Trump calls Maduro bluff with fast capture and sets new geopolitical precedent

EU Mid-Market Update: Trump calls Maduro bluff with fast capture and sets new geopolitical precedent, by 'ruling' Venezuela until a new leader is in place; Oil supply glut predicted, Bitcoin breaks out >$90K.

Notes/observations

- European equities opened mostly higher, with broader risk sentiment holding up despite a sharp geopolitical shock with the US intervention and capture of Venezuela Pres Maduro. Market reactions remain selective rather than systemic, with focus on second-order impacts rather than immediate macro dislocation. Venezuela exposed bond funds are seeing volatility. Biggest player in the space, Ashmore, is up >10%. US oil names skyrocket, on expectations of eased restrictions and higher future production out of the Venezuelan reserves (largest in world). Chevron, Halliburton, ConocoPhillips and SLB lead.

- Venezuela intervention created significant uncertainty for energy markets. Markets weighing the potential for a massive future supply surge against current warnings of a global crude glut. Brent and WTI oil were down nearly 1% but since bounced back partially. Short-term uncertainty is elevated due to potential supply disruptions during Venezuela’s political transition, prompting OPEC+ to pause supply increases in Q1. Longer-term consensus remains bearish, with expectations that sanctions relief, infrastructure investment, and normalization of Venezuelan output will add to an already oversupplied market in 2026. Most banks maintain forecasts for Brent in the $55–65 range next year.

- China condemned the move, while analysts warn it may set a precedent that emboldens Beijing over Taiwan and the South China Sea. Tensions also resurfaced in Europe after Denmark urged the US to tone down rhetoric over Greenland. Despite the escalation, economists broadly judge the immediate global economic impact to be contained.

- Latin American currencies face downside risk, particularly the Colombian and Mexican pesos, which are used as proxies for regional risk. Oil-linked currencies such as the Canadian dollar and Norwegian krone also weaken amid falling crude prices and expectations of future supply growth

- Bitcoin extended gains amid speculation that Venezuela holds a large shadow reserve of coins, which could potentially be seized or redirected following regime change. While speculative, the narrative has added incremental support to crypto prices alongside broader geopolitical uncertainty.

- AI-chip rally from Friday continued following ASML upgrade and Samsung comments at CES.

- TTN Early 2026 Risk Radar: CES on Jan 5-6 (AMD, Nvidia, Intel, Qualcomm) plus Nvidia’s Jan 6 J.P. Morgan fireside, then the Jan 9 US jobs report, kick off a front-loaded catalyst cluster that can whip AI-semi sentiment and rates expectations heading into mid-January earnings and 2026 AI capex guidance. Into late January, policy and funding cliffs stack up - Jan 21 Supreme Court arguments on Lisa Cook, Jan 30 US government funding expiry, Jan 31 Fed Miran term end - with bigger early-2026 overhangs from the IEEPA legality decision window, Trump’s Fed Chair pick, and a potential Oracle jumbo ~$40B debt deal.

-Asia closed higher with Shanghai outperforming +1.4%. EU indices +0.2-0.9%. US futures +0.1-0.5%. Gold +2.4%, DXY +0.3%; Commodity: Brent -0.1%, WTI -0.1%; Crypto: BTC +1.2%, ETH +0.7%.

Asia

- Japan Dec Final PMI Manufacturing: 50.0 v 49.7 prelim (avoids 6th month of contraction).

- China Dec RatingDog PMI Services: 52.0 v 52.1 prior (34th month of expansion).

- BOJ Gov Ueda reiterated stance to raise rates if economic outlook was realized (**Note: Japan 5-year JGB yield at 1.60% and highest level since mid-2007).

Global conflict/tensions

- Russia comments on Venezuela said it was crucial to “prevent further escalation and to focus on finding a way out through dialogue. (**Note: Russia was a key ally of the Maduro regime).

- Iran Supreme Leader Ayatollah Khamenei said to be planning to flee to Moscow if unrest within the country intensified. Khamenei noted over the weekend that he would talk with protesters, but talking with rioters was useless.

- Trump reiterated his stance that the US needed Greenland for “national security” purposes and stated that a deal between Russia and Ukraine was likely "at some point.

Europe

- UK unemployment could climb to an eleven-year high in 2026 (**Note: Britain’s unemployment rate now rivals the EU’s for the first time since the euro was launched following a surge in joblessness under Labour.

Americas

- Venezuela President Maduro is due to appear before a federal judge on Monday at noon, in New York (**Note: Delcy Rodríguez is the acting President and hardline Socialist). Trump warned other drug-producing nations in the Western Hemisphere that he wouldn’t long tolerate the flow of illegal substances (Colombia, Mexico). Trump described Colombia as "very sick" and urged Mexico to "get its act together" regarding drug cartels.

- Philadelphia Fed Pres Paulson (voter in 2026) stated that saw inflation moderating, the labor market stabilizing and growth coming in around 2% this year. If all of that happened, then some modest further adjustments to the funds rate would likely be appropriate later in the year.

Energy

- OPEC+ left oil production unchanged (as expected) to pause supply increases. There was no direct mention of Venezuela in the statement
Trump suggested Washington would “run” the Venezuela and access its oil. Working with newly sworn-in leaders in Caracas; Washington would not invest in Venezuela, despite oil company interest.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.36% at 598.28, FTSE +0.15% at 9,966.30, DAX +0.82% at 24,724.39, CAC-40 +0.10% at 8,203.44, IBEX-35 +0.44% at 17,569.91, FTSE MIB +0.53% at 45,615.50, SMI -0.56% at 13,193.00, S&P 500 Futures +0.22%].

Market Focal Points/Key Themes: Global market sentiment appears cautiously optimistic as U.S. futures point higher, potentially providing a positive lead for European equities following the previous week's volatility. However, the region's energy sector may face downward pressure as Brent crude futures were slightly down on expectations of increased supply following the U.S. intervention in Venezuela. Meanwhile, geopolitical uncertainty has triggered a flight to safety that is boosting the Swiss Franc, while a strengthening U.S. dollar creates headwinds for international currency markets.

Equities

- Consumer discretionary: Ryanair [RYA.IE] -0.5% (load factor), Pandora [PNDORA.DK] -2.0% (analysts downgrade).

- Energy: Shell [SHEL.UK] +0.5% (Venezuela Acting Pres says ready to cooperate with US).

- Financials: Auction Technology Group [ATG.UK] +19.0% (rejected several offers).

- Industrials: Rheinmetall [RHM.DE] +7.0% (US actions against Venezuela and Trump comments over Greenland).

- Technology: ASML [ASML.NL] +3.5% (analyst upgrade; Samsung comments).

Speakers

- China Foreign Ministry called on US to immediate release Venezuela's Maduro; US actions violated international law.

- Iran Foreign Ministry spokesperson stated that ties with Venezuela to continue based upon shared interests.

Currencies/fixed income

- Geo-political concerns helped to put some firmness back in the USD as the trading week began after US arrested Venezuelan President Maduro over the weekend. Dealers suggested that US intervention in Venezuela could benefit the US economy in the longer term by securing oil supply, in turn boosting the USD and stock indexes.

- Oil-related FX pairs were softer along with oil prices after the Venezuela news. Price action saw a modest flight to quality, where gold and the Swiss franc are bid, and the USD found some support. Session saw a weaker Canadian Dollar and Norwegian Krone as a result.

- EUR/USD at 1.1680 by mid-session.

- USD/JPY at 156.85 despite higher Japanese yields. Concerns over Japan’s fiscal front continued to simmer.

- 10-year German Bund yield last at 2.90%, France 10-year Oat at 3.61% and 10-year Gilt yield at 4.53% 10-year Treasury yield: 4.17%; 10-year JGB: 2.11%.

Economic data

- (NL) Netherlands Nov Retail Sales Y/Y: 3.9% v 3.3% prior.

- Turkey Dec CPI M/M: 0.9% v 1.0%e; Y/Y: 30.9% v31.0%e; CPI Core Y/Y: 31.1% v 31.4%e.

- (TR) Turkey Dec PPI M/M: 0.8% v 0.8% prior; Y/Y: 27.7% v 27.2% prior.

- (CH) Swiss Nov Real Retail Sales Y/Y: 2,3% v 2.2% prior.

- (TH) Thailand Dec Business Sentiment Index: 49.8 v 50.0 prior.

- 03:00 (ES) Spain Dec Unemployment Change: -16.3K v -18.8K prior; Employment Net Change M/M: +33.1K v +44.7K prior.

- (HU) Hungary Dec Manufacturing PMI: 53.7 v 52.0e.

- (VN) Vietnam Q4 GDP Y/Y: 8.5% v 7.7%e.

- (VN) Vietnam Dec CPI Y/Y: % v 3.5%e.

- (CH) Swiss Dec PMI Manufacturing: 45.8 v 49.6e; PMI Services: 52.1 v 45.3 prior.

- (CH) Swiss weekly Total Sight Deposits (CHF): 452.5B v 458.3B prior; Domestic Sight Deposits: 426.4B v 439.6B prior.

- (UK) Nov Net Consumer Credit: £2.1B v £1.1Be; Net Lending: £4.5B v £4.1Be.

- (UK) Nov Mortgage Approvals: 64.5K v 64.0Ke.

- (UK) Nov M4 Money Supply M/M: +0.8 v -0.2% prior; Y/Y: 4.3 v 3.5% prior; M4 Ex IOFCs 0.0B Annualized: 5.4% v 4.9% prior.

Fixed income issuance

- (SI) Slovenia opened its book to sell EUR-denominated 10-year bonds via syndicate; guidance seen +45bps to mid-swaps.

- (SA) Saudi Arabia to sell USD-denominated 3-year, 5-year, 10-year and 30-year notes.

Looking ahead

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

- 05:30 (DE) Germany to sell combined €4.0B in 3-month and 9-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 06:00 (IL) Israel to sell bonds.

- 06:00 (TR) Turkey to sell bonds.

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 06:01 (NZ) New Zealand Dec Cotality Home Value: No est v 0.0% prior.

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 06:30 (CL) Chile Central Bank (BCCh) Dec Minutes.

- 08:00 (CZ) Czech Dec YTD Budget Balance (CZK): No est v -232.4B prior.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.2-7.4B in 3-month, 6-month and 12-month bills.

- 09:00 (IS) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 4.25%.

- 10:00 (US) Dec ISM Manufacturing: 48.3e v 48.2 prior.

- 11:00 (DK) Denmark Dec Foreign Reserves (DKK): No est v 659.7B prior.

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

- 13:00 (BR) Brazil Dec Trade Balance Monthly: $6.4Be v $5.8B prior; Exports: No est v $28.5B prior; Imports: No est v $22.7B prior.

- 16:00 (KR) South Korea Dec Foreign Reserves: No est v $430.7B prior.

- 17:00 (AU) Australia Dec Final PMI Services: No est v 51.0 prelim; PMI Composite: No est v 51.1 prelim.

- 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 81.5 prior (Dec 15th).

- 18:50 (JP) Japan Dec Monetary Base Y/Y: No est v -8.5% prior.

- 19:01 (UK) Dec BRC Shop Price Index Y/Y: No est v 0.6% prior.

- 19:30 (HK) Hong Kong Dec PMI (whole economy): No est v 52.9 prior.

- 19:30 (SG) Singapore Dec PMI (whole economy): No est v 55.4 prior.

- 20:00 (PH) Philippines Dec CPI M/M: No est v 0.2% prior; Y/Y: No est v 1.5% prior.

- 20:01 (IE) Ireland Dec PMI Services: No est v 58.5 prior; PMI Composite: No est v 55.8 prior.

- 22:30 (JP) Japan to sell 3-Month Bills.

- 22:35 (JP) Japan to sell 10-year JGB Bonds.