Closing Recap 

U.S. stocks rallied on Thursday, with the major indices recovering all of the prior session’s sharp losses after President Trump signaled a de-escalation in the trade standoff with Europe over Greenland. The S&P 500 jumped, and the Dow also gained, but the real star of the show was the small-cap Russell 2000, which surged to a new all-time high. The rally was broad-based, with cyclical sectors leading the charge. The “risk-on” mood was sparked by Trump’s comments that a “framework for a future deal” had been reached. This sent a wave of relief through global markets, causing safe-haven assets like gold to pull back. The Bank of Japan added to the day’s drama with a suspected “rate check,” causing a sharp but brief spike in the yen. 

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. 
• Small Caps Hit New Record High: The Russell 2000 jumped to a new all-time high, extending its streak of outperformance over the S&P 500 to 14 consecutive days in a sign of broadening market participation. 
• “Risk-On” Mood Returns with a Vengeance: The de-escalation of the Greenland trade war has triggered a massive “risk-on” wave. Stocks are soaring, safe-haven assets like gold are pulling back, and the U.S. Dollar has reversed its recent slide.
• Safe Havens Retreat on De-escalation: The easing of geopolitical tensions caused a pullback in safe-haven assets. Gold and silver both fell, pulling back from their recent record highs. 
• Gold and Silver Explode to Historic, Stratospheric Highs: The rally in precious metals has gone into overdrive. Gold has surged to a new all-time high, nearing the $5,000 level, and Silver has also hit a new record, smashing through $99.00 and getting closer to $100 on a “perfect storm” of safe-haven demand and supply shortages.
• Yen Spikes on Suspected Intervention: The Japanese yen saw a dramatic but short-lived surge, with USD/JPY plunging nearly 200 pips in seconds on what was suspected to be a “rate check” by the Bank of Japan, a warning shot to speculators. 
• Strong Data Supports “Soft Landing” Narrative: A batch of upbeat U.S. data, including a stronger-than-expected Q3 GDP print and in-line PCE inflation, reinforced the market’s “soft landing” narrative.
• Bank of Japan Holds, But Signals Tighter Policy Ahead: The Bank of Japan held rates steady at 0.75% as expected, but the decision was split, with one member voting for a hike. The bank also revised its inflation forecasts higher, reinforcing expectations of further tightening.
• Natural Gas on a Parabolic Run: Natural gas has been the standout performer in commodities, with futures surging a record 57% in just two days as a “polar vortex” arctic blast hits the U.S., sparking fears of supply shortages.
• Investor Risk Appetite Near Record Highs: A new survey showed institutional investor risk appetite is at its highest level since April 2021, a potentially contrarian bearish signal. 
• Bitcoin Fails to Hold Rebound: The cryptocurrency’s recent rebound has stalled, with Bitcoin struggling to hold the $90,000 level as the improved risk sentiment in traditional markets fails to spill over and new whale selling pressure emerges.
• Flash PMIs in Focus: The market is now looking ahead to today’s Flash PMI data from Europe and the U.S. for the next major directional cue. 

Market Overview 

After a brutal sell-off to start the week, the bulls came roaring back on Thursday, courtesy of a classic Trumpian U-turn. The announcement that the threatened tariffs on Europe 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 rally was further supported by a fresh batch of upbeat U.S. economic data. The final Q3 GDP print was revised higher to 4.4%, and the Fed’s preferred inflation gauge, the core PCE, came in as expected. This data reinforces the “soft landing” narrative that has been a key pillar of the market’s rally. 

Index	Up/Down	%	Last
DJ Industrials	306.78	0.0063	49384
S&P 500	37.76	0.0055	6913
Nasdaq	211.2	0.0091	23436
Russell 2000	20.6	0.0076	2718

The most encouraging sign for bulls was the continued outperformance of small caps, a clear signal of broadening market participation. However, significant risks are still brewing. The drama in the Japanese currency market, where a suspected “rate check” from the Bank of Japan caused a massive yen spike, is a stark reminder of the potential for disorderly moves as the BoJ normalizes policy.

Economic Calendar 

With a slew of central bank decisions now in the rearview mirror, today’s focus is on the release of Flash PMI data from around the globe. Data Released Yesterday / Overnight: 

• U.S. Q3 Final GDP: Revised higher to a stronger-than-expected +4.4% annualized rate. 
• U.S. Weekly Jobless Claims: Fell to 200,000, remaining near historic lows. 
• U.S. November PCE Price Index: Came in as expected, with the core rate holding steady at +2.8% y/y. 
• Bank of Japan Rate Decision: Held the policy rate steady at 0.75% in an 8-1 vote, with one member dissenting for a hike. The bank revised its inflation forecasts higher. 
• Japan Flash Manufacturing PMI (Jan): A big beat, rising to 51.5 from 50.0, signaling a return to expansion for the first time in months. 
• Australian Flash PMIs (Jan): Showed a strong start to the year, with the composite index jumping to 55.5. 
• UK Retail Sales (Dec): A huge beat, rising +0.4% month-over-month versus a -0.1% forecast.

Today’s Economic Calendar: 

• European Session: Flash Manufacturing & Services PMIs for Germany, the Eurozone, and the UK. 
• U.S. Session: Flash Manufacturing & Services PMIs and Canadian Retail Sales. 
• A heavy slate of central bank speakers from the ECB and BoE.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities has been the surge in precious metals. Gold is consolidating its gains near $4,950 an ounce, while silver has pulled back to just near $99.00 and close to the big psychological level $100. The de-escalation of the Greenland trade dispute has reduced immediate safe-haven demand. Crude oil prices fell, with WTI settling down over 2% as the market unwound the geopolitical risk premium. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-1.26	-0.0208	59.36
Gold	75.9	0.0167	4913.4
EUR/USD	0.0041	0.0035	1.1723
USD/JPY	0.32	0.002	158.57
Bitcoin	-2,000+	-0.022	89000
10-Year Note Yield	0.022	0.0052	0.04275

The U.S. dollar is on the back foot as the de-escalation of the Greenland trade dispute has improved risk appetite. The Japanese yen was the main focus after a dramatic intraday spike. 

• USD/JPY: The yen was on a wild ride, with the pair first rallying towards 159.22 before a suspected “rate check” from the Bank of Japan sent it plunging nearly 200 pips to 157.33. The move has put the market on high alert for physical intervention. Massive options expiries at 159.00 ($1.1B) and 160.00 ($1.4B) are providing key resistance targets for today’s session.
• EUR/USD: The pair is rallying, trading around 1.1740 as the dollar weakens. The single currency is benefiting from the broad improvement in risk sentiment. A notable $1.3B options expiry at the 1.1700 level provides a key support level.
• GBP/USD: The pound is also catching a strong bid, with GBP/USD surging on the back of the Greenland de-escalation news. 

Cryptocurrencies: The crypto market remains under heavy pressure. Bitcoin is struggling to hold the key $90,000 level, with the “digital gold” narrative failing to materialize amidst the flight to physical precious metals. The market is being hit by a wave of selling from large investors, compounding the negative sentiment. Treasuries: U.S. Treasury yields are slightly higher as investors digest the week’s geopolitical rollercoaster and a fresh batch of strong U.S. economic data. The benchmark 10-year yield is trading around 4.27%. 

Looking Ahead 

Today’s trading will be dominated by the release of the Flash PMI reports from Europe and the U.S. These timely indicators of economic activity will be crucial in shaping the market’s outlook for 2026. Stronger-than-expected data could challenge the market’s dovish conviction and lead to a reversal in the dollar and a pullback in stocks. Conversely, weak numbers would all but guarantee further Fed easing and could fuel the next leg higher for the year-end rally. Traders will also be on high alert for any further developments out of Japan, as the prospect of a BoJ intervention remains a major wild card for global markets.

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 PMI Pulse: Today’s flash PMI reports will be the market’s most up-to-date read on the health of the global economy. Stronger-than-expected data would reinforce the current “risk-on” narrative, while weak numbers could revive slowdown fears. 
• The BoJ’s Hawkish Hold: The BoJ’s decision to hold rates but maintain a clear tightening bias is a significant development. The market will be watching to see if this provides a floor for the Yen or if the dovish political pressure from PM Takaichi will reassert itself. 
• The Precious Metals Parabola: The moves in Gold and Silver are historic but are also becoming extremely extended. The risk of a sharp, violent pullback on profit-taking is very high. 
• The Bitcoin Whale Watch: The emergence of new whale selling pressure is a major headwind for Bitcoin. Traders will be closely monitoring on-chain data for any signs that this selling is abating or intensifying.