20th January 2026

MACRO

Trump Greenland and Davos

Trump will deliver a special address to Davos at 2:30pm CET on Wednesday.

Trump said he will meet with several parties over Greenland during the World Economic Forum and had a “very good telephone call” with NATO’s Mark Rutte.

Trump threatened a 200% tariff on French champagne after Macron rejected his peace initiative. “I’ll put a 200% tariff on his wines and champagnes and he’ll join.”

Trump published a text message from Macron in which the French president invited Trump to dinner in Paris and said: “I do not understand what you are doing on Greenland.”

(Bloomberg)

Fed Chair Timeline

Treasury Secretary Bessent said Trump could announce his Fed chair pick as soon as next week.

“We have four fantastic candidates - it will be up to the president, and I would imagine that he will have an announcement maybe as early as next week.”

(Bloomberg)

Japan Bond Market Meltdown

Japan’s long-term government bond yields surged to multi-year highs, spurred by fears that an upcoming election could lead to a consumption-tax cut that might worsen public finances.

The 40-year yield surged past 4% for the first time on record.

A consumption tax cut could cost around $31 billion annually in revenue.

Macquarie Bank analysts suggested the BOJ may intervene as early as Wednesday to stop the rout. “If the selloff continues, and especially if it spreads globally, then we should see BOJ dust [the bond buying tool] off and put it to work.”

Some analysts say the meltdown may pile pressure on the BOJ to act quicker to raise rates.

The yen and Nikkei saw selling pressure as a result.

Tourists to Japan hit a record high for December despite Chinese visitors plunging 45% due to diplomatic tensions.

(Wall Street Journal, Bloomberg, Reuters)

China Policy Stimulus

Policymakers in Beijing are planning to boost domestic demand as part of their battle against entrenched deflationary pressures and plunging investment.

Senior state planners are formulating a five-year plan to lift domestic demand, acknowledging that the economy faces an imbalance between “strong supply and weak demand.”

China will keep the 2026 fiscal deficit and debt scale at levels deemed “necessary” and ensure an increase in fiscal expenditure intensity.

China announced a 500 billion yuan loan guarantee facility to encourage private companies to borrow for expansion.

China will extend interest subsidies for consumers, service businesses and those in need of equipment upgrades.

China left benchmark loan prime rates unchanged for the eighth consecutive month in January.

(Wall Street Journal, Reuters, Bloomberg)

China Trade and FX

Chinese exports of rare earth magnets to Japan in December fell 8% from November amid the diplomatic spat.

China’s yuan hit a fresh 32-month high against the dollar as the central bank’s daily fixing neared the key 7.00 level.

The last tankers carrying sanctioned Venezuelan crude to Asia are set to arrive in the coming days, effectively ending China’s easy access to cheap oil.

Chinese exporters are finding new markets to sell to but the compensation is not as great as the US was, creating struggles for many.

(Reuters, Bloomberg)

UK Developments

UK firms cut jobs at the fastest pace since 2020 and wage growth eased to its lowest in 3.5 years, more signs of a weakening jobs market.

Rachel Reeves is asking businesses to pitch the UK as an alternative to the US at Davos.

Business secretary Peter Kyle said the UK would be “foolish” to embrace a new customs union with the EU despite fears of a trade war with Trump.

Britain is considering a range of measures to better protect children online, including an Australian-style social media ban.

(Bloomberg, Financial Times, Reuters)

Other Global Developments

Australia’s second-biggest pension fund says it is reducing exposure to the US dollar through currency hedging amid falling interest rates and global volatility.

Taiwan aims to build a “democratic” high-tech supply chain with the US and form a strategic AI partnership under the new tariffs deal.

Banks in Saudi Arabia are borrowing internationally at their fastest ever pace as they rebalance their books.

(Reuters, Financial Times)

GEOPOLITICAL

Trump on Diego Garcia

Trump criticised UK PM Starmer’s plans to return sovereignty of Diego Garcia - an island that houses a crucial military base - to Mauritius, reversing his previous support.

Trump cited the decision to justify his ambitions for Greenland.

(Bloomberg)

UK-China Embassy

The UK government is preparing to approve a contentious new Chinese “mega” embassy in London on Tuesday, after Britain’s intelligence services devised protective security measures.

(Financial Times)

China Board of Peace

China has been invited to join Trump’s Board of Peace initiative aimed at resolving global conflicts, a Chinese foreign ministry spokesperson confirmed.

(Reuters)

Afghanistan Attack

Islamic State claimed an explosion that killed a Chinese national and six Afghans at a Chinese-run restaurant in a heavily guarded part of Afghanistan’s capital.

(Reuters)

Nigel Farage

Nigel Farage is seeking a meeting with the UAE president to boost his profile and build ties.

(Financial Times)

EQUITIES

China Tourism Buying LVMH’s DFS

China Tourism Group Duty Free shares rose after the company said it plans to acquire LVMH’s DFS travel retail business in Hong Kong and Macau.

(Wall Street Journal)

GSK Acquires Rapt Therapeutics

GSK has agreed to acquire Rapt Therapeutics, a US biotech developing therapies for inflammatory and immunologic diseases, in a deal valuing the company at $2.2 billion.

(Financial Times)

ByteDance Cloud Push

ByteDance is making an aggressive push into China’s cloud market, using its AI advances to diversify beyond consumer apps.

The strategy is disrupting a multibillion-dollar industry long dominated by Alibaba, Tencent and Huawei.

(Financial Times)

Baidu AI Growth

Baidu’s AI assistant has surpassed 200 million monthly active users since its 2023 launch.

Last week Alibaba announced its Qwen app surpassed 100 million MAUs within two months of launch.

(Wall Street Journal)

Chinese EVs in UK

Nio, Aion and Zeekr are set to launch in the UK this year, becoming the latest Chinese carmakers to use Europe’s second-largest EV market to test their global ambitions.

(Financial Times)

Nvidia H200 Update

Taiwan’s Inventec President said the decision on Nvidia’s H200 AI chips “appears to be stuck on the China side.”

(Reuters)

Chevron Venezuela Caution

Chevron has expressed caution for further investment in Venezuela, showing how far Trump’s aspirations for a speedy Venezuelan oil revival are from what the US oil industry considers realistic.

(Wall Street Journal)

Lululemon Proxy Fight

Lululemon founder Chip Wilson is trying to excise private equity firm Advent from the apparel maker’s board as part of an ongoing proxy fight.

(Semafor)

Elliott Invests in Stratolaunch

Elliott Investment Management has made an investment in Stratolaunch, a privately held hypersonic-flight company.

(Wall Street Journal)

Wise Moving to US

Wise said it’s on track to shift its primary listing to the US in the first half of this year, as continued customer growth fueled a 21% increase in underlying income in Q3.

(Bloomberg)

Musk vs Ryanair

The online brawl between Elon Musk and Ryanair dragged into a second week, with Musk again floating the idea of buying the airline after clashing with its CEO.

(Bloomberg)

Other Notable Moves

Henkel said it was in discussions over a potential acquisition of Dutch specialty-chemicals company Stahl Holdings.

BHP upgraded its annual copper-production guidance amid record-high prices but announced another cost overrun on its Canadian potash project.

New carbon tax will hurt British industry, according to steel, cement and chemicals groups.

(Wall Street Journal, Financial Times)

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