Market Wrap 2026-01-14

Core-Brief

14 Jan 2026 — 11 min read

Sources speaking to the WSJ indicate that Beijing is not currently planning further expansion into Latin America; instead, the focus has shifted to the idea that if the Western Hemisphere is considered to belong to the US, then the Taiwan Strait should be considered to belong to China, though this does not imply immediate action.
According to WSJ sources, Chinese officials are considering incentives to encourage the US to strategically withdraw from the Taiwan Strait, potentially including Beijing's agreement to purchase billions of USD in long-term Treasuries.
European stock exchanges opened with gains but have largely declined as risk sentiment weakens due to rhetoric from Iran; US equity futures are also showing losses.
The DXY is slightly lower; the JPY is experiencing mild gains following verbal interventions from several officials, including Katayama, who stated that they will take appropriate action to address excessive FX movements, with no options excluded.
Fixed income benchmarks were initially stable but have recently risen as risk aversion increases.
Crude oil benchmarks are at their highest levels as Iran warns it will strike US bases if attacked; Iran states it is at its "highest level" of readiness.
Upcoming events include US PPI (Nov), Retail Sales (Nov), Atlanta Fed GDP, NBP Policy Announcement, Fed's Beige Book; speeches from BoE's Ramsden, Fed's Paulson, Kashkari, Williams, Miran, Bostic; and earnings reports from Wells Fargo, Citi, and Bank of America.

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EUROPEAN TRADE

EQUITIES

European stock exchanges (STOXX 600 -0.1%) initially opened with broad gains but have since mostly fallen into negative territory as risk sentiment declines amid hawkish rhetoric from Iran.
European sectors are mixed. Healthcare and Utilities are leading, while Media and Travel & Leisure are lagging. The latter is under pressure after Barclays downgraded Lufthansa (-3%) and Air France (-4.5%).
US equity futures were mixed but have recently come under pressure, showing a negative outlook across indices: ES -0.4%, NQ -0.6%, RTY -0.2%. Sentiment has dipped as markets digest remarks from Iran, which stated it would strike US bases in the Middle East if the US attacked Iran. Reports suggest that some personnel have reportedly been told to leave Qatar's Al Udeid US airbase by Wednesday evening.
China's customs authorities have reportedly informed customs agents this week that NVIDIA's (NVDA) H200 AI chips are not permitted to enter China; it is unclear whether this constitutes a formal ban or a temporary measure. Government officials have reportedly told tech companies not to purchase the chips unless necessary.
Tesla (TSLA) CEO Elon Musk announced on X that the company will stop selling FSD after February 14th and will only offer it as a monthly subscription thereafter.
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FX

The DXY is incrementally lower, trading within a narrow range of 99.02-99.24; the low for the day is slightly below its 50 DMA at 99.04. Further pressure could lead to a test of its 200 DMA at 98.79.
There is no single major driver for the index this morning, but overnight the USD was pressured by a WSJ report stating that the US had halted China’s plans to expand in Latin America and instead believes the Taiwan Strait belongs to China. The report added that China could incentivize the US to move away from the Strait by offering billions of dollars in long-term Treasuries.
Other G10 currencies are mixed against the USD, with modest strength in Antipodeans (attributed to strength in the metals complex) and the GBP. Regarding Sterling, BoE's Taylor spoke earlier, reiterating that he expects monetary policy to normalize at neutral "sooner rather than later," adding that the BoE sees inflation at the target in mid-2026 versus 2027 previously. These remarks did not cause any market movement.
USD/JPY has fluctuated this morning, but the JPY is net-firmer against the USD amid continued verbal interventions from Japanese officials and increasing geopolitical tensions. Earlier, Cabinet Secretary Kihara said they will take appropriate action to deal with excessive movements in FX – echoing remarks made by the Keidanren Chief in the prior session. Subsequently, Katayama spurred some modest strength in the JPY after stating that "nothing is excluded" in relation to dealing with FX moves, adding that she had FX talks with Bessent. As a reminder, Katayama recently said Bessent shares the same concerns about a weak JPY – perhaps indicating some acceptance of intervention by the US. Thereafter, FX Diplomat Mimura spurred another bout of strength in the JPY after he reiterated Katayama’s comments.

FIXED INCOME

The European day began with a contained start for fixed income.
However, the risk tone began to deteriorate due to geopolitical news. Specifically, a Senior Iranian Official said that it would strike US bases in the Middle East if the US attacked Iran. As a result, reports suggest that some personnel have reportedly been told to leave Qatar's Al Udeid US airbase by Wednesday evening.
USTs (112-05+ to 112-13+) and Bunds (127.98 to 128.26) are currently at the upper end of their respective ranges, given the risk tone.
There was no real movement in Bunds following a number of ECB appearances and a German auction that passed without issue.
Gilts opened with modest gains, reflecting the mild bullish bias in peers. Since then, the benchmark has been choppy in 92.14 to 92.40 confines, but trades broadly in-line with the above. No move to remarks from BoE's Taylor, who stuck to his dovish script and largely echoed language from the December meeting; as a reminder, Taylor was in the majority who voted for a 25bps cut to 3.75%. UK supply was well received, sparking modest upside.
Germany sold EUR 700.9mln vs exp. EUR 1bln 3.25% 2042 Bund, EUR 809mln vs exp. EUR 1bln 0.00% 2052 Bund, EUR 822mln vs exp. EUR 1bln 2.90% 2056 Bund & EUR vs exp.

COMMODITIES

Crude benchmarks began the European session on the backfoot, scaling back from the upside seen in the prior session. However, a number of Iran-related headlines have lifted the complex into positive territory and to highs. Specifically, a Senior Iranian Official said that it would strike US bases in the Middle East if the US attacked Iran. As a result, reports suggest that some personnel have reportedly been told to leave Qatar's Al Udeid US airbase by Wednesday evening. WTI and Brent are currently at highs, posting gains of approximately USD 0.90/bbl.
Precious metals continue their ascent to ATHs, as trend purchasing and geopolitics keep the complex bid. Spot gold made a fresh all-time peak at USD 4,639.89/oz and has traded at elevated levels throughout the European morning. Spot silver made a fresh ATH at USD 91.57/oz before scaling back towards the USD 90/oz mark.
Base metals also followed the trend seen across the precious metals complex overnight, with 3M LME Copper also making a fresh ATH beyond USD 13.4k/oz, but has since scaled back to currently trade flat on the session. Elsewhere, 3M LME tin hits a new record above USD 51k/t on strong Chinese investor demand.
Indonesia could potentially approve a Nickel ore production quota of c. 260mln/MT in 2026, according to local reporting.

TRADE/TARIFFS

EU lawmakers are scheduled to meet at 08:00GMT to decide whether to postpone the vote on lifting tariffs on US industrial goods, according to Politico sources; the delay is framed as a tactical response to the US' threat to annex Greenland.
Indonesia is to raise its crude palm oil export level to 12.5%, effective from March.
US President Trump said, regarding China, "I think we can open China markets to US goods."
The US Commerce Department stated that Chinese companies must demonstrate sufficient security procedures to buy NVIDIA (NVDA) H200 chips.
The US posted a license review rule for chip exports to China and Macau; the US is easing the criteria to approve NVIDIA (NVDA) H200 chip exports to China; NVIDIA H200 chips are covered by the export license review rule.

NOTABLE EUROPEAN HEADLINES

The option to allow the French budget, in its initial form, to pass without parliamentary approval has reportedly been under consideration for around ten days, according to Politico sources; this is the so-called "ordinance" option, reportedly favored by President Macron. However, several sources add that while nothing has been ruled out, the option of Article 49.3 is the one actively under consideration at this moment.

CENTRAL BANKS

Fed's Barkin (2027 voter) said that no single meeting is decisive and that errors can be corrected at the next meeting. He is not seeing a strong business push to pass on price hikes. CPI data was encouraging. Shelter inflation is still biased due to missing October data. Businesses are more confident about tariff outcomes now than last April. Tariffs still create some cost and inflation pressure over time, but the timing is unclear.
Fed's Barkin (2027 voter) said inflation is higher than our target but it doesn't seem to be accelerating just yet; unemployment has ticked up but is not ticking out of control.
BoJ Governor Ueda said Japan's economy continued to moderately recover in 2025 and the Bank will keep raising rates if the economic outlook is realized.
Japanese Chief Cabinet Secretary Kihara said the BoJ chooses which monetary tools to use and expects BoJ-Government co-operation to reach 2% inflation steadily.
The Finance Markets Department of the BoJ will hold a meeting on market operations on February 26th to discuss recent market developments, BoJ operations, JGB market liquidity and functionality, and money markets.
ECB's de Guindos said inflation is in a good place.
ECB's Villeroy said if the budget deficit in France increased to more than 5% in 2026, then the country would enter the danger zone.
ECB's Kazaks said the ECB is in a good place and that outlook risks are on both sides.
BoE's Taylor said he "...expect monetary policy to normalise at neutral sooner rather than later, as I said in the December minutes". The BoE sees inflation at the target in mid-2026, judging this to be sustainable given cooling wage growth.
A Bank of Korea official reiterated that a USD/KRW exchange rate above 1,400 is misaligned with economic fundamentals, noting the need for policy measures to ease excessively pessimistic market sentiment.

NOTABLE US HEADLINES

US' Witkoff and Kushner intend to visit Moscow, Russia soon and meet with President Putin, according to Bloomberg sources. The meeting could occur in January.
US President Trump said that robots will be a major force and will help with jobs.
US President Trump said the economy is booming, with the private sector growing by over 5% due to business investment. He added that inflation trends are looking good and that "All the smart money knows the HOTTEST Economy in the World is the U.S.A".
"Israel has been on particularly high security alert in recent hours, against the backdrop of the US president's dramatic statements regarding the protests in Iran", according to local press. The Israeli security assessment is that a US attack on Iran is not a question of if but when". "There are fears that Iran could attack Israel in response.".

GEOPOLITICS

RUSSIA-UKRAINE

US' Witkoff and Kushner intend to visit Moscow, Russia soon and meet with President Putin, according to Bloomberg sources. The meeting could occur in January.
European Commission President von der Leyen says funding to Ukraine for the 2026-27 period will be EUR 90bln, split into EUR 60bln for military and EUR 30bln for fiscal support.

MIDDLE EAST

A Senior Iranian Official said Tehran has warned regional nations that it will strike US bases in the region if attacked by the US. They requested that regional leaders work to prevent an escalation. Direct communication between the US and Iran has been halted due to threats by US President Trump.
"Israeli security sources: Israel is not a partner in any US plans to launch military action against Iran", Sky News Arabia reported, citing local reports.
The Trump administration is expected to announce the establishment of a peace council for Gaza and the establishment of a Palestinian government of technocrats that will run the Gaza Strip, according to Axios. "The Trump administration will also officially announce the appointment of former UN envoy Nickolay Mladenov as the representative of the Peace Council in the Gaza Strip and who will accompany the activities of the Palestinian technocrat government".
US National Security Officials arrive at the White House as meeting begins to discuss Trump's options against Iran, CNN reported.
The US State Department has warned US citizens to leave Iran and to consider departing by land to Turkey or Armenia if it is safe to do so.
US President Trump said he is heading back to the White House and will look at Iran, adding that "Iran is on my mind" and will get death figures shortly. He will act accordingly on the protester death toll.
"Israel has been on particularly high security alert in recent hours, against the backdrop of the US president's dramatic statements regarding the protests in Iran", according to local press. The Israeli security assessment is that a US attack on Iran is not a question of if but when". "There are fears that Iran could attack Israel in response.".
The Trump administration believes that Iran has not yet reached the stage of weakness that makes US strikes decisive to topple the regime, NBC News reported.

OTHERS

Some personnel have reportedly been told to leave Qatar's Al Udeid US airbase by Wednesday evening.
Four Chinese ships reportedly entered Japan's waters near the Senkaku Islands, according to Kyodo.
Sources speaking to the WSJ indicate that Beijing is not currently planning further expansion into Latin America; instead, the focus has shifted to the idea that if the Western Hemisphere is considered to belong to the US, then the Taiwan Strait should be considered to belong to China, though this does not imply immediate action. Beijing is now playing defense, focused on avoiding a complete erasure from Venezuela’s oil reserves. This calculated retreat, according to sources, could reflect what China expects the US to do in the Taiwan Strait. Other incentives under consideration by Chinese officials, sources said, include Beijing potentially agreeing to buy billions of USD in long-term Treasurys.
Venezuela's acting President Rodriguez plans to send an envoy to Washington to meet with senior US officials on Thursday.
The Venezuela Government has started releasing US citizens, Bloomberg reported.
US Senators have introduced legislation to prevent the American military from occupying or annexing NATO territories including Greenland.

CRYPTO

Bitcoin is on a firmer footing and trades towards USD 95k; Ethereum outperforms and is back above USD 3.3k.

APAC TRADE

Asia-Pac stocks traded mostly in the green, with the Nikkei 225 outperforming, while the ASX 200 lagged.
The ASX 200 initially started the session with gains, up as much as 0.6%, before reversing due to losses in Financials. This follows poor JPMorgan (JPM) earnings, in which EPS and revenue missed estimates.
The Nikkei 225 was the clear outperformer in Asia-Pac equities, up 1.7% and continuing to extend to fresh ATHs. This follows increased traction around reports that PM Takaichi is set to dissolve the Lower House and call a snap election in a bid to capitalize on her healthy poll numbers, reviving the so-called ‘Takaichi trade’.
The KOSPI traded choppily, with the South Korean equity market peaking at a new ATH of 4,716 before falling back into Tuesday’s trading range.
The Hang Seng and Shanghai Composite started the APAC session on the front foot and have failed to pull back meaningfully in the early hours of trade, with the Shanghai Composite trading at ATHs around 4,181. The Shanghai Comp. later completely reversed its earlier gains following a margin requirement adjustment.

NOTABLE ASIA-PAC HEADLINES

China's Ministry of Science and Technology announces a plan to strengthen financing and support mechanisms for key tech sectors.
China is reportedly to launch a new round of policy to boost employment, via CCTV.
Samsung Electronics (005930 KS) is reportedly to close one of its three 8inch foundry fabs in Giheung during H2-2026, Lec reported, citing sources. The intention is to phase out low-profit legacy processes and concentrate resources on 12inch production.
Baidu (9888 HK) is reportedly looking into upgrading its Hong Kong listing to primary status, Bloomberg reported, citing sources. This move would provide it with more mainland China exposure.

NOTABLE APAC DATA RECAP

Indian WPI Inflation YoY (Dec) Y/Y 0.83% vs. Exp. 0.30% (Prev. -0.32%).
Indian WPI Food Index YoY (Dec) Y/Y 0.0% vs. Exp. -2.3% (Prev. -2.60% ).
Indian WPI Manufacturing YoY (Dec) Y/Y 1.82% vs. Exp. 1.5% (Prev. 1.33%).
Japanese Money Supply M2 YY (Dec) 1.7% (Prev. 1.8%).
Japanese Money Supply M3 YY (Dec) 1.1% (Prev. 1.2%).
Chinese Exports YoY (Dec) Y/Y 6.6% vs. Exp. 3% (Prev. 5.9%).
Chinese Balance of Trade Yuan (Dec) 808.8B vs. Exp. 820B (Prev. 792.58B).
Chinese Imports YoY (Dec) Y/Y 5.7% vs. Exp. 0.9% (Prev. 1.9%).
Chinese Exports YoY Yuan-Denominated (Dec) Y/Y 6.1% (Prev. 5.7%).
Chinese Imports YoY Yuan-Denominated (Dec) Y/Y 0.5% (Prev. 1.7%).
Australian Building Permits MoM Final (Nov) M/M 15.2% vs. Exp. 15.2% (Prev. -6.1% ).
Australian Building Permits YoY Final (Nov) Y/Y 20.2% vs. Exp. 20.2% (Prev. -1.1% ).
Australian Private House Approvals MoM Final (Nov) M/M 1.3% vs. Exp. 1.3% (Prev. -1.3% ).