GGMA Morning Brief 05 Jan 2026: US captures Venezuelan President Nicolas Maduro, Philly Fed’s Paulson sees room for cuts ‘later in the year’, Ueda highlights BOJ’s intention to keep raising rates, US ISM manufacturing in focus
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
US captures Venezuelan President Nicolas Maduro
The main news over the weekend was the US raid that captured Venezuelan President Nicolas Maduro. (BBG) President Trump said Sunday the U.S. is "in charge" of Venezuela and that the U.S. could launch a second strike on Venezuela if "they don't behave." (Axios) However, the Senate will vote next week on a bipartisan war powers resolution to block President Trump from continuing military action against Venezuela. (The Hill) Meanwhile, OPEC+ kept oil output unchanged on Sunday after a quick meeting that avoided discussion of the political crises affecting several of the producer group's members. (RTRS) Oil prices initially rallied at the open but are off their highs and are down on the day.
Philly Fed’s Paulson sees room for cuts ‘later in the year’
Philadelphia Fed President Anna Paulson said that the Federal Reserve may be able to cut interest rates further if inflation cools—but suggested that any additional reductions might not be coming right away. (WSJ) Here is a chart showing what is currently priced into the Fed Funds Futures curve:
Ueda highlights BOJ’s intention to keep raising rates to bankers; Manufacturing PMI improves
Bank of Japan Governor Kazuo Ueda said the bank will continue raising rates in line with improving economic conditions and inflation. He stated that the appropriate adjustment of monetary easing will lead to the achievement of a stable inflation target and longer-term economic growth. The BOJ raised its benchmark rate to 0.75% on Dec. 19, and most BOJ watchers expect the next move to come around the middle of the year, according to Bloomberg. Meanwhile, the S&P Global Japan Manufacturing Purchasing Managers' Index (PMI) was flat at 50.0 in December, improving from 48.7 in November and hitting the break-even point separating expansion from contraction. (RTRS)
The benchmark 10-year Japanese government bond yield climbed as much as five basis points on Monday to 2.12%, its highest level since 1999. Yields on 20-year and 30-year bonds also rose, according to Bloomberg.
China’s services gauge slows again with growth at a six-month low
China’s services activity expanded at the weakest pace in six months, according to a private survey, as new export business returned to contraction because of fewer tourist arrivals. A smaller number of tourists, especially from Japan, was “primarily” responsible for the renewed drop in new export business, amid tensions between Tokyo and Beijing, according to Bloomberg.
Czech central bank chief says policy will need to remain tight
The Czech central bank needs to maintain a tight monetary stance to keep inflation under control, according to Governor Ales Michl. Policymakers cited key inflation risks, including a potential acceleration of lending to households and the government, and rapid wage hikes. The central bank will seek to preserve positive real interest rates and is leaving all options open for interest rate decisions this year, with rates potentially going lower, staying stable, or being raised if inflation risks appear, according to Bloomberg.
Economic Calendar: Swiss sight deposits & manufacturing PMI, US ISM manufacturing in focus
In Switzerland, the SNB will release its update on sight deposits for last week at 10:00 CET. They are far from a perfect proxy for SNB interventions in foreign exchange markets and are influenced by other factors, yet they remain worth monitoring. There is also a seasonal element, as sight deposits are more likely to decline in December and rise again in January due to seasonal fluctuations in the demand for banknotes.
In its latest statement, the central bank reiterated its willingness to intervene as necessary.
The Swiss manufacturing PMI will be released at 8:30 CET. Recent deterioration in German business sentiment, a key trading partner, may adversely affect Switzerland.
In the US, the ISM manufacturing survey will be published at 16:00 CET. The consensus expects a minimal improvement to 48.3 in December, compared to 48.2 in November. Of particular interest will also be the prices paid, employment and new orders components. The regional surveys already released paint a mixed picture for December.
Good luck today,
Günter