Morning Bid: How Green is my rally?

• U.S. equity indices posted their worst day Tuesday during peak Greenland tensions, then rallied Wednesday after Trump indicated he would not impose additional 10% tariffs on European allies
• Japan's 10-year government bond yield jumped over 18 basis points in two days to multi-year highs following Prime Minister Takaichi's snap election call for February, with the yen briefly strengthening to 157 per dollar amid intervention speculation
• The dollar index is on track for weekly losses while gold continues rising, reflecting anxiety over Trump's willingness to reopen closed trade deals as a negotiating tactic in non-economic disputes

Market Summary: Greenland Tensions and Global Market Volatility

Key Developments:

President Trump's week-long Greenland dispute with Denmark concluded with a "concept of a deal," averting threatened 10% tariffs on European allies. However, major U.S. equity indices recorded their worst day on Tuesday during peak tensions before recovering Wednesday. The episode highlighted Trump's willingness to reopen trade deals as negotiating leverage, increasing uncertainty for businesses and trading partners.

Market Reactions:

• Dollar index tracking toward worst weekly performance in recent period
• Gold continues climbing as safe-haven demand rises
• European stocks poised for first weekly gain in over a month
• U.S. rally showing signs of stalling

Japan Market Surge:

Japanese 10-year government bond yields jumped 18+ basis points over two days to multi-year highs after Prime Minister Sanae Takaichi called a snap February election, promising massive stimulus. The yen strengthened to 157 per dollar, prompting intervention speculation. The Bank of Japan maintained current policy.

U.S. Economic Performance:

The economy continues robust growth despite political tensions. However, inflation remains elevated with the personal consumption expenditures price index at 2.7-2.8%, above Fed comfort levels.

Looking Ahead:

Federal Reserve meeting scheduled next week with no rate changes expected. Focus will shift to potential Powell replacement when his term ends in May. Trump's first-year anniversary passed Tuesday, marking ongoing policy uncertainty.

Sector Concerns:

Oil and gas industry expressing anxiety about policy direction despite initial support from the administration. European energy dependence on U.S. gas remains a vulnerability exposed by the Greenland tensions.