Market Quick Take – 20 January 2026

Market drivers and catalysts

• Equities: Equities fell in Europe and Hong Kong on tariff fears, US was shut.
• Volatility: headline risk, Greenland tariffs, Davos focus
• Digital assets: risk-off tone, BTC near $91k, altcoins softer, IBIT/ETHA selective inflows
• Currencies: JPY weakens on drama in Japan’s government bond market. USD also weak on weak risk sentiment linked to geopolitics.
• Commodities: Gold shines as stocks and bonds falter; natural gas spikes on incoming arctic blast.
• Fixed Income: Long-dated Japanese government under historic pressure, triggering widespread unease and some contagion into US treasuries.
• Macro: Germany January ZEW Survey

Macro headlines

• Japanese Government Bonds are under enormous and mounting pressure and driving unease elsewhere. The longest maturity government bond yields rose several multiples of their normal daily trading ranges – the 30-year benchmark up over 25 basis points to 3.87% at its highest on Tuesday in late Tokyo hours, a new record high yield since the bond was launched in the late 1990’s. The 10-year benchmark JGB yield rose eight basis points to its own highest level in decades at 2.34%. These moves are a warning to the Japanese government that new tax cut and spending promises risk destabilizing the government’s finances and will demand policy action soon.
• Japanese PM Takaichi will call for a snap election on January 23, 2025, for voting on February 8. She plans to end overly restrictive fiscal policy and pursue strategic fiscal spending.
• Canada's headline inflation rate rose to 2.4% in December 2025, up from 2.2%, exceeding expectations. This increase, driven by a GST and HST break, affected food, alcohol, and toy prices. Inflation slowed for shelter and transportation costs decreased. Core inflation fell to a one-year low of 2.5%.
• The IMF raised its global growth forecast to 3.3%, driven by resilient activity and AI investments, but warned of risks like market corrections and geopolitical concerns. Growth projections include 2.6% for the US, 1.3% for the Euro Area, and 4.5% for China.
• Eurozone inflation fell to 1.9% in December 2025, below the ECB's 2% target, likely keeping interest rates steady. Energy prices dropped sharply, while core inflation hit a four-month low at 2.3%. Inflation decreased in Germany, France, and Spain but rose slightly in Italy. Core inflation dropped to a four-month low of 2.3% in December 2025, down from 2.4% in November. The core CPI rose 0.3% month-on-month. EU core inflation also fell to 2.5%.

Macro calendar highlights (times in GMT)

0700 – UK ILO Unemployment Rate
1000 – Germany January ZEW Survey
1330 – Phily Fed Non-manufacturing Activity

Earnings events

• Today: Netflix, Interactive Brokers, 3M
• Wednesday: Johnson & Johnson, Charles Schwab
• Thursday: Visa, LVMH, SK Hynix, Procter & Gamble, GE Aerospace, Intel, Abbott Laboratories, Intuitive Surgical, KLA Tencor, Capital One Financial, Freeport McMoRan, CSX Corporation
• Friday: SLB

For all macro, earnings, and dividend events check Saxo’s calendar.

Equities

• USA: US stock and bond markets were closed on Monday for Martin Luther King Jr. Day.
• Europe: European equities sold off on Monday as tariff talk returned, with the Euro STOXX 50 down 1.7% to 5,925.82 and the STOXX 600 off 1.2% to 607.06. Autos took the hit, as BMW fell 3.7% on export risk, while Rheinmetall rose 1.0% as investors leaned toward defence exposure. Bayer jumped 7.0% after the US Supreme Court agreed to hear its Roundup case, and the next test was whether EU retaliation plans moved from talk to timetable.
• Asia: Hong Kong’s Hang Seng Index fell 1.1% to 26,563.90 on Monday, tracking a broader risk-off mood after fresh US tariff threats. China reported fourth-quarter gross domestic product growth of 4.5%, a three-year low, which kept pressure on growth-sensitive sectors. Xiaomi slipped 1.7% and SMIC dropped 2.8% as investors trimmed tech exposure, with attention turning to any policy support signals from Beijing and the US cash reopen

Volatility

• Market volatility picks up as US cash markets open after the Martin Luther King Jr. holiday, with investors reassessing geopolitical and policy risks rather than reacting to fresh economic data. The renewed dispute around Greenland and US tariff rhetoric towards Europe has pushed headline risk back to the forefront, while the World Economic Forum in Davos (19–23 January) is expected to generate further policy and trade-related signals in the days ahead. Against this backdrop, demand for downside protection remains elevated.
• SPX expected move (this week): options pricing implies roughly ±1.0% (±72 points) into 23 January.
• Skew indicator (today’s expiry): downside protection is still priced significantly richer than upside, signalling persistent investor caution rather than outright panic.

Digital Assets

• Digital assets remain under pressure, with the tone clearly risk-off. Bitcoin slipped back toward the $90–91k area, while Ether traded near $3.1k, and major altcoins such as Solana and XRP also moved lower on the day. The sell-off appears macro-driven, reflecting heightened geopolitical uncertainty tied to the Greenland dispute and broader trade tensions.
• That said, ETF flow data from the most recent full US session (Friday) suggests selective dip-buying rather than wholesale capitulation: IBIT recorded net inflows, even as total spot bitcoin ETF flows were negative, while ETHA also attracted fresh inflows, keeping aggregate ether ETF flows marginally positive. With US markets closed on Monday, official flow data may lag, but overall positioning points to caution, not abandonment.

Fixed Income

• Enormous pressure on Japan’s government bonds Tuesday, as noted above, with almost all of the pressure coming at the long end of the curve, i.e., the yield curve suffered a violent steepening. The benchmark 2-year JGB yield was almost unchanged, while the benchmark 10-year JGB rose a hefty eight basis points. A 20-year JGB auction in Tokyo Tuesday saw weak demand. At the longest end of the curve, the 30-year and 40-year bond yields rose over 25 basis points in a massive acceleration of recent pressure, with the market losing faith that the government has any plans to get its fiscal house in order as new tax cutting and spending promises are afoot ahead of the snap election on February 8. Some official policy response has likely been brough sharply forward .
• US treasuries sold off Tuesday, with the latest pressure coming on pressure from Japan’s government bond market. The benchmark 10-year yield has already lifted above the key 4.20% level on Friday and rose almost five basis points further in Asian hours Tuesday to 4.27%., with the 30-year benchmark T-bond yield pulling six basis points higher to 4.90%, its highest level since last September.

Commodities

• Gold hit a fresh record above USD 4,700, while silver paused after almost reaching USD 95, amid concern over the Trump administration’s aggressive stance toward global peers, most recently through Greenland-related tariff threats that have reignited trade tensions. Together with worries about Federal Reserve independence and growing unease toward the dollar and U.S. government bonds amid rising fiscal debt, demand for hard assets remains firm, supported by their lack of credit risk, absence of an issuer, and long history as a store of value during periods of political and monetary uncertainty.
• Copper trades below USD 6, having struggled to join the broader hard-asset rally amid concerns about demand destruction in top buyer China after prices hit a record. This has been reinforced by a regulatory clampdown on high-frequency trading following a burst of speculative activity, while exchange-monitored inventories (NY, London and Shanghai) at an eight-year high have helped offset supply concerns. Similar risks of industrial demand destruction may also begin to challenge silver as it trades near USD 95.
• U.S. natural gas future trades up 19% since Friday after the late-January weather outlook shifted colder, with Arctic air expected to hit the eastern U.S. The February futures have rebounded above USD 3.7 after testing USD 3 support last week, highlighting the market’s pronounced seasonal, weather-driven volatility.

Currencies

• The Japanese yen weakened as confidence in Japan’s bond market is faltering, but the move didn’t resemble the chaotic moves in long government bonds Tuesday, as USDJPY lifted back above the key 158.00 area and toward to 158.45. The US dollar was a bit weaker, so EURJPY rose more aggressively after its recent sell-off to a 182.63 low, rising sharply Monday and following through in Tuesday’s Asian session to 184.88 by late Tokyo hours. The Bank of Japan meets Friday.
• Outside of USDJPY, the US dollar is weakening amidst weak risk sentiment. Some of the weakness may be linked to geopolitical concerns as President Trump faces off against European powers on the Greenland issue and whether the US is set to seize the island by any means. EURUSD rose back toward 1.1670 in Asian hours Tuesday, while AUDUSD rose to 0.6730, its highest in more than a week.

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