Gold hits record high and equity selloff amplified

EU mid-market update: Gold hits record high and equity selloff amplified as fear builds on escalating tariff threats and NATO breakdown between EU-US; Davos commentary will be key.

Notes/observations

- European equities extend losses after a weak Asia session and softer US futures, with CAC/DAX posting their worst day since November earlier in the week; defensives couldn’t fully offset declines in luxury, financials, and energy.

- Greenland/tariff standoff dominates Europe’s macro tape. Trump reiterated he wants Greenland and threatened 10% tariffs on eight European nations from Feb 1st if they oppose his plan, driving risk-off in European assets and keeping geopolitics front-and-center at Davos/WEF. EU response looks uneven: Eurasia Group’s Ian Bremmer argues the bloc lacks the cohesion/institutional capacity for a forceful, coordinated retaliation given diverging member-state priorities.

- Today is another window for possible Supreme Court decision on IEEPA tariff legality; Tomorrow, Fed Chair Powell said to attend SCOTUS hearings on Fed's Cook case.

- UK labour market soft but “known/embedded.” Unemployment held at 5.1% (vs 5.0% expected), and ex-bonus wage growth eased to 4.5%. Strategists note the softening trend is already priced into cautious BoE easing expectations into 2026, muting FX reactions - though the next focal point is UK inflation.
- Rates selloff spills globally from Japan. Long-end JGB yields surged (notably ~+25 bps in 30y cited), dragging developed-market yields higher: US 10y ~4.27% (highest since early Sept), Bunds and gilts also firmer in yield; Macquarie analysts say Bank of Japan may intervene as early as Wed, Jan 21st to stop the rout in Japanese bond market.

- US dollar weakened vs. most majors on U.S.–Europe tension headlines (positioning cited as vulnerable), while USD/JPY risks are framed around potential “intervention territory” near 159/160 if the yen selloff accelerates.

- Precious metals ripping on uncertainty + weaker USD. Gold broke above $4,700/oz (record), with silver also surging-flows framed as a hedge against policy unpredictability and broader geopolitics.

- Axios reports that Elon Musk is pivoting SpaceX from a mere logistics firm to an orbital utility, leveraging Starship’s heavy-lift dominance to export AI’s "megawatt wall" into the infinite thermal sink of the vacuum. In this high-frontier arbitrage, massive foldable radiators serve as the ultimate thermal escape hatch, turning the scarcity of Earth-bound power into a solar-drenched monopoly on orbital intelligence.

- The IQ "lobotomies" currently haunting Gemini and GPT-5 are not a loss of digital wits but a silent debasement of the cognitive currency, as fixed-price subscriptions collide with a volatile, load-indexed spot market for rationed reasoning. We have exited the "model era" for one of brutal hardware realism, where the quality of a user’s session is no longer a function of inherent intelligence, but a tactical byproduct of memory-tiering discipline and KV-cache survival.

- Asia closed lower with Nikkei225 underperforming -1.0%. EU indices -1.4% to -1.6%. US futures -1.7% to -2.2%. Gold +1.2%, DXY -0.6%; Commodity: Brent +0.2%, WTI +0.2%; Crypto: BTC -2.2%, ETH -3.7%.

Asia

- China PBOC Monthly Loan Prime Rate (LPR) Setting left both he 1-year and 5-year LPR unchanged at 3.00% and 3.50% respectively (as expected).

- Japan sold ¥900B in 20-Year JGB Bonds; Avg Yield: 3.2530% v 2.9160% prior; Bid-to-cover: 3.19x v 4.10x prior (Dec 12th 2025.

- Japan Growth Minister Kiuchi stated that would discuss timing for realistic tax cuts; govt would assess when Japan could begin cutting taxes ; would consider Impact of food sales tax cuts on yields and FX.

Global conflict/tensions

- President Trump stated that had good call with NATO Sec Gen Rutte: agreed to meetings in Davos with various parties. Greenland was imperative for national security and world security and there could be no going back.

Europe

- France PM Lecornu said to extend tax on big companies to appease socialist left party. Budget talks ongoing. PM noted that would to use Article 49.3 powers to pass 2026 budget without vote in parliament. Would respect deficit target at 5% of GDP in 2026.

- ECB’s Vujcic (Croatia) formally nominated to become ECB’s next vice president to replace de Guindos on June 1 st.

Trade

- China has purchased roughly 12 million tons of US soybeans in the last three months.

- President Trump stated that would impose a 200% tariff on French wines and champagne.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -1.42% at 598.46, FTSE -1.42% at 10,050.25, DAX -1.51% at 24,584.53, CAC-40 -1.28% at 8,008.25, IBEX-35 -1.79% at 17,348.63, FTSE MIB -1.55% at 44,495.50, SMI -1.18% at 13,106.90, S&P 500 Futures -1.81%].

Market focal points/key themes: European indices open lower across the board and declined through the early part of the session; risk off attributed to continued geopolitical concerns; communication services the lone sector managing to stay in the green, with other less negative sectors including telecom and consumer discretionary; sectors leading the way lower include utilities and industrials; GSK to acquire Rapt Therapeutics; Elon Musk floats idea of buying Ryanair, but is seen as a joke; Shiongi raises stake in VIIV Healthcare from Pfizer and GSK; earnings expected in the upcoming Americas session include Netflix, 3M, Vinci and pre-close calls from Mercedes and Porsche.

Equities

- Consumer discretionary: Ryanair [RYA.IE] -0.5% (being attributed to Elon Musk apparently jokes about buying Ryanair), Staffline Group [STAF.UK] +9.5% (trading update).

- Energy: TotalEnergies [TTE.FR] +1.0% (trading update).

- Financials: Wise [WISE.UK] +12.5% (trading update).

- Healthcare: AstraZeneca [AZN.UK] -2.5% (direct listing on NYSE; interested in Abivax), GSK [GSK.UK] -1.5% (acquisition).

Speakers

- Japan Chief Cabinet Sec Kihara: Long-term rate moves determined by markets. Watching market moves, including long-term rates, closely.

- South Korea Fin Min Kim stated that Govt was not considering extra budget.

- South Korea said to hold off $20B US trade investment over Korean won (KRW) impact.

- China Vice MOF official stated that to use more fiscal spending in consumption; to regulate tax breaks and fiscal subsidies. To ensure fiscal spending to increase in 2026. To keep necessary levels for budget deficit and expenditure in 2026.

- Treas Sec Bessent stated that was seeing Capex boom in US which always lead to employment boom.

Currencies/fixed income

- USD was softer against the European pairs as Trump renewed tariff threats amid tensions over Greenland. A ‘sell America’ theme was gaining some tracking as the session wore on.

- JPY currency initially continued its weakness in the 1st part of the EU session and edging closer to the; pivotal 160 resistance area. Dealers noted that upcoming Japanese election could result in worsening public finances which push up JGB yields sharply higher. Some speculation that the BOJ might intervene as early as Wednesday to stop the rout in the nation’s bond market.

- EUR/USD firmly above the 1.17 level as France PM Lecornu reportedly to extend tax on big companies to appease socialist left party and take a step closer to having a 2026 budget.

- 10-year German Bund yield last at 2.87%, France 10-year Oat at 3.55% and 10-year Gilt yield at 4.40% 10-year Treasury yield: 4.29%; 10-year JGB: 2.34%.

Economic data

- (DE) Germany Dec PPI M/M: -0.2% v -0.2%e; Y/Y: -2.5% v -2.4%e.

- (UK) Dec Jobless Claims Change: +17.9K v -3.3K prior; Claimant Count Rate: 4.4% v 4.3% prior; Payrolled Employees Monthly Change: -43K v -20Ke.

- (UK) Nov Average Weekly Earnings 3M/Y: 4.7% v 4.6%e; Weekly Earnings (e-bonus 3M/Y: 4.5% v 4.5%e.

- (UK) Nov ILO Unemployment Rate: 5.1% v 5.1%e; Employment Change 3M3M: +82K v +31Ke.

- (CH) Swiss Dec Producer & Import Prices M/M: -0.2% v -0.5% prior; Y/Y: %-1.8 v -1.6% prior.

- (ES) Spain Nov Trade Balance: -€5.7B v -€4.7B prior.

- (TW) Taiwan Dec Export Orders Y/Y:43.8 % v 35.5%e.

- (HK) Hong Kong Dec Unemployment Rate: 3.8% v 3.8%e.

- (EU) Euro Zone Nov Current Account: €8.6B v €25.7B prior.

- (IT) Italy Nov Current Account: -€1.3B v +€3.4B prior.

- (GR) Greece Nov Current Account: -€2.1B v -€1.1B prior.

- (ZA) South Africa Nov Total Mining Production M/M: -5.9% v +0.5%e; Y/Y: -2.7% v 5.0%e; Gold Production Y/Y: -6.0% v -0.3% prior; Platinum Production Y/Y: -2.8% v +3.9% prior.

- (DE) Germany Jan ZEW Current Situation Survey: -72.7 v -76.0e; Expectations Survey: 59.6 v 50.0e.

- (EU) Euro Zone Jan ZEW Expectations Survey: 40.8 v 33.7 prior.

- (EU) Euro Zone Nov Construction Output M/M: -1.1% v +1.7% prior; Y/Y: -0.8% v +1.9% prior.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) opened its book to sell EUR-denominated 10-year SPGB bond via syndicate; guidance seen +8bps to SPGB bond.

- (UK) DMO opened book to sell 15-year Gilt via syndication; guidance seen +6.75-7.0bps to Jan 2040 Gilts.

- (ZA) South Africa sold total ZAR3.0B vs. ZAR3.0B indicated in 2039, 2042 and 2048 bonds.

- (ES) Spain Debt Agency (Tesoro) sold total €3.006B vs. €2.5-3.5B indicated range in 3-month and 9-month bills.

Looking ahead

- (IL) Israel 12-month Jan CPI Forecast: No est v 2.0% prior.

- (MX) Mexico Citi Survey of Economists.

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

- 05:25 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (IL) Israel Dec Trade Balance: No est v -$3.8B prior.

- 06:00 (PT) Portugal Dec PPI M/M: No est v -0.1% prior; Y/Y: No est v -3.3% prior.

- 06:30 (IN) India Dec Eight (Key) Infrastructure Industries: No est v 1.8% prior.

- 06:30 (EU) ESM to sell €1.1B in 6-month Bills.

- 06:30 (RU) Russia announcement on upcoming OFZ bond issuance (held on Wed).

- 07:00 (MX) Mexico Nov Mexico Gold Production: No est v 5.74K prior; Silver Production: No est v 338.5K prior; Copper Production: No est v 41.9K prior.

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

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending Jan 2nd: No est v +11.8K prior.

- 08:30 (US) Jan Philadelphia Fed Non-Manufacturing Activity: No est v -16.8 prior.

- 11:30 (DE) ECB's Nagel (Germany with SNB President Schlegel at Davos.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 11:30 (US) Treasury to sell 52-Week Bills.

- 14:00 (AR) Argentina Dec Trade Balance: $1.5Be v $2.5B prior.

- 19:00 (KR) South Korea Jan Imports 20 Days Y/Y: No est v 0.7% prior; Exports 20 Days Y/Y: No est v 6.8% prior.

- 20:10 (KR) Bank of Korea to sell KRW1.1T in 2.46% 3-Year Bonds.

- 21:00 (NZ) New Zealand Dec Non Resident Bond Holdings: No est v 59.5% prior.

- 22:35 (CN) China to sell CNY160B in 1.66% 2032 Bonds.