The Mexican Peso Closes Below 17.50 for the First Time in 18 Months

Posted on January 21, 2026 by Ignacio Teson

The peso climbed to levels not seen in 18 months, supported by a calmer market backdrop following a speech by U.S. President Donald Trump in Davos.

The Mexican peso appreciated against the U.S. dollar in Wednesday’s trading, breaking below the 17.50 mark for the first time in 18 months amid reduced market anxiety after remarks by President Donald Trump at the World Economic Forum.

The exchange rate ended the session at 17.4843 pesos per dollar. Compared with Tuesday’s close of 17.6056, according to official data from the Bank of Mexico (Banxico), the move represented a gain of 12.13 centavos, or 0.69%.

During the session, the dollar traded in a range between a high of 17.6082 pesos and a low of 17.4224. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.21% to 98.77 points.

[[USD/MXN-graph]]

No Force Over Greenland

In a closely watched speech at the Davos forum, Trump reiterated that the United States needs to control territory in Greenland, but scaled back his demand to “just a portion” of the island. He also pledged that he would not use military force to take control of the territory.

Over the weekend, the U.S. president had warned that he would not back down from his ambitions and threatened to impose tariffs on several European countries that oppose his stance. European leaders were preparing for an emergency meeting to discuss possible responses.

U.S. Treasury Secretary Scott Bessent said on Tuesday that he was confident Washington and European governments would find a solution to Trump’s Greenland ambitions, downplaying fears of a new trade conflict.

Trump Threatens Cartel Strikes

The exchange rate, which had approached the 17.40 level earlier in the day, edged higher later on—while still holding most of its gains—after Trump issued another warning. The U.S. president said that attacks against drug cartels would “begin soon.”

Although ambiguous, Trump’s statement opened the door to interpretations of more aggressive actions in the region, potentially including direct or indirect operations on Mexican territory. Such a scenario could raise tensions ahead of the upcoming review of the USMCA trade agreement.

Wall Street Rises After Trump Rules Out Use of Force in Greenland

Posted on January 21, 2026 by Ignacio Teson

U.S. stocks moved higher on Wednesday, January 21, following President Donald Trump’s highly anticipated speech at the World Economic Forum in Davos.

Initial market reaction was negative, with futures slipping in pre-market trading amid Trump’s sharp criticism of the European Union. However, once markets officially opened, major indexes reversed course after the Republican president stated that while he seeks to acquire Greenland, he does not intend to use military force.

Global markets showed mixed performance. In Europe, Germany’s DAX fell 0.5%, the Euro Stoxx 50 declined 0.4%, and Italy’s FTSE MIB dropped 0.5%, while London’s FTSE 100 edged up 0.1% and France’s CAC 40 gained 0.1%, reflecting a lack of a clear regional trend. On Wall Street, sentiment was more positive: the Dow Jones rose 0.6%, the S&P 500 advanced 0.4%, and the Nasdaq added 0.1%.

Donald Trump Moderated his Speech

During his speech, Trump took aim at Europe amid tensions surrounding Greenland, arguing that “Europe is not doing well” and “is not moving in the right direction.” Much of his address focused on criticizing policies adopted by European governments in recent years, particularly those he described as “progressive.”

“Frankly, many parts of the world are being destroyed before our very eyes, and leaders don’t even understand what’s happening. And those who do understand are doing absolutely nothing about it,” Trump said.

Despite the harsh rhetoric, U.S. equities opened slightly higher after Trump explicitly ruled out the use of force to acquire Greenland. “People thought I would use force. I don’t have to use force. I don’t want to use force. I will not use force,” he said.

His remarks came one day after the S&P 500 fell 2.1%, marking its worst session since October. That sell-off was triggered by Trump’s threat to impose a 10% tariff on European countries that oppose his ambitions regarding Greenland.

Venezuelan Oil Production Could Rise 30%, Says U.S. Energy Secretary

Posted on January 21, 2026 by Ignacio Teson

Chris Wright voiced optimism about Venezuela’s oil production outlook at the World Economic Forum.

The energy sector could rally again soon after an agreement between Venezuela and the United States.

U.S. Energy Secretary Chris Wright told oil industry executives that Venezuela’s crude output could increase by as much as 30% from current levels of around 900,000 barrels per day over the short to medium term. His remarks followed a meeting with three oil executives on the sidelines of the World Economic Forum in Davos, Switzerland.

Venezuela’s oil production has collapsed in recent years due to chronic underinvestment and international sanctions. In the 1970s, the country produced about 3.5 million barrels per day—roughly 7% of global supply—but today it accounts for just 1% of worldwide output.

Against this backdrop, analysts and oil executives remain skeptical about a rapid recovery of Venezuela’s oil sector, noting that its aging infrastructure would require multibillion-dollar investments to be brought back online. Venezuela’s oil reserves are also among the most expensive in the world to develop, as its crude is extremely heavy and viscous, requiring specialized equipment for extraction, transportation, and refining into usable fuels.

The U.S. Oil Strategy in Venezuela

Following the U.S. military intervention in Venezuela that led to the capture of President Nicolás Maduro, Washington’s primary objective has been to boost crude production in the Latin American country, which holds the world’s largest proven oil reserves.

Speaking at the World Economic Forum, Donald Trump said Venezuela will earn more from oil production over the next six months than it has in the past 20 years. His optimistic vision includes long-term control of Venezuela’s oil resources under a $100 billion plan. So far, his administration has extracted 50 million barrels of oil and is selling part of that output on the open market, the Republican president said on Tuesday.

Earlier this month, Trump met with more than 15 oil executives at the White House. During that meeting, Exxon CEO Darren Woods told Trump that Venezuela would need to change its legal framework before becoming an attractive investment opportunity.

Christine Lagarde and Jamie Dimon Warn of Risks to the Global Economy

Posted on January 21, 2026 by Ignacio Teson

ECB President Christine Lagarde and JPMorgan CEO Jamie Dimon warned of mounting risks to the global economy, criticizing U.S. President Donald Trump’s unilateral, tariff-driven approach, calling for greater cooperation among allies, and cautioning about the economic and financial fallout of his proposals.

Tensions between the United States and Europe were on full display at the World Economic Forum in Davos, where Lagarde and Dimon delivered pointed critiques of Trump’s political and economic strategy.

In an interview with French broadcaster RTL, Lagarde warned that “what is good for the United States is not necessarily good for the world,” arguing that the global economy is entering “the dawn of a new world order”—a shift that will force Europe to fundamentally rethink its economic structure and strategic positioning.

The ECB president took aim at Trump’s “transactional” approach, accusing him of deliberately raising the stakes in negotiations “to levels that are sometimes completely unrealistic,” referring to threats to impose tariffs of up to 200% on French wine and champagne. Such behavior, Lagarde said, is “very strange for an ally” and compels Europe to clearly define which tools it is willing to deploy, including its anti-coercion trade mechanism.

She emphasized that Europe’s response must be rooted in unity and collective resolve. “Once Trump redefines his position—something I hope will happen in his Davos speech—Europeans will be able to decide together how to respond,” she said, stressing that internal cohesion will be critical in the face of pressure from Washington.

Dimon: Tariff Criticism and Economic Warnings

Criticism of Trump’s agenda was not limited to European institutions. Jamie Dimon also voiced concerns during his appearance in Davos. The JPMorgan CEO said the United States “cannot act this way” toward Europe and argued that while Washington can be a partner in advancing shared goals, leadership for change must come from within Europe itself.

Dimon called for a more cohesive Western alliance, with a stronger NATO and European Union, and explicitly rejected tariffs as a policy tool. “I’m not a fan of tariffs in general,” he said, echoing Lagarde’s concerns about the broader consequences of an escalating trade conflict.

That said, Dimon expressed support for Trump’s stance on immigration, arguing that the U.S. “was right to reassert control over its borders,” and claiming that unchecked immigration had undermined social cohesion.

He also criticized the Trump administration’s proposal to cap credit card interest rates at 10%, calling it an “economic disaster.” If implemented, Dimon warned, up to 80% of Americans could lose access to credit, with direct repercussions for consumption and key sectors such as retail, tourism, and public services.

Finally, Dimon addressed the rapid advance of artificial intelligence, acknowledging its disruptive impact on employment. He suggested JPMorgan could have fewer employees within five years and urged policymakers and businesses to prepare for a technological transformation that, in his view, “could move too fast for society to absorb.”

Japanese Bonds Tumble as Yields Hit Record Highs

Posted on January 20, 2026 by Ignacio Teson

The sell-off in Japanese government debt accelerated after investors reacted negatively to the government’s fiscal proposal, amid growing unease over its potential spillover effects on global markets.

Japan's Bonds are reaching new lows. — Japan’s Bonds are reaching new lows.

Japan’s bond market came under renewed pressure on Tuesday. Sovereign bonds extended their slump, pushing yields to levels not seen in more than three decades, as investors rejected Prime Minister Sanae Takaichi’s campaign proposal to cut taxes on food without a clearly identified funding source.

According to Bloomberg, the yield on Japan’s 40-year government bond climbed above 4%, a record high since its launch in 2007 and the highest level for any maturity of Japanese sovereign debt since the early 1990s. Yields on 30- and 40-year bonds jumped more than 25 basis points on the day—the sharpest rise since April last year, when former U.S. president Donald Trump’s tariff offensive rattled global markets.

Fiscal Concerns and Market Distrust

The sell-off was reinforced by a weak auction of 20-year bonds, which once again highlighted investor concerns over public spending and inflation. At the same time, the wave of selling in Japanese debt spilled over into global markets, amplifying declines in U.S. Treasuries, which were already under pressure amid fears that new tariffs could undermine the appeal of U.S. assets.

Since Takaichi took office in October, yields on 20- and 40-year bonds have risen by roughly 80 basis points, as investors closely monitor Japan’s potential impact on global markets in an environment of heightened volatility ahead of the snap election scheduled for February 8. With no clear funding source for the proposed consumption tax cut, markets expect it to be financed through additional debt issuance.

“The bond market is the canary in the coal mine,” one investor noted. “Despite the reaction, there has been no official communication to counter it. From an investor’s perspective, it’s hard to find incentives to buy bonds.”

Regime Shift and Global Implications

The surge in yields underscores a structural shift in Japan’s bond market after years of ultra-low rates. The 30-year Japanese government bond now yields more than its German counterpart, which is trading around 3.5%. For some asset managers, however, these levels are beginning to look attractive.

“A 40-year bond yielding above 4% offers increasing value for long-term investors, especially on a currency-hedged basis,” some managers argue.

Rising yields have also drawn in foreign capital, which now accounts for nearly 65% of monthly trading volume in Japan’s bond market. At the same time, the yen weakened to 158.60 per dollar, while Japanese equities moved in line with broader declines across Asian markets.

Risk of Bank of Japan Intervention

Negative sentiment deepened after data showed that domestic insurers sold a record amount of ultra-long bonds in December—the largest net liquidation since records began in 2004. Although Japan’s debt-to-GDP ratio has fallen to a 16-year low, it remains the highest among advanced economies, making demand particularly sensitive to any signs of increased borrowing.

Against this backdrop, some market participants warn that if pressure persists, the Bank of Japan may be forced to step in to stabilize the market. Should the sell-off intensify and spread globally, the central bank could revive its unlimited bond-buying tools to stem the decline.

Europe to Use Anti-Coercion Tool Against U.S. Over Greenland

Posted on January 20, 2026 by Ignacio Teson

Created in 2021, the instrument allows Europe to condition trade with the United States, although it can take months to take effect.

Amid repeated threats by U.S. President Donald Trump to take control of Greenland, calls are growing for the European Union to deploy its so-called Anti-Coercion Instrument.

Tensions escalated after Trump announced tariffs of up to 25% on Denmark, Finland, France, Germany, the Netherlands, and Sweden—along with non-EU countries the United Kingdom and Norway—unless the autonomous Danish territory of Greenland is ceded to the United States.

The instrument is designed to deter economic coercion against any of the EU’s 27 member states. Such coercion is defined as the “application or threat of application by a third country of measures affecting trade or investment” that interfere with the bloc’s and its members’ “legitimate sovereign decisions.”

Political figures including French President Emmanuel Macron and Valérie Hayer, leader of the liberal Renew group in the European Parliament, have urged the EU to activate the mechanism. “The United States is making a miscalculation that is not only dangerous, but could also be painful. The Anti-Coercion Instrument is our economic nuclear weapon,” Hayer said.

How the EU’s Anti-Coercion Instrument Works

The tool allows the EU to impose measures such as restrictions on imports and exports of goods and services within its single market of 450 million consumers. It also gives Brussels the authority to limit U.S. companies’ access to public procurement contracts across Europe.

EU officials have previously drawn up a list of U.S. services that could be targeted, potentially including major American technology firms, given that the United States runs a services trade surplus with the EU.

Both the European Commission and member states can request activation of the instrument. Approval would require the backing of at least 55% of member states, representing 65% of the EU’s population. Even then, implementation could take several months.

The Commission has up to four months to investigate the third country accused of harmful trade practices. Member states would then have eight to ten weeks to endorse any proposed response. Only after that would the Commission be authorized to prepare measures, which could enter into force roughly six months later.

The Anti-Coercion Instrument was created after Lithuania accused China in 2021 of blocking its exports in retaliation for Vilnius allowing the opening of a Taiwanese diplomatic representation in the country.

Wall Street Slides as Risk Aversion Spikes and Gold and Silver Soar

Posted on January 20, 2026 by Ignacio Teson

Donald Trump’s tariff threats against Europe revive fears of a trade war, hit Wall Street, and fuel a sharp rise in risk aversion.

Stocks are looking bearish right now after two days of declines.

Wall Street posted steep losses on Tuesday, January 20, following Monday’s Martin Luther King Jr. Day holiday, as markets reacted to rising risk aversion triggered by Donald Trump’s remarks on imposing tariffs on Europe and the escalating dispute over Greenland. The exchange of statements between U.S. and European officials has continued to weigh on sentiment, pushing markets lower.

U.S. equities traded sharply down across the board, led by the Nasdaq, which fell 1.6% to 23,096.42. The S&P 500 slid 1.4% to 6,841.97, while the Dow Jones posted a more moderate decline of 1.2%, ending at 48,723.52.

[[SPX-graph]]

Macro Context

The U.S. president warned that tariffs of 10% would be imposed starting February 1—rising to 25% from June 1—on imports from Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, unless an agreement is reached for the full acquisition of Greenland. He also threatened to levy 200% tariffs on French wine and champagne if President Emmanuel Macron refuses to join the so-called “Peace Board” proposed by Washington for Gaza.

The European Union responded swiftly. Brussels rejected any form of intimidation and, while emphasizing dialogue and diplomacy, made clear that all options remain on the table. These include activating the Anti-Coercion Instrument, which would allow trade restrictions and limits on access to the single market, as well as reviving a €93 billion retaliation package designed during previous disputes with the United States.

From the financial sector, the prevailing mood is one of growing distrust. Confusion and unpredictability best describe the current market environment following Trump’s latest moves.

Adding to the pressure is mounting institutional uncertainty in the United States. Investors are closely watching an upcoming Supreme Court ruling on the legality of using emergency powers to impose broad tariffs—a decision that could spark significant volatility. In addition, a hearing is scheduled for Wednesday on the dismissal of Federal Reserve Governor Lisa Cook, ordered by Trump, amid heightened tensions between the White House and the central bank.

Gold Hits New Highs, Oil Rises

Rising risk aversion is clearly reflected across other markets. Gold, the classic safe-haven asset, surged to fresh record highs, breaking above $4,700 per ounce for the first time, with gains exceeding 3% on the day. Silver also hit a new record, jumping nearly 7% to around $94.72 per ounce.

In energy markets, crude prices moved higher: WTI gained 1.3% to $60.15 per barrel, while Brent rose 1.4% to $64.85, tracking the broader increase in global market tensions.

[[XAU/USD-graph]]

Japan: Sharp Rise in Bond Yields

In Japan, the yield on the 40-year government bond climbed above 4% for the first time since its launch in 2007, following Prime Minister Sanae Takaichi’s announcement of snap elections scheduled for February 8. The yield on the ultra-long bond jumped 27.5 basis points to 4.215%, while the 30-year yield rose to 3.88%, reflecting growing concerns over Japan’s fragile fiscal position and the government’s ambitious spending plans.

Donald Trump’s Assault on the Fed Reaches the U.S. Supreme Court

Posted on January 20, 2026 by Ignacio Teson

The presence of the Federal Reserve chair at a key Supreme Court hearing underscores the severity of the standoff with the White House and the risk of setting a precedent on political control over monetary policy.

Federal Reserve Board of Governors member Lisa Cook, right, talks with Federal Reserve Chairman Jerome Powell before an open meeting of the Board of Governors at the Federal Reserve, Wednesday, June 25, 2025, in Washington. (AP Photo/Mark Schiefelbein)/DCMS106/25176724591192//2506252241

Federal Reserve Chair Jerome Powell’s decision to attend oral arguments at the U.S. Supreme Court this Wednesday has raised alarm bells across markets and institutional circles. Such a move is highly unusual and highlights the importance of the case, as well as the potential impact its outcome could have on the central bank’s independence.

The legal dispute centers on President Donald Trump’s attempt to remove Fed Governor Lisa Cook, a move that has reignited a broader debate over the limits of presidential power and the safeguards protecting monetary policy autonomy. Powell’s personal presence at the hearing is widely seen as a signal of how seriously the institution views the risks posed by the litigation.

The case is further complicated by the fact that it unfolds while Powell himself is facing a criminal investigation in Washington related to the multibillion-dollar renovation of the Fed’s headquarters and his testimony before Congress. In a public statement issued on January 11, the Fed chair directly linked the conflict to monetary policy decisions, arguing that the threat of criminal charges arose “as a consequence of the Federal Reserve setting interest rates based on what it believes is best for the public, rather than the president’s preferences.”

Lisa Cook’s Lawsuit

Trump announced in late August his intention to remove Cook, citing alleged mortgage fraud involving two properties. The Fed governor has denied any wrongdoing and faces no criminal charges. In response, she filed a federal lawsuit seeking to block her dismissal, and both a district court judge and a federal appeals court ordered that she remain in office while the case proceeds.

The Department of Justice has challenged those rulings, calling them an “improper judicial interference” with the president’s authority to remove officials for “cause.” For the Federal Reserve, however, the case goes well beyond Cook’s individual situation and could establish a critical precedent defining the extent of institutional protection shielding the central bank from political pressure.

Tensions Escalate Between the U.S. and Europe: Stocks Fall, Gold Rises

Posted on January 19, 2026 by Ignacio Teson

European stocks slide as trade tensions between the United States and the European Union intensify, while precious metals hit record highs and oil and the dollar weaken.

With Wall Street closed for the Martin Luther King Jr. Day holiday, European equities are trading lower on Monday, January 19, with losses of up to 1.6%, amid rising trade and geopolitical tensions.

The Euro Stoxx 50 fell 1.5%, led by Paris (-1.7%) and Milan (-1.2%), as increased risk aversion weighed on investor sentiment.

[[DAX-graph]]

Market caution intensified after Donald Trump warned of potential new tariffs on countries opposing his plan to move forward with the acquisition of Greenland, a statement that reignited concerns across global markets.

Over the weekend, Trump said the United States would impose an additional 10% tariff starting February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom.

He added that tariffs could rise to 25% in June if no agreement is reached allowing the U.S. to gain control of Greenland, a semi-autonomous territory within the Kingdom of Denmark.

European Retaliation to Trump

Media reports suggest the European Union could revive a €93 billion tariff package on U.S. goods in retaliation, a move that would significantly escalate tensions and raise the risk of a broader transatlantic trade dispute.

In Asia, markets were mixed. Japan’s Nikkei fell 0.7% on profit-taking and U.S. tariff threats, South Korea’s Kospi rose 1.3%, Shanghai’s benchmark index gained 0.29%, while Hong Kong’s Hang Seng was down 1.06% ahead of the close.

Following Trump’s tariff threats linked to potential U.S. moves on Greenland, affected European countries began to respond. EU officials are reportedly considering invalidating the trade agreement reached with Washington last July and have also warned about the possible activation of the bloc’s anti-coercion instrument, a mechanism designed to counter economic pressure from third countries.

Precious Metals Hit Record Highs

Amid rising geopolitical tensions, precious metals continue to strengthen as safe-haven assets. Both gold and silver reached record highs. Spot gold climbed 1.6% on Monday to $4,669.57.

Brent crude, the European benchmark, traded nearly flat at $64.11 per barrel, while U.S. benchmark West Texas Intermediate (WTI) stood at $59.34.

The U.S. dollar also weakened on Monday, slipping 0.2% to 99.050.

China Weathers the Tariff War as Its Economy Grows 5% in 2025

Posted on January 19, 2026 by Ignacio Teson

Exports to new markets proved key, though growth slowed in the final quarter of last year.

China reported on Monday that its gross domestic product (GDP) expanded by 5% in 2025, according to data from the National Bureau of Statistics (NBS), matching the previous year’s pace and meeting official growth targets despite the tariff war with the United States.

However, growth slowed to 4.5% in the final quarter of the year, the government said. That marked the weakest quarterly expansion since late 2022, when China began easing its strict Covid-19 restrictions. The world’s second-largest economy had grown at an annual rate of 4.8% in the previous quarter.

Both figures came in above analysts’ expectations, which had forecast quarterly growth of around 1% and annual growth of roughly 4.4%.

Chinese leaders have sought to accelerate growth following the downturn in the property market and the disruptions caused by the pandemic, which rippled across the broader economy.

As expected, full-year growth aligned with the government’s official target of “around 5%.”

Chinese Exports and Imports

Strong exports helped offset weak consumer spending and subdued business investment, contributing to a record trade surplus of $1.2 trillion.

Exports to the United States suffered after President Donald Trump returned to office early last year and reignited a tariff war. That decline, however, was largely offset by increased shipments to other markets. Rising imports of Chinese goods through platforms such as Temu and Shein have prompted some governments to take steps to protect domestic industries.

Trump and Chinese leader Xi Jinping agreed to extend a truce in their tariff dispute, which also helped ease pressure on China’s exports. Even so, Chinese exports to the U.S. fell by 20% last year.

The NBS noted that, “in the face of complex changes in the domestic and global economic environment”—a veiled reference to tariffs—“the national economy advanced through high-quality development driven by innovation despite mounting economic pressures.”

“The economy maintained momentum toward steady progress in 2025 despite multiple headwinds,” the statement added.

What Chinese Authorities are Doing

Chinese policymakers have repeatedly emphasized boosting domestic demand as a priority, but results so far have been limited. A trade-in program encouraging drivers to replace older vehicles with more energy-efficient models, for example, has lost momentum in recent months. Stabilizing—rather than fully recovering—the domestic property market remains key to restoring public confidence and, in turn, reviving household consumption and private investment.

China has also rolled out trade-in subsidies for household appliances such as refrigerators, washing machines, and televisions. While major consumer stimulus measures in 2025, including these subsidies, are set to continue into 2026, they could be scaled back, said Weiheng Chen, global investment strategist at J.P. Morgan Private Bank, in a recent note.

Looking ahead, slower growth is expected in 2026. Deutsche Bank forecasts China’s economy will expand by around 4.5% next year, according to the Associated Press.