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Bonds
The US 10-year Treasury yield is hovering around 4.24% as we near the end of the week. It is marginally higher after a volatile stretch shaped by geopolitics and global rates. Treasury yields briefly pushed to five-month highs after President Trump threatened tariffs on European countries opposing his Greenland plan, fuelling concerns that Europe could use its sizeable US asset holdings as leverage. Conditions steadied after he signalled a pause and referenced a North Atlantic Treaty Organisation (NATO) “framework for a future deal.” Solid US data also reinforced expectations that the Fed will keep rates unchanged next week.
In the United Kingdom (UK), the 10-year gilt rose to 4.49%. Investors weighed fading trade-escalation fears against sticky inflation; UK CPI came in at 3.4% and service inflation at 4.5%. The UK labour backdrop remains soft, with unemployment at 5.1% and wage growth slowing to 4.5%. The UK’s December borrowing beat expectations, with the budget deficit narrowing to £11.6 billion.
Germany’s 10-year Bund eased to 2.87% as US-Europe tensions moderated, despite Denmark reiterating that Greenland’s sovereignty is non-negotiable.
Equities
US equity futures were steady this morning after a second day of gains for the major benchmarks. Dow and S&P 500 futures held flat, while Nasdaq 100 futures dipped as multinational tech company Intel slid more than 11% after-hours on a softer-than-expected first quarter outlook, weighing on broader tech sentiment. In Thursday’s session, the Dow rose 0.63%, the S&P 500 added 0.55%, and the Nasdaq climbed 0.91%. Risk appetite improved after President Trump pulled back on proposed tariffs tied to Greenland, referencing a NATO “framework” for a future deal. Data also supported the tone: US third quarter GDP was revised up to 4.4%, jobless claims stayed near 200,000, Personal Consumption Expenditure (PCE) inflation met expectations, and consumer spending remained resilient.
UK markets were helped by easing trade concerns and a better-than-expected fiscal print, with the UK’s December budget deficit narrowing to £11.6 billion. Diversified food ingredient and retail group Associated British Foods was up after reaffirming guidance, along with discount retailer B&M, which rose despite announcing another cut to its forecasts.
European equities rebounded sharply, led by banks, including Deutsche Bank, BNP Paribas, UniCredit and Banco Santander, which were all up at least 3% while defence names lagged.
Commodities
Brent held above $64/barrel, recovering some lost ground as traders balanced steady demand signals against a still-ample supply backdrop. The CEO of Saudi Arabia’s largest energy and chemical company, Saudi Arabian Oil Company, pushed back on “glut” fears, arguing demand – especially from emerging markets – remains firm after record consumption last year and expected growth into 2026. The International Energy Agency, however, still sees supply exceeding demand this year, keeping rallies contained. A softer US dollar offered additional support, but the upside is limited by easing geopolitical risk premia, including Ukraine ceasefire speculation and a less aggressive US stance toward Iran. Brent is on track for a modest weekly gain, with risks still finely balanced.
Gold surged above $4,950/ounce, printing fresh record highs. Safe-haven demand was reinforced by ongoing Greenland-related uncertainty, even as Trump dropped planned tariffs on Europe and the EU paused its threatened countermeasures. US headline and core PCE inflation numbers matched expectations, supporting the view that disinflation is continuing while growth holds up. Markets are still pricing in two Fed rate cuts later this year, with added focus on Trump’s impending pick for the next Fed chair – where a more dovish choice could amplify easing expectations.
Silver jumped nearly 3% toward $99/ounce, also reaching record territory. The move was underpinned by the weaker dollar and a broader bid for real assets, alongside market positioning dynamics. Support for the metal has been amplified by strong retail demand, a squeeze-like backdrop, and China-related supply constraints.
Currencies
The DXY is hovering near 98.3 this morning and is on track for a roughly 1% weekly decline, as geopolitics has rattled confidence. Markets reacted to President Trump’s shifting stance on Greenland, including his initial tariff threats against parts of Europe, which were followed by a reversal after he cited a NATO “framework” for a future deal. With details still unclear, and speculation around the terms, which may include potential strategic or resource considerations, risk sentiment remains fragile. Unease also grew around Europe’s sizeable holdings of US assets, after a Danish pension fund flagged plans to exit its US Treasury exposure. The dollar’s weekly losses were most visible versus the euro and the Australian and New Zealand dollars.
The euro held around $1.17/€, near a two-week high, as tariff fears eased temporarily. However, uncertainty remains elevated, with Denmark reiterating that Greenland’s sovereignty is not negotiable. With eurozone activity holding up and inflation close to target, markets still expect the European Central Bank to remain on hold for now.
Sterling climbed to about $1.348/£, its strongest level in over two weeks, supported by calmer trade headlines and UK data: December’s deficit narrowed to £11.6 billion, CPI printed 3.4%, services inflation edged up to 4.5%, unemployment held at 5.1%, and wage growth slowed to 4.5%.
*Please note that all information is at the time of writing.
Key indicators:
GBP/USD: 1.3492
GBP/EUR: 1.1479
GBP/ZAR: 21.74
GOLD: $4,955
BRENT CRUDE: $64.35
Sources: Bloomberg, Investing.com, Reuters, Trading Economics and Trading View.
Written by Citadel Advisory Partner and Citadel Global Director, Bianca Botes.
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