Trump’s Greenland post envelopes Davos, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on January 20

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all fell, with the Dow futures falling 1.24%, the S&P 500 futures falling 1.34%, and the Nasdaq futures falling 1.65%. Germany's DAX index fell by 1.21%, Britain's FTSE 100 index fell by 0.86%, France's CAC40 index fell by 0.89%, and Europe's Stoxx 50 index fell by 1.01%.

2. Interpretation of market news

Trump's Greenland post enveloped Davos, and a former U.S. diplomat bluntly called the policy "stupid"

⑴ The atmosphere in Davos was very gloomy. When attendees woke up on Tuesday morning, they saw President Trump posting a series of posts on social media, once again emphasizing his vow to control Greenland. ⑵ John Herbst, the former US ambassador to Ukraine, said that the current US policies towards Greenland and Denmark are "very stupid" and extremely unpopular in the United States. ⑶ He pointed out that this policy is extremely unpopular among the American public and also extremely unpopular among Republican circles in the U.S. Congress. ⑷Herbst made the remarks at a pre-dawn breakfast meeting attended by Ukrainian and European officials, energy www.xmtraders.company executives and the media. ⑸ This sharp criticism from a former senior U.S. diplomat highlights the significant differences and political risks that Trump’s Greenland policy has caused in his country. ⑹ This has intensified the market’s concerns about the stability of the U.S. government’s decision-making and the reliability of its international alliances, which may further affect investor sentiment.

The influx of retail funds has supported the performance of British low-coupon government bonds

⑴ An institutional strategist pointed out in a report that retail investorsStrong demand for low-coupon gilts has supported the market performance of these bonds. ⑵ Low-coupon British government bonds refer to British government bonds with low annual interest payments but provide capital gains upon maturity. ⑶ Strategists said that retail capital flows have been considerable and tend to be concentrated in low-coupon, shorter-term British government bonds. ⑷ They believe that retail buyers may continue to reinvest the funds obtained from the redemption of British government bonds at maturity into low-coupon British government bonds. ⑸This continued retail demand provides a stable source of funds for the British Treasury market, especially short-end low-coupon varieties. ⑹ This reflects the preference of retail investors for safe assets with certain maturity returns in low interest rate or volatile environments. ⑺If this trend continues, it may help relieve some of the financing pressure of the British government and affect the relative performance of government bonds of different maturities.

Tariffs and Greenland’s ambitions detonate the market: stock market sell-off, curve steepening and risk-off trading go hand in hand

⑴ The Trump administration’s threat to impose 200% tariffs on French wine and its continued discussion of annexing Greenland triggered a stock market sell-off and a large-scale selling of long-term fixed-income assets, as evidenced by the 9.3 basis points surge in the 30-year U.S. Treasury yield in a single day. ⑵ With the German DAX index falling by 1.5% and the S&P 500 index futures falling by 1.6%, the short-term government bond market and the recent contracts of SOFR futures found support in the "mini-version" hedging trade, with the 3-month to 2-year yields falling slightly by 0.5-0.6 basis points. ⑶The overall government bond yield curve has steepened significantly, and the spread between the 2-year and 30-year interest rates has widened by 9.9 basis points. ⑷The abnormal surge in Japan's 30-year government bond yield by 27 basis points has intensified the selling pressure on the long end of U.S. debt. This is related to the Japanese leadership talking about tax cuts and increasing spending at the same time. Since July 2025, the yen has depreciated 10%. ⑸ Research shows that of the $4 trillion in imported goods between January 2024 and November 2025, foreign exporters only bear 4% of the tariff cost, while American consumers absorb the rest. ⑹ While Treasury bonds suffered a massive sell-off, swap spreads narrowed by 1.5 to 4.7 basis points, with the 20-year variety leading the decline. The slope of the overall swap curve flattened by 2.25 basis points, contrary to the sharp steepening trend of the Treasury curve. ⑺Swap transaction flow is expected to remain active this week, with a scale of between US$30 billion and US$35 billion. ⑻ Technical analysis signals show that SOFR futures and treasury bonds of multiple maturities have issued "sell" signals, and the market is advised to be cautious in adjusting positions. ⑼ Short-term treasury bill interest rates generally fell, with the 1-year variety leading the decline. The market also paid attention to multiple treasury bill auctions and purchase operations that day. ⑽The current market presents a typical www.xmtraders.complex pattern of coexistence of "risk aversion" and "long-term inflation/growth concerns", and policy uncertainty is driving a dramatic revaluation of asset prices.

The EU’s “slow work”: slow response may become a secret weapon against Trump’s tariff threat

⑴ U.S. Treasury Secretary Bessant’s response to EU leaders and their response to Trump’s tariffsThe speed of the economic response to the tax has been criticized, and he predicted that the EU would first set up a "daunting working group". ⑵The ridicule may be inappropriate, because slow and seemingly inefficient summit diplomacy may be exactly the secret weapon to counter Trump’s threats. ⑶ Many countries, including Denmark, France, and Germany, have sent a small number of soldiers to Greenland. This is not only to appease the United States' concerns about the island's defense, but also undoubtedly increases the cost of a potential military invasion. ⑷In response, Trump threatened to impose additional import tariffs on relevant countries. EU leaders have planned to hold a summit on Thursday, and their response measures may include 93 billion euros of retaliatory tariffs and the use of "anti-coercion tools." ⑸ However, countries not directly affected (such as Italy) may push for a more diplomatic solution. ⑹ Paradoxically, the deadlock may actually be a good outcome, because time is not on Trump’s side. ⑺The upcoming Supreme Court ruling may soon deprive it of the ability to use emergency economic powers to implement tariffs; polls show that tariffs and the annexation of Greenland are increasingly unpopular at home, intensifying pressure on the Republican Party before the November midterm elections; and its tariff threats are often downplayed in the aftermath. ⑻ Assuming that the US president is unwilling to risk direct military confrontation with NATO allies, he may ultimately choose to reach an agreement involving Greenland and its mineral resources, or obtain concessions on other issues (such as Ukraine). ⑼The key background is that even if Trump imposes 10% tariffs on February 1 as scheduled and raises it to 25% on June 1, the damage may be limited. Targeting only parts of the EU single market is unlikely to work, and goods may be transited through unaffected countries. ⑽According to agency forecasts, even under www.xmtraders.comprehensive tariffs and reciprocal retaliation, the GDP growth rate of the Eurozone this year will be less than 0.4 percentage points, and economists have tended to overestimate the impact of tariffs in the past year. ⑾The EU leaders may be annoyed that the US Treasury Secretary is urging them not to retaliate while mocking his cowardice, but in this case, they might as well give him a dose of "classic European inaction."

Global interest rate spread map: The U.S. yield "stands out from the crowd", and Germany has become the core of Eurozone pricing

⑴ The current U.S. 2-year Treasury bond yield is 3.597%, which is significantly higher than most major economies and only lower than the UK's 3.743%. ⑵ Taking the United States as the benchmark, Australia's 2-year yield is 48.8 basis points higher, while core countries in the Eurozone (such as Germany and France) are 132 to 156 basis points lower, and Japan is 238.4 basis points lower. ⑶Germany’s 2-year yield (2.093%) has become the pricing anchor in the euro zone, and the yields in Belgium, France and other countries are relatively close to it, with interest rate differences within 20 basis points. ⑷In terms of 10-year Treasury bonds, the U.S. yield (4.297%) is also high, only lower than Australia and the United Kingdom. ⑸ Germany’s 10-year yield (2.894%) has formed a clear gradient with other countries in the Eurozone. The yields in France, Italy and other countries are about 40-70 basis points higher. ⑹ Taking Germany as the benchmark, the U.S. 10-year yield is 140.3 basis points higher, which reflects the market’s confidence in the growth prospects andDifferent expectations on the path of monetary policy. ⑺The huge interest rate differential highlights the divergence of the global monetary policy cycle, especially the Federal Reserve's more tightening stance relative to the European and Japanese central banks. ⑻These interest rate spreads are a key factor driving cross-border capital flows, but they may also amplify exchange rate fluctuations and financial market instability.

USDA forecasts: Ocean transportation costs are expected to fall in 2026, and grain transportation prospects improve

⑴ The USDA predicts in its weekly grain transportation report that grain water transportation costs are expected to decrease in 2026. ⑵ This forecast is based on the expected growth in ship supply this year. ⑶ The report also pointed out that volatility originating from various war zones around the world is also expected to be alleviated, which will allow ships to sail freely and supply chains to be easier to maintain. ⑷ The U.S. Department of Agriculture said that due to the decrease in attacks on ships in the Red Sea in recent months, shipping may return to the Suez Canal and Red Sea routes. ⑸Such a return will improve fleet efficiency and put downward pressure on freight rates. ⑹ Grain futures on the Chicago Board of Trade were mixed in afternoon trading. ⑺This forecast provides a positive cost outlook for global agricultural traders, and if realized, will help alleviate food inflation pressures. ⑻ In the future, the market will pay close attention to the actual safety status of major waterways and the growth of fleet capacity to verify this expectation.

Zelensky said that three documents related to peace negotiations are nearly www.xmtraders.completed

Ukrainian President Zelensky said on the 20th that the three documents of the peace agreement, security guarantee and prosperity treaty are almost ready, but he pointed out that the United States has not yet exerted enough pressure on Russia. Zelensky said, "So far, the United States does not have enough power to stop (Russian President) Putin. However, through diplomatic channels, we have prepared nearly three important documents. These documents will protect us in the future and will also restore Ukraine's vitality." Zelensky also pointed out that the United States has resumed providing intelligence to Ukraine.

Trump was "on full fire" for 24 hours: criticizing allies, posting pictures to put pressure, and escalating tariff threats

⑴ Trump criticized the British plan to transfer Diego Garcia to Mauritius, calling the move "extremely stupid" and used it to reiterate the national security reasons for seizing Greenland. ⑵ He posted pictures on social media related to Federal Reserve official Cook, which involved his mortgage documents and residence information. ⑶ Trump released an AI-generated picture showing himself, the Vice President and the Secretary of State planting the American flag in Greenland, and labeling it "United States Territory, established in 2026." ⑷ He also released an AI-modified photo of the Oval Office, which showed a map that included Greenland, Canada and Venezuela as part of the U.S. territory. ⑸ Trump released a text message from French President Macron, in which Macron said he "cannot understand" his position on Greenland and proposed holding a G7-related meeting after Davos. ⑹ He announced that he would impose a 200% tariff on French wine and champagne, and said that Macron would join the "peace www.xmtraders.committee" he proposed. ⑺The U.S. Trade Representative stated that if the Supreme Court overturns theThe government can impose new tariffs almost immediately. ⑻ Trump showed a message from NATO Secretary-General Rutte, who praised his achievements in Syria and expressed his www.xmtraders.commitment to finding a way out for the Greenland issue. ⑼ When asked whether he would use force to seize Greenland, Trump replied "no www.xmtraders.comment" and suggested that Europe should pay more attention to the situation between Russia and Ukraine. ⑽ A red baseball cap with the words "Get Out of America" ​​printed on it has become a symbol of resistance to the threat in Denmark and Greenland. The designer said it was against Trump's diplomatic style. ⑾This series of intensive actions shows that Trump is using a variety of non-traditional pressure methods to deeply tie the Greenland issue to trade, diplomacy and even domestic politics. ⑿ The market needs to be wary that its remarks and actions may further exacerbate tensions in transatlantic relations and trigger new policy uncertainties.

U.S. bonds encountered a "perfect storm", with long-term yields soaring to multi-month highs

⑴ Long-term U.S. Treasury bonds suffered a sharp sell-off on Tuesday, with the yield curve steepening sharply as investors digested Trump's tariff remarks and turmoil in the Japanese government bond market. ⑵ The ultra-long-term 30-year U.S. Treasury yield surged 9 basis points to 4.93%, hitting the highest level since September last year and recording the largest single-day increase since July last year. ⑶The benchmark 10-year yield rose 6 basis points to 4.29%, also the highest since September last year; while the interest rate-sensitive 2-year yield bucked the trend and fell 1 basis point to 3.58%. ⑷The market reaction was the first concentrated response to developments over the weekend, when Trump threatened to impose additional tariffs on goods from multiple European countries starting on February 1. ⑸ This latest escalation in trade tensions has triggered widespread sell-offs in the U.S. dollar, U.S. bonds and U.S. stock futures, reminiscent of the crisis of confidence in U.S. assets after the "Liberation Day" announcement last year. ⑹ Analysts pointed out that the Japanese Prime Minister's announcement of an early election shook confidence in the country's fiscal health, causing Japanese government bonds to also suffer a significant sell-off on Tuesday, with the spillover effect affecting the US and European markets. ⑺ Some institutional analysts said that this is the "perfect storm" driving the trend of U.S. debt, including the "turbulence" of the Japanese bond market, the threat of tariffs and pure technical momentum. ⑻ The steepening of the yield curve is also very significant, with the steepness of the 2-year/10-year and 10-year/30-year parts being the largest since October last year. ⑼ This shows that the market is repricing long-term growth, inflation and debt risks, while short-term policy expectations are relatively stable.

The results of the issuance of British ultra-long-term government bonds were announced, with unprecedented demand

⑴The British Debt Management Office www.xmtraders.completed pricing of the additional issuance of government bonds due in 2041 on Tuesday, with the final issuance scale being 7.25 billion pounds. ⑵The issuance spread of the bond is set at the benchmark UK government bond yield plus 6.75 basis points. ⑶ This issuance has received unprecedented demand, with the total order book before the end of subscription exceeding 117 billion pounds (including the 7.25 billion pounds www.xmtraders.committed by the joint lead managers). ⑷During the pricing process, the size of the order book once exceeded 110 billion pounds (including 6 billion pounds of joint lead manager orders). ⑸This issueThe bank's bonds are the additional issuance of the original 5.25% coupon treasury bonds due in 2041, with the settlement date being January 21. ⑹ Ultra-long-term government bonds have received huge subscriptions, reflecting the market’s extreme thirst for safe, high-rated long-term assets in the context of global uncertainty. ⑺This demand intensity far exceeds supply, highlighting the scarcity of high-quality core assets and driving down the government's financing costs. ⑻ In the future, attention needs to be paid to whether such strong demand can be sustained and whether it indicates long-term structural changes in global capital allocation.

Confidence turning point suddenly appears, can the German economy usher in a turning year

⑴ Data released by the European Economic Research Center on Tuesday showed that the German investor confidence index jumped sharply to 59.6 points in January, far exceeding market expectations of 50.0 points. ⑵The chairman of the agency said that the index is rising strongly and 2026 may mark a turning point. ⑶The evaluation index reflecting the current economic situation also improved, rising from negative 81.0 points in the previous month to negative 72.7 points. ⑷ He said that despite positive economic sentiment, continued efforts are needed to enhance Germany's attractiveness as an investment destination to achieve sustainable growth. ⑸ The unexpected rebound in market confidence may stem from optimistic expectations for an improvement in the macro policy environment and potential recovery paths. ⑹ However, the current situation index is still in a deeply negative range, indicating that the economic foundation is still fragile and optimistic expectations are facing a reality test. ⑺The key focus of the market in the future is whether this emotional turning point can actually be transformed into a substantial increase in investment inflows and economic growth momentum.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD rose and is now at 1.1723, an increase of 0.67%. The price of EURUSD surged in the last session before the New York session to exit the range of the bearish correction channel that had limited its previous short-term trading and managed to surpass the negative pressure on the EMA50, reinforcing the bullish momentum. On the other hand, we noticed a negative overlapping signal on the relative strength indicator after reaching overbought levels, which may reduce its upcoming gains.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3445, an increase of 0.19%. Pre-market, the GBPUSD fell slightly in the last trading session as it reached the resistance of the EMA50 while testing the bearish corrective trendline on a short-term basis, increasing the strength and importance of this area as a key resistance in detecting the upcoming trajectory. Furthermore, after reaching overbought levels, a negative overlapping signal emerged relative to the price movement, starting to form a negative divergence on the relative strength indicator.

Spot gold: as of 21:2 Beijing time0. Spot gold rose, now trading at 4720.36, an increase of 1.08%. Before the New York market opening, the price of gold rose in the last trading day and reached a new all-time high, reaching the resistance of $4720, which was the expected target of our previous analysis, supported by its continued trading above the EMA50, reinforcing the dominance of the main bullish trend, trading together with the major and minor trend lines supporting this trajectory, noting the emergence of positive signals from the relative strength indicator.

Spot silver: As of 21:20 Beijing time, spot silver rose and is now trading at 95.176, an increase of 0.90%. In the New York pre-market, the (silver) price edged higher on its final trading day, hitting new all-time levels, taking advantage of the dynamic support represented by its exchange above the EMA50 and dominated by the short-term main bullish trend, as it traded along the trend line, reinforcing the bullish momentum, and despite the negative signal from the relative strength indicator, trying to escape from this overbought condition after reaching overbought levels reduced the last gains.

Crude oil market: As of 21:20 Beijing time, U.S. oil rose, now trading at 59.810, an increase of 0.81%. Prices (crude oil) rose on the last trading day before the New York session as it gained bullish momentum relying on the support of the EMA50, which helped it convert early losses into intraday gains. The short-term bullish trend dominated, and its trading was accompanied by a smaller trend line. In addition, the relative strength indicator emerged with positive signals, reinforcing the near-term bullish scenario.

4. Institutional view

Barclays: The Greenland issue is a "bigger trouble" for the euro than the US dollar

Barclays strategists believe that if the relationship between the EU and the United States seriously deteriorates, leading to the United States withdrawing from NATO, then Greenland tensions will be a much greater problem for the euro than for the US dollar. Barclays foreign exchange strategist Lefteris Farmakis and others said in a report that "the worst scenario may be a www.xmtraders.complete breakdown of relations between the United States and its NATO partners." A possible U.S. withdrawal from the alliance "should put a negative premium on the euro," they said.

These strategists downplayed the idea that European investors’ holdings of U.S. assets are an important check on U.S. geopolitical power. "While the euro area has indeed increased its exposure to U.S. assets since the start of the last decade, it has also received significant capital inflows from the rest of the world," they said. They added that, for example, at a time when EU-US relations have reached a breaking pointIn a world of increasing levels of fragmentation, it cannot be taken for granted that Asian investors’ preference for European bonds will remain unchanged. They also noted that there has so far been no "dumping" of U.S. assets by large holders in response to U.S. tariffs over the past year. For now, the strategists believe the dollar is vulnerable to Trump's latest threats, which could prompt a reversal of long dollar positions established at the start of the year. The safe-haven Swiss franc remains "the best hedge against intra-NATO disputes," they said, adding that further rises in the VIX could hit more risk-sensitive currencies such as the Swedish krona, the Australian dollar, Latin American currencies and the South African rand.

The above content is all about "[XM Foreign Exchange Platform]: Trump's Greenland post enveloped Davos, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on January 20". It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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