Geopolitical Influences on Financial Markets
The ongoing World Economic Forum in Davos brings international focus on escalating global tensions, particularly with U.S. President Trump’s continued pressure on Greenland, leading to volatility in cryptocurrency markets. January 20 has been notably challenging for digital currencies. Macron’s recent statement about transitioning to a “world without rules” hints at the persistence of market fluctuations driven by these global developments.
France’s Macron has voiced strong opposition against America’s impositions, implying the ongoing tension over Greenland is set to continue. This statement underlines the critical nature of the current geopolitical landscape, with nations contemplating their positions regarding U.S. policies.
Economic Turmoil and Market Reactions
In Japan, financial turmoil is evident as government bond prices decline sharply following substantial sell-offs. The U.S. dollar, influenced by both Greenland and tariff issues, weakened, leading to a rise in Treasury yields. The 10-year Treasury yield increased by seven basis points to 4.29%, while the 30-year yield surged by ten basis points to 4.94%, marking their highest levels since early September.
On prediction platforms like Polymarket, there’s a 37% probability that the U.S. may impose tariffs on the EU due to the Greenland issue by February 1 or earlier. Market campaigns, such as “Will Trump purchase Greenland before 2027?” suggest a 20% probability of such an event, while the purchase of a portion of Greenland by Trump holds a 25% likelihood.
Macron emphasized the lack of plans for a meeting with Trump at Davos, contradicting Trump’s shared messages and pointing to heightened EU-U.S. tensions since last year’s tariffs.
Upcoming Economic and Political Events
Key decisions are anticipated between 18:00 and 18:30 regarding the Supreme Court’s tariff ruling, after weeks of delays. At 21:00, White House Press Secretary Leavitt will speak, and Trump is expected to address in a signature ceremony at 23:00. Additionally, Netflix’s earnings report is scheduled for later this evening.
U.S. Treasury Secretary Bessent advised caution against escalating tensions, mentioning four potential candidates concerning the Federal Reserve, with an announcement expected soon.
“Trump’s Greenland threats are unlike other trade deals, with the U.S. anticipating a 4-5% real GDP growth this year. European nations continue to hold U.S. Treasuries steadfastly, while the U.S.’s commitment to NATO remains firm. Capturing Greenland remains a long-term U.S. objective.”
He criticized Powell’s participation in Cook’s hearing amidst ethical issues and highlighted the president’s focus on Western Hemisphere security.
He also predicted Japan will make statements to ease market unrest.
The Supreme Court unlikely to annul a presidential economic policy signature. I spoke with China’s He Lifeng last night, and rare earth elements are flowing as expected. The U.S. economy is robust, with accelerating growth, unaffected by China’s measures against Japan.
We are rapidly establishing a critical minerals block, setting price floors and ceilings. Administering independence in refining critical minerals is expected within 18-24 months.”