Closing Recap 

U.S. stocks staged a powerful rebound on Wednesday, with the major indices surging higher after President Trump signaled a de-escalation in the trade standoff with Europe over Greenland. The S&P 500 jumped 1.16%, and the Dow gained 1.21%, erasing a significant portion of the previous day’s sharp losses. The rally was broad-based, with cyclical sectors like Energy, Materials, and Healthcare leading the charge, while small caps also outperformed. The “risk-on” mood was sparked by a post on Trump’s Truth Social media page, in which he announced that a “framework for a future deal” on Greenland had been reached and that he would not be imposing the threatened February 1st tariffs. This sent a wave of relief through global markets, causing safe-haven assets like gold and silver to pull back from their recent record highs. 

Key Takeaways 

• Stocks Surge as Trump Drops Tariff Threat: A powerful relief rally swept through markets after President Trump announced he was scrapping his planned tariffs on the EU and UK over Greenland, citing a “framework for a future deal.” 
• Broad-Based Rebound, Small Caps Outperform: The S&P 500 gained 1.16%, and the rally was broad-based, with nearly all sectors finishing in the green. The Russell 2000 jumped 2%, extending its streak of outperformance to 13 days. 
• Safe Havens Retreat on De-escalation: The easing of geopolitical tensions caused a pullback in safe-haven assets. Gold and silver both fell after the settlement, pulling back from their recent record highs. 
• Gold and Silver Retreat from Highs: After a parabolic run, precious metals are seeing a sharp pullback as the risk-on mood returns. Silver has corrected from its record highs, while Gold has pulled back from the $4,900 level.
• Goldman Lifts Gold Target to $5,400: Despite the pullback, Goldman Sachs raised its 2026 gold price forecast by $500 to $5,400/oz, citing strong structural demand from central banks and private investors.
• Japanese Bond Rout Eases, Nikkei Rebounds: The violent sell-off in Japanese Government Bonds eased, providing some relief for global markets. The Nikkei snapped a five-session losing streak, jumping over 1%. 
• Trump Hints at “Greenspan-like” Fed Chair: President Trump stated he wants a new Fed Chair in the mold of Alan Greenspan, who famously let risky assets run, reinforcing the market’s dovish expectations.
• The Dollar’s Bleak Outlook: Despite the near-term bounce, major banks like HSBC see a bleak medium-term outlook for the U.S. Dollar, weighed down by erratic U.S. policy and the looming Fed leadership transition.
• Natural Gas Surges 75% in 3 Days: Natural gas has been on a tear, with prices now up 75% in just three days as a “polar vortex” is forecast to hit the U.S., a move that marks the largest 3-day gain in history. 
• Bitcoin Wipes Out 2026 Gains: The crypto market remains under pressure, with Bitcoin’s recent slide having now erased all of its year-to-date gains as investors retreat from risk. 
• Jobless Claims and PCE Inflation on Tap: The market is now looking ahead to today’s weekly Jobless Claims report and the delayed November PCE inflation data for the next major directional cue. 
• Hawkish Central Bank Surprises: The market is grappling with a wave of hawkish surprises from global central banks. The RBA has turned hawkish, the BoJ is on a clear tightening path, and even the ECB is pushing back on rate cut expectations.
• Aussie Dollar Surges on Hot Jobs Data: The Australian dollar was the standout performer overnight after a blockbuster December jobs report smashed expectations and sent RBA rate hike odds soaring. 

Market Overview

The market’s “risk-off” mood has evaporated as quickly as it appeared. After a brutal sell-off on Tuesday, the bulls came roaring back on Wednesday, courtesy of a classic Trumpian U-turn. The catalyst was a classic “Trump Accepts Chinese Offer” (TACO) moment, this time with Europe.A single post on his Truth Social media page was all it took to completely reverse the market’s recent risk-off mood. The announcement that a “framework for a future deal” on Greenland had been reached and that the threatened tariffs were now off the table sent a powerful wave of relief through global markets, igniting a broad-based rally in equities and other risk assets. The session was a perfect illustration of how sensitive the market has become to geopolitical headlines and the unpredictable nature of the Trump administration. The de-escalation of the Greenland standoff has, for now, overshadowed the other major risk factor that had been weighing on sentiment: the turmoil in the Japanese bond market. 

Index	Up/Down	%	Last
DJ Industrials	588.39	0.0121	49076
S&P 500	78.77	0.0116	6875
Nasdaq	270.5	0.0118	23224
Russell 2000	52.81	0.02	2698

While the long-term implications of rising Japanese yields and a potential “great liquidity drain” remain a serious concern, the market has chosen to focus on the immediate positive of avoiding a new trade war. With the geopolitical risk premium now unwinding, the focus will shift back to the economic data and the path of the Federal Reserve, with today’s Jobless Claims and PCE reports set to provide the next key inputs.

Economic Calendar 

With U.S. markets returning to a more normal schedule, today’s session is packed with a backlog of important economic data releases. Data Released Yesterday / Overnight: 

• Australian December Employment Report: A blockbuster report. The economy added a massive 65.2K jobs, smashing the 30K forecast, and the unemployment rate fell to 4.1%. The data sent the AUD soaring and has put a February RBA rate hike firmly on the table. 
• South Korean Q4 GDP: A major miss, with the economy contracting by -0.3% quarter-over-quarter.
• UK December CPI: A hot report, with headline inflation rising to 3.4% y/y, beating the 3.3% forecast and complicating the BoE’s path. 

Today’s Economic Calendar: 

• European Session: An extremely light calendar with only an EU leaders’ summit, which is now less critical after the tariff de-escalation. 
• U.S. Session: The main highlights are the weekly U.S. Jobless Claims report and the delayed November U.S. PCE Price Index, the Fed’s preferred inflation gauge. 
• 13:30 GMT – U.S. Q3 GDP (Final) & PCE Prices. 
• 13:30 GMT – U.S. Weekly Jobless Claims.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

After their recent explosive rally, precious metals saw some significant profit-taking. Gold is consolidating its gains around the $4,830 level, while silver has pulled back towards $94.00, as the de-escalation of the Greenland trade dispute has reduced immediate safe-haven demand. The big story in commodities has been the sharp pullback in precious metals. Gold has fallen back towards the $4,800 level as the immediate safe-haven bid recedes, though Goldman Sachs has raised its 2026 target to $5,400, citing strong structural demand from central banks and private investors. Crude oil prices are holding steady, with WTI trading above $60.50 a barrel, as the market balances the easing of geopolitical tensions against ongoing supply concerns. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.26	0.0043	60.62
Gold	71.7	0.0151	4837.5
Silver	(Volatile)	–	94.2
EUR/USD	-0.0045	-0.0038	1.1679
USD/JPY	0.32	0.002	158.47
10-Year Note Yield	-0.024	-0.0056	0.04271

The U.S. dollar rebounded as the Greenland tariff threat faded, while the Australian dollar was the standout performer. HSBC maintains a bleak outlook for the dollar, citing erratic U.S. policy and the looming Fed chair transition as major headwinds:

• AUD/USD: The Aussie surged to a 15-month high after a stunningly strong December jobs report smashed expectations and sent RBA rate hike odds soaring.The data has effectively put a February RBA rate hike on the table, with markets now pricing a 50% chance. 
• EUR/USD: The Euro has pulled back sharply from its recent highs, falling below 1.1700 as the U.S. dollar rebounds on the back of the tariff de-escalation. A massive $2.5B options expiry at the 1.1700 level provides a key pivot point. The easing of the US-EU trade tensions has removed a key pillar of support for the single currency. 
• GBP/USD: The pound is holding its ground, supported by a hotter-than-expected UK CPI report for December, which is tempering some of the market’s more dovish expectations for the Bank of England. 
• USD/JPY: The yen is weaker, with the pair climbing back above 159.00. The broad risk-on mood and a recovery in global bond markets are weighing on the safe-haven currency. The Yen is under pressure from the broad “risk-on” mood, which is overshadowing the hawkish BoJ narrative. A notable $1.2B options expiry at the 159.00 level is a key resistance target.Goldman Sachs sees the pair trading in a 155-160 range, with intervention risks capping the upside.

Cryptocurrencies: After a brief recovery, the crypto market’s rebound has stalled. Bitcoin is struggling to hold the $90,000 level, with the de-escalation of the Greenland crisis providing little support for the beleaguered asset. The market remains in a fragile state, with all of its 2026 gains now erased. U.S. Treasury yields are slightly lower as investors digest the week’s geopolitical rollercoaster. The benchmark 10-year yield is trading around 4.27%, reflecting ongoing uncertainty about the global economic outlook. 

Looking Ahead 

Today’s trading will be dominated by the release of the U.S. Jobless Claims and PCE inflation reports. After a week of being whipsawed by geopolitical headlines, the market will be eager to get back to focusing on the fundamentals. Softer-than-expected data would reinforce the case for Fed easing and could reignite the risk-on rally. However, any signs of unexpected economic strength or sticky inflation could challenge the market’s dovish conviction and lead to another wave of volatility.

What to Watch Today 

• The “TACO” Trade’s Durability: The market has rallied hard on the Greenland tariff de-escalation. The key question now is whether this is a lasting truce or just another temporary pause in the trade wars. 
• The Data Deluge is Here: Today’s Q3 GDP and PCE reports will be critical in confirming or denying the dovish narrative that is currently driving markets. Expect significant volatility. 
• The Aussie’s Hawkish Pivot: The blockbuster jobs report is a game-changer for the RBA. The market is now in a tug-of-war, with a hawkish central bank battling against the headwinds from a slowing Chinese economy. 
• Trump’s “Greenspan” Fed: President Trump’s desire for a more dovish, “Greenspan-style” Fed Chair is a major new narrative. His choice of a successor to Powell will be a huge market-moving event and a key focus for traders. 
• The Natural Gas Squeeze: The parabolic surge in natural gas is a major new development. The combination of an arctic blast and low inventories has created a powerful squeeze that is a major risk for consumers and a boon for producers.