GGMA Morning Brief: Oil prices drop, Trump imposes new tariffs, Japan opposition party merger, BOK removes "further cuts" language, UK housing market green shots
Good morning,
I hope all is well.
Here are the main overnight news and market movers:
Markets: Oil prices drop after Trump’s Iran comments, Silver tumbles
Oil prices and bond futures began to rally in the late afternoon yesterday amid rising geopolitical risks regarding Iran. However, oil prices started to decline sharply after US President Trump said that he had been told that the killing in Iran had stopped and that there are no plans for executions. US stock market futures also rebounded. Bonds are trading flat.
In FX, USDJPY dropped sharply yesterday on some verbal intervention but is little changed this morning. As risk aversion eased, prices for precious and industrial metals declined. Bitcoin rose significantly yesterday but is off its highs today.
Silver tumbled on Thursday, trading around $89 per ounce, retreating sharply from all-time highs after US President Donald Trump held off on imposing new tariffs targeting imports of critical minerals.
Trump would want military action in Iran to be swift and decisive, sources say
President Donald Trump has told his national security team that he would want any U.S. military action in Iran to deliver a swift and decisive blow to the regime and not spark a sustained war that dragged on for weeks or months, according to a U.S. official, two people familiar with the discussions and a person close to the White House. “If he does something, he wants it to be definitive,” one of the people familiar with the discussions said. (NBC)
Trump tells Reuters no plans to remove Powell despite probe
President Donald Trump insisted he does not plan to fire Federal Reserve Chair Jerome Powell despite a Justice Department probe into the central bank’s renovation. “I don’t have any plan to do that,” Trump said Wednesday in an interview with Reuters. (BBG)
US sets 25% tariff on some chip sales as part of Nvidia deal
The US imposed a 25% tariff on imports of certain advanced semiconductors, including the H200 artificial intelligence processors made by Nvidia Corp. in Taiwan. President Donald Trump directed officials to pursue negotiations on imports and report back in 90 days. He may announce new tariffs and an offset program to incentivise domestic manufacturing in the near future, Bloomberg reports.
Donald Trump’s ‘unpredictable’ policies to fuel multiyear shift from US, Pimco says
Dan Ivascyn, chief investment officer of Pimco, told the FT that the $2.2tn fund manager was “diversifying” its portfolios as it contends with the US president’s rapidly changing policies, which have caused flare-ups in market volatility. (FT)
Takaichi’s election bet faces risk of opposition parties merger
Japan's largest opposition party and a former ruling coalition partner are heading toward a de facto merger, complicating Prime Minister Sanae Takaichi's bid to widen her majority through a snap election. A new party formed between the CDP and Komeito could prove to be a formidable opposition force against Takaichi, who is staking a greater public mandate on her own popularity by calling an early election, according to Bloomberg.
Japan PPI growth slows in December
Producer Price Inflation MoM in Japan decreased to 0.10 per cent in December from 0.30 per cent in November of 2025.
PBOC cuts structural interest rates to boost targeted lending
China’s central bank will lower interest rates on its structural monetary policy tools by 0.25 percentage points, stepping up targeted support for the economy as it enters 2026. Deputy Governor Zou Lan announced Thursday during a briefing in Beijing that the one-year rate for various relending facilities will be reduced to 1.25% from 1.5%. The instruments are meant to encourage banks to lend to companies in various sectors, according to Bloomberg.
Bank of Korea leaves policy rate unchanged
The Monetary Policy Board of the Bank of Korea decided today to leave the Base Rate unchanged at 2.50% for the intermeeting period. Along with inflation expected to stabilise gradually, economic growth continues to improve, and risks to financial stability also remain. The Board, therefore, judged that it is appropriate to maintain the current level of the Base Rate while assessing developments in the domestic and external policy environments. (BOK)
The central bank removed previous language about considering "further cuts," marking a notable hawkish shift in its policy statement. Governor Rhee Chang-yong emphasised the focus on financial stability as the Korean won hovers near 16-year lows, having fallen around 2% against the US dollar so far in 2026, making it one of Asia's worst-performing currencies. (TE)
Australia inflation expectations edge lower in January.
Australia’s consumer inflation expectations stood at 4.6% in January 2026, little changed from 4.7% in the previous month. Inflation expectations were at 4% this time last year.
UK Residential Survey December 2025
The UK housing market remained soft at the end of 2025, but confidence is returning as expectations for sales and prices turn decisively more positive, according to the latest RICS UK Residential Market Survey. The Royal Institution of Chartered Surveyors (RICS) found that buyer demand and agreed sales remained in negative territory in December, reflecting a market that has been subdued for much of 2025. New buyer enquiries registered a net balance of -24%, while agreed sales came in at -19%. However, both measures improved slightly on the previous month, signalling that the downturn is losing momentum. The standout indicator was a shift in forward-looking sentiment. Sales expectations over the next three months rose to +22%, the strongest reading since October 2024. Looking twelve months ahead, optimism strengthened further, with a net balance of +34% of respondents expecting sales volumes to rise – more than double the level seen in November. Surveyors point to easing interest rate expectations and the clearing of Budget-related uncertainty as key drivers behind the turnaround in mood.
House prices continue to edge down nationally, with a net balance of -14%, but the trend is clearly moderating. RICS Head of Market Research & Analysis, Tarrant Parsons, said: “The UK residential market remains in a prolonged soft patch, with December’s survey recording a sixth consecutive month of negative momentum in buyer enquiries. That said, there are tentative signs of a shift in sentiment beneath the surface. Near-term sales expectations have strengthened, and the twelve-month outlook has edged into more positive territory. The key test for 2026 will be whether borrowing costs ease on a sustained basis. If so, this could provide the catalyst needed to drive a recovery in buyer demand.” (RICS)
Today’s Macro Roadmap: US N.Y. Empire Mfg., US Jobless Claims & Philly Fed Business Outlook
US regional business surveys are expected to improve in January. The Philly Fed and Empire surveys are more volatile than the ISM manufacturing survey, but could offer clues on whether sentiment in that sector is improving. I would also monitor new orders and the prices paid subcomponents.
US jobless claims are expected to increase slightly to 215k, from 208k.
Good luck today!