Trump Strikes Softer Geopolitical Tone

• Geopolitics and Davos took centre stage again, after Donald Trump posted that a “framework for a future deal” had been reached regarding Greenland.
• Addressing the World Economic Forum, Trump struck a softer tone, ruling out the use of force and confirming that planned tariffs on European nations due from 1 February will not go ahead.
• Markets interpreted the combined messaging as a step back from escalation, with the US 10-year Treasury yield easing 4bps to 4.25%, while the 2-year yield remained anchored near 3.60%.
• Japanese rates also retraced, as Finance Minister Katayama urged calm, prompting 14–17bps declines in longer-dated JGB yields.
• At home, attention turns squarely to December Labour Force data today, with consensus expecting unemployment to hold at 4.3%, a key input ahead of Q4 inflation next week.