The great vol reset
We’ve seen a massive reset in bond volatility since the Liberation Day chaos. US Treasuries yields have gone nowhere, but at these levels owning some bond volatility offers limited downside with asymmetric upside. Source: The Market Ear, LSEG
We aren't just talking about trade embargoes or "backdoor deals" anymore. We are talking about a direct naval showdown on the high seas. 🌊⚓️
Here is the situation: The U.S. is moving to seize the Marinera, a Russian-flagged tanker carrying sanctioned Venezuelan oil. Russia’s response? They deployed a submarine to escort it. 🇷🇺🇻🇪🇺🇸 The Breakdown: -> The Move: The U.S. is enforcing sanctions with physical force. -> The Counter: Moscow is signaling they will use military hardware to protect their assets. ->The Global Ripple: China is watching closely. 🇨🇳 Why this matters: This isn't just about oil prices. It’s about the shift from Economic Diplomacy to Kinetic Confrontation. If the U.S. succeeds, American sanctions become the ultimate global law. If Russia blocks them, the era of U.S. naval dominance faces its biggest test in decades. Source: Mario Nawfal on X, Reuters, @sentdefender, WSJ
Financial conditions keep loosening as investors get excited about the potential for both fiscal and monetary stimulus this year.
Yields on junk bonds have fallen to the lowest since 2022, despite bankruptcies starting to creep higher. Source: Bloomberg, Lisa Abramowicz @lisaabramowicz1
In case you missed it... In Germany, inflation slowed more than expected at the end of last year.
Consumer prices rose 1.8% in Dec YoY, below the 2.1% forecast. The slowdown was driven mainly by falling energy prices and a sharp easing in food inflation, which dropped to just 0.8%. Core inflation also declined to 2.4%, although service inflation remains stubbornly high at 3.5%. Source: HolgerZ, Bloomberg
Saudi Arabia has removed all restrictions for foreigners to buy local stocks.
The decision allows non-residents to invest directly in the main market effective Feb. 1.
Nvidia CEO said yesterday that the “Memory Bottleneck is Severe”
SK Hynix ($330B) $MU ($355B) Samsung ($595B). Wait and see the look on everyone’s face when they find out the entire AI buildout will be bottlenecked by the tiny $AXTI ($1B) after the China’s new export controls. Source: Serenity @aleabitoreddit
As highlighted by Lia the Trader @Liathetrader on X BEWARE $SILVER holders ‼️
The 2026 commodity index rebalancing (BCOM & GSCI) kicks off this week, forcing big adjustments in holdings. Precious metals stand out with massive estimated outflows—over $6.8B in gold and $6.8B in silver selling pressure. Silver's weight in BCOM drops sharply from ~9.6% to ~1.45%, triggering passive funds to dump futures. This could create short-term downward pressure on silver prices starting Thursday (Jan 8-14 roll period). Silver is trading around $78/oz today after huge 2025 gains (~150%), making it a prime rebalancing target. Expect volatility—analysts warn of potential dips, but fundamentals (industrial demand, deficits) remain bullish long-term.
Traders are betting that the Panama Canal will be the next target of the Trump administration, given the market's dawning understanding of the "Donroe Doctrine:"
Source: h/t @bloombergtv's @DRBCurtis Lisa Abramowicz Bloomberg
