GGMA Morning Brief 13-01-2026
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
Market Movers: Yen falls and JGB yields rise
The Japanese yen weakened overnight, falling as much as 0.5% to 158.91 per dollar, with losses accelerating after a report that Prime Minister Sanae Takaichi intends to call a snap election. Japanese Finance Minister Satsuki Katayama expressed concerns about the yen's one-way weakening at a meeting with her US counterpart, Scott Bessent, who shares those concerns. The risk of currency intervention will likely come back into focus, with the yen at 160 against the dollar being closely watched as the intervention line, according to Bloomberg. Meanwhile, Japan’s 10-year government bond yield rose to around 2.16% overnight. The Nikkei rallied more than 3%.
In other markets, US equity futures edged lower overnight, while silver remained above $85 per ounce on Tuesday. US Treasury futures are only a little changed ahead of today’s US CPI report. In Asia, the Indian rupee slipped to around 90.2 per dollar, and Chinese stocks fell amid trade-war fears. Oil prices rose.
Trump says he’s imposed a 25% tariff on countries linked to Iran
President Donald Trump said he is imposing a 25% tariff on goods from countries “doing business” with Iran, ratcheting up pressure on the government in Tehran that has been rocked by widespread protests. Trump posted on social media on Monday that the new duty would be “effective immediately,” without providing further details. The administration has yet to issue paperwork outlining the scope of the charges. The action could disrupt major US trading relationships worldwide, including with large economies such as India, Turkey, and China. (BBG – Continue Reading)
Fed’s Williams hints rates need no near-term adjustment
New York Fed President John Williams said that interest rates are in a comfortable place as the Fed’s first meeting of 2026 approaches, hinting that he and other U.S. central bankers may not be in a rush to bring interest rates lower this month. Speaking at the Council on Foreign Relations in New York City Monday evening, Williams said that in the past 12 months, the labour market has cooled, while the underlying trend in inflation appears to be easing into alignment with the Fed’s 2% target. That shifting balance prompted the Fed’s three-quarter-point rate cuts between September and December, which have brought the central bank’s target interest-rate range down to 3.5% to 3.75%. (WSJ – Continue Reading) Here is the implied expected path for the Fed Funds rate.
Justice department’s probe into Jay Powell galvanises Fed leaders to repel Donald Trump’s attacks
The criminal probe into Jay Powell by US prosecutors has galvanised the Federal Reserve’s top leaders to resist President Donald Trump’s attacks and could push the chair to remain a governor until 2028, officials say. (FT) Senator Thom Tillis vowed to oppose any Trump nominees to the Federal Reserve until the grand jury investigation into Federal Reserve Chair Jerome Powell is resolved. Senate Majority Leader John Thune said the threat of a legal battle with the Fed could make confirming Fed nominees “challenging” and warned that the allegations against Powell “better be real and they better be serious”. Republican senators, including Lisa Murkowski and Dave McCormick, offered pushback on the investigation, with Murkowski denouncing it as “nothing more than an attempt at coercion” and McCormick saying he does not think Powell is guilty of criminal activity. (BBG)
ECB’s Villeroy sees 2026 rate rise as ‘fanciful’
The European Central Bank is unlikely to raise its key interest rate in 2026, Bank of France Governor Francois Villeroy de Galhau said. The ECB maintained its key interest rate at 2% for the fourth consecutive meeting, after cutting it from a 4% peak in June 2024. (WSJ)
Weak yen may spur BOJ rate hike in April, ex-board member says
The Bank of Japan may raise its benchmark interest rates as early as April amid market concerns about Prime Minister Sanae Takaichi's fiscal policy approach. The yen has hit its weakest level in a year, prompting concerns that the currency may continue to fall and that the BOJ may need to raise rates to prop it up. Former BOJ board member Makoto Sakurai says Takaichi's fiscal measures are driving the yen's weakness and that it will be hard to rebuild market trust due to her "loose and dangerous approach" to fiscal policy. (BBG)
Japan's current account increases in November above estimates
Japan’s current account surplus increased to JPY 3,674.1 billion in November 2025 from JPY 3,338.9 billion in the same month a year earlier, topping market expectations of JPY 3,594 billion. The surplus of goods account surged to JPY 625.3 billion from JPY 119.1 billion in the previous year, as exports rose 5.1% while imports fell 0.5%. Also, the primary income surplus inched higher to JPY 3,380.9 billion from 3,374.5 billion. At the same time, the secondary income deficit narrowed to JPY 288.0 billion from JPY 422.4 billion. However, the services account moved into a small JPY 0.44 billion deficit, down from a JPY 267.7 billion surplus. (TE)
UK retail sales growth slowed as shoppers waited for sales
UK retail sales growth slowed for a fourth consecutive month in December, with customers thought to be waiting for post-Christmas discounts. Total retail sales growth slowed to 1.2% year on year last month, according to the British Retail Consortium. Grocery sales were a bright spot over the festive period, increasing by 3.1% year on year in December, and buoyed by ongoing food inflation, according to Bloomberg.
There is only a loose correlation between the BRC series and the official retail sales numbers. Still, it would point towards a deceleration in consumer spending.
NZ Q4 business confidence at highest level since 2014, NZIER says
The latest NZIER Quarterly Survey of Business Opinion showed a strong lift in business confidence in the final quarter of 2025. A net 39 percent of firms expect better general economic conditions over the coming months on a seasonally adjusted basis. This was a substantial increase from the net 17 percent expecting an improved general economic outlook in the September quarter, and business confidence is at the highest level since March 2014. The results point to a reacceleration in growth, employment and inflation:
Australian consumer confidence declines in January
The Westpac-Melbourne Institute Consumer Sentiment Index slipped 1.7% lower to 92.9 in January from 94.5 in December. Deteriorating views on the near-term outlook drive the move. About two-thirds of consumers now expect mortgage rates to rise in 2026 and are less negative on ‘time to buy a dwelling’ – most 18-34 year olds are positive. House price expectations have cooled slightly but remain very bullish.
Consumers are less confident about job prospects. (Westpac)
Bank of Korea to hold rates at 2.50% on January 15, next cut delayed to 2027 - Reuters poll
Economists expect no change in the policy rate due to the won's decline and inflation concerns. BOK signals end of easing cycle, revises guidance on rate cuts. Seoul apartment prices rise, complicating BOK's decision on rate cuts. (RTRS) Here is the chart of the Won against the US Dollar, which shows the Won's decline.
Today’s Macro Roadmap: US CPI in focus
The main event will be the release of the US CPI report for December at 14:30 CET. The consensus is looking for a 0.3% MM increase in the core and headline numbers. Some of the expected increase is likely due to technical adjustments stemming from the October federal government shutdown, rather than underlying price pressures. Many prices that weren't collected during the October shutdown—particularly those surveyed bimonthly—have effectively been frozen since August, according to JPMorgan. Goldman Sachs also notes that new tariffs are driving price increases in exposed categories, particularly recreational goods.
Good luck today!