0.2bps v 0.2bps prior.

- (SE) Sweden sold total SEK20.0B vs. SEK20.0B indicated in 3-month and 12-month Bills.

- (NO) Norway sold NOK 3.0B vs. NOK3.0B indicated in 2029 and 2035 Bonds.

Looking ahead

- (UR) Ukraine Dec Official Reserve Assets: No est v $54.7B prior.

- (ZA) South Africa Dec Naamsa Vehicle Sales Y/Y: No est v 12.5% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India 2026 Advance GDP Estimate (current fiscal year) Y/Y: 7.5%e v 6.5% prior.

- 05:30 (DE) Germany to sell €6.0B in new Feb 2036 Bunds.

- 5:30 (PT) Portugal Debt Agency (IGCP) to sell 9-month Bills.

- 06:00 (IE) Ireland Dec Unemployment Rate: No est v 4.9% prior.

- 06:00 (EU) European Union to sell combined €3.5B in 3-month, 6-month and 12-month Bills.

- 06:00 (FI) Finland to sell combined €2.0B in 6-monthand 12-month bills.

- 06:30 (CL) Chile Dec Trade Balance: $2.2Be v $1.9B prior; Exports: No est v $8.5B prior; Imports: No est v $6.6B prior; Copper Exports: No est v $4.3B prior.

- 06:30 (CL) Chile Dec International Reserves: No est v $48.6B prior.

- 06:30 (CL) Chile Central Bank Traders Survey.

- 07:00 (US) MBA Mortgage Applications w/e Jan 2nd: No est v -5.0% prior (last Dec 24th).

- 07:00 (CL) Chile Nov Nominal Wage Y/Y: No est v 5.9% prior.

- 07:00 (UK) Weekly PM Question time in House.

- 08:00 (PL) Poland Dec Official Reserves: No est v $265.0B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) Dec Monthly ADP Employment Change: +50Ke v -32K prior.

- 10:00 (US) Dec ISM Services Index: 52.2e v 52.6 prior.

- 10:00 (US) Nov JOLTS Job Openings: 7.60Me v 7.670M prior.

- 10:00 (US) Oct Factory Orders: -1.2%e v +0.2% prior; Factory Orders (ex-transportation): No est v 0.2% prior.

- 10:00 (US) Oct Final Durable Goods Orders: -2.2%e v -2.2% prelim; Durables (ex-transportation): 0.2%e v 0.2% prelim; Capital Goods Orders (non-defense/ex-aircraft): No est v 0.5% prelim; Capital Goods Shipments (non-defense/ex-aircraft): No est v 0.7% prelim.

- 10:00 (CA) Canada Dec Ivey Purchasing Managers Index (PMI): No est v 48.4 prior; PMI (unadj): No est v 44.5 prior.

- 10:00 (CO) Colombia Nov Exports: $4.1Be v $4.3B prior.

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:30 (US) Treasury to sell 17-Week Bills.

- 18:30 (JP) Japan Nov Labor Cash Earnings Y/Y: 2.3%e v 2.5% prior (revised from 2.6%); Real Cash Earnings Y/Y: -1.2%e v -0.8% prior (revised from -0.7%); Cash Earnings - Same Sample Base Y/Y: 2.3%e v 2.4% prior; Scheduled Full-Time Pay - Same Base Y/Y: 2.3%e v 2.1% prior (revised from 2.2%).

- 19:30 (AU) Australia Nov Trade Balance (A$): 5.0Be v 4.4B prior; Exports M/M: No est v 3.4% prior; Imports M/M: No est v 2.0% prior

- 22:30 (JP) Japan to sell 6-Month Bills.

- 22:35 (JP) Japan to sell 30-year JGB Bonds.

- 22:45 (TH) Thailand Dec Consumer Confidence: No est v 53.2 prior; Economic Confidence: No est v 46.8 prior.