Key Highlights

• Aggressive correction in gold, silver and cryptocurrencies
• Kevin Warsh is expected to be nominated as the next Fed chair.
• Panamanian courts annul CK Hutchison’s canal operation contracts.

Chart of the Day

Equity markets’ scored holdings more than 20% above rolling 12-month average

^{Source: BNY}

The sharp risk-off moves seen in markets overnight underscore the impact of elevated positioning across a handful of concentrated themes such as yields and mining. By this measure, there are plenty of candidates across different asset classes that could be in for choppier waters in the near term. For example, in foreign exchange the entire “carry complex” is running at two-and-a-half-year highs and becoming increasingly difficult to sustain. These high-yielders comprise nine out of the top ten non-developed market currencies in holdings across emerging and frontier markets. Indeed, the fact that we even have EGP currency holdings figures at present is testament to a pick-up in activity, as traditionally data density is not sufficient to print holdings figures. Whatever the driver, if risk aversion picks up and financial conditions tighten, such FX positions will often be the first to go.

Looking at the top ten best-held equity markets in emerging markets, a similar metals and yield story comes through. Peru is at significant risk of a correction due to its outlier status in equities: cross-holdings have more than doubled, and that is rare no matter what is driving it. Other Latin American economies and South Africa also feature as part of the mining complex.

What's Changed?

Correlation is not causality, but the link between price moves in gold and big tech shares on the one hand and a stronger USD and higher U.S. rates on the other is dominating markets today. President Trump’s expected nomination of former Fed governor Kevin Warsh to the role of FOMC chair wasn’t priced in before yesterday. On top of the month-end reversals are last-ditch efforts to avert a U.S.-Iran conflict and a two-week deal from Democrats to avoid a U.S. government shutdown.

• Iran talks. Oil has reversed, shedding 1% of its value overnight after President Trump said he plans to talk with Iran. The Turkish foreign minister is meeting with Iran today to help prevent conflict escalation. Saudi and U.S. officials met to discuss the situation yesterday. Eyes will be on the USD correlation to oil prices, which has been positive for most of the last three years.
• Warsh pick. The implications of appointing Kevin Warsh, a former central banker turned Fed critic, have come as a surprise for some and will test how the Fed and Treasury work together on rates and balance sheets. He has argued a need for lower rates, while also calling for “regime change” at the Fed. Warsh sees AI and deregulation as helping to hold down inflation and believes the Fed should have a much smaller balance sheet. Investors will be watching the U.S. yield curve steepening trade and USD as key barometers for this choice.
• Global recovery. EU economies grew in Q4, with Germany up 0.3% q/q in its best performance in three quarters. Italy matched this showing, and Spain continued to outperform, expanding by 0.8%, while France was up 0.2%. The “rest of the world” growth engine matters to commodities, stocks and how investors reallocate risk in 2026. The best-performing markets are in Asia, led by Japan, South Korea and Hong Kong, while Europe is recording uneven returns.

Bottom line: Spurious correlations could break the trend today. The worries that started the week – JPY intervention, Iran-U.S. conflict and U.S. shutdown risks – remain but are all delayed. Japan didn’t intervene in FX during January, but clearly talked about it. The country’s CPI was lower, and its upcoming election looms as the next driver. Iran and U.S. are talking indirectly, leaving open room for a better outcome. On the U.S. shutdown risk, there is a path toward a two-week deal. What matters next has been the driver on the margins of volatility: Q4 earnings, with big tech the ongoing focus. How investors end the month will be critical given the correlation between January performance and the full year. Today’s price action likely matters more than usual, given that correlations are fragile and positions are extended, with gold and the dollar looking for equilibrium. 

What You Need to Know

President Trump has signaled that he is preparing to nominate former Federal Reserve governor Kevin Warsh as the next Fed chair, telling an audience in Washington that an announcement would be made imminently. The move would see Warsh replace Jerome Powell when his term expires in May, reviving a candidate previously considered during Trump’s first term. Warsh is viewed as a conventional and orthodox choice with deep ties to Wall Street and Republican economic circles, potentially easing concerns over Federal Reserve independence after months of presidential attacks on Powell. The expected nomination follows an unusually contentious selection process and comes amid sustained political pressure on the Fed to cut interest rates. S&P Mini -0.815% to 6935.75, DXY +0.332% to 96.602, 10y UST +3.6bp to 4.267%.

Gold and silver prices plunged on Friday as word of Kevin Warsh’s nomination as the next Federal Reserve chair boosted the U.S. dollar and triggered a sharp correction in precious metals. Gold fell as much as 5.9%, while silver and platinum dropped more than 10%, unwinding part of a powerful rally that had pushed technical indicators to extreme levels. The Bloomberg Dollar Spot Index rose to 0.5%, piling on the pressure by making metals more expensive for non-U.S. buyers. Despite the sell-off, gold has still put on about 17% in January and silver 43%, underscoring how stretched positioning had become. Analysts said the news on Warsh provided a catalyst for a long-anticipated pullback after historically overbought conditions.

Japan’s leading business group representing small firms has urged the government to take stronger action on foreign exchange, warning that the weak yen is eroding profitability and threatening wage growth. Ken Kobayashi, chairman of the Japan Chamber of Commerce and Industry, said the yen is “excessively weak” and argued that authorities should focus more closely on currency policy, citing an exchange rate of around ¥130 to the dollar as more appropriate based on corporate surveys. He said recent moves had been driven largely by speculation and called for the use of all available tools, including FX intervention and verbal warnings. The weak yen is hitting smaller companies hardest by raising import costs and squeezing margins. Nikkei -0.099% to 53322.85, USDJPY +0.673% to 154.14, 10y JGB -0.9bp to 2.252%.

Panama’s Supreme Court has annulled the concession allowing a unit of Hong Kong-based CK Hutchison to operate the Balboa and Cristóbal ports at either end of the Panama Canal. It declared the contract unconstitutional following a lawsuit triggered by a government audit alleging irregularities. The unanimous ruling casts serious doubt on a planned $23bn deal to sell the ports to a consortium including BlackRock and strengthens U.S. efforts, championed by President Trump, to curb Chinese influence in the region. The decision forces Panama to retender the ports and potentially bars China’s Cosco from ownership under domestic law. CK Hutchison has said it will pursue legal remedies, while Panama has signaled that it will comply with the court’s decision. The Hong Kong government has expressed its “strong disapproval” of the ruling. Hang Seng -2.077% to 27387.11, USDHKD +0.03% to 7.8079, 10y HKGB -1.2bp to 1.417%.

China is considering the sale of special government bonds to recapitalize some of its largest insurers, including China Life Insurance Group Co. and China Taiping Insurance Group Co. The sale would raise about ¥200bn to help recapitalize the insurers, with the proceeds to be injected into state-controlled firms. The plan is part of an effort to strengthen the largest insurers, which are expected to assist regulators in dealing with riskier small peers and to bolster the capital of firms that were pushed to buy stocks to stabilize markets. CSI 300 -1% to 4706.34, USDCNY -0.032% to 6.9502, 10y CGB -0.6bp to 1.81%.

What We're Watching

German December CPI is expected to come in at 0.0% m/m, 1.9% y/y, with the harmonized figure expected to show a mild m/m contraction.

U.S. December PPI final demand is forecast to ease to 2.8% y/y from 3.0% y/y, while PPI ex-food and energy is seen at 2.9% y/y from 3.0% y/y.

U.S. January MNI Chicago PMI is expected at 43.5 from 42.7.

Colombia’s central bank is expected to make a 50bp hike to 9.75%.

Central bank speaker: St. Louis Fed President Alberto Musalem speaks on the U.S. economy and monetary policy.

What iFlow is Showing Us

Mood: iFlow Mood has stabilized around 0.40 with improving risk sentiment on both equities and fixed income. Equities posted accelerated buying and further unwinding of short positioning in core sovereign outflows.

FX: Demand for LatAm dominated, with significant inflows for CLP, COP and PEN. Currency flows were light and mixed in the rest of the region. USD and JPY were sold, against inflows in EUR, GBP, AUD and NCD. Within APAC, CNY, IDR and SGD were bought against outflows in INR and THB.

FI: Good demand for G10 sovereign bonds, against mixed flows in LatAm, EMEA and APAC. Philippine, Chilean and Indonesian government bonds were most sold.

Equities: Strong equity demand was observed in Chile, Mexico, Peru, Czechia, South Korea and Malaysia, against selling pressure in the EU and Switzerland, followed by the U.S., the U.K. and Thailand. 

Quotes of the Day

“There’s zero correlation between being the best talker and having the best ideas.” – Susan Cain

“Correlation does not equal causality. When two things travel together, it is tempting to assume that one causes the other.” – Steven D. Levitt and Stephen J. Dubner

Economic Details

Euro area GDP in Q4 rose 0.3% q/q, matching growth in the EU, according to Eurostat’s preliminary flash estimate. This followed a 0.3% increase in the euro area and 0.4% in the EU in Q3. On a y/y basis, GDP was up 1.3% in the euro area and 1.4% in the EU, slightly less than in the previous quarter. For 2025 as a whole, GDP is estimated to have grown by 1.5% in the euro area and 1.6% in the EU on a calendar and seasonally adjusted basis. Among member states with available data, Lithuania recorded the strongest q/q growth in Q4 at 1.7%, followed by Spain and Portugal at 0.8%, while Ireland was the only country to contract. Euro Stoxx 50 +0.458% to 5918.91, EURUSD -0.401% to 1.1923, BBG AGG Euro Government High Grade EUR -1.9bp to 2.945%.

The euro area unemployment edged lower in December, with the seasonally adjusted jobless rate falling to 6.2% from 6.3% in November, while the EU unemployment rate declined to 5.9%. The number of unemployed people stood at 10.79 million in the euro area and 13.04 million in the EU. On a m/m basis, unemployment decreased by 61,000 in the euro area and 94,000 in the EU, while y/y it fell by 5,000 in the euro area but rose by 71,000 in the EU. Youth unemployment eased, with the euro area rate falling to 14.3% and the EU rate to 14.7%. Unemployment rates for men and women in the euro area were broadly stable at 6.1% and 6.4%, respectively.

Euro area consumer sentiment softened in December, according to the ECB’s Consumer Expectations Survey, with households reporting lower confidence in income and spending prospects. Consumers’ perceptions of past inflation eased slightly, while inflation expectations for the next 12 months remained broadly stable, continuing the gradual disinflation trend seen since late 2023. Expectations for nominal income growth declined further, reflecting weaker wage optimism. Planned consumption growth over the next year also edged down, particularly among lower-income households. At the same time, expectations for economic growth became less negative, while unemployment expectations improved modestly. Housing market expectations were mixed, with house price growth expectations easing and mortgage rate expectations decreasing. Overall, the survey pointed to cooling household demand momentum alongside stabilizing inflation perceptions.

German import prices fell 2.3% y/y in December, marking the steepest annual decline since March, while edging down 0.1% m/m. The annual drop was driven primarily by energy prices, which fell 20.6% y/y, with declines across crude oil, natural gas, coal, electricity and refined products. Excluding energy, import prices rose 0.3% y/y and increased by 0.3% m/m, indicating firmer underlying price pressures. Agricultural import prices declined by 2.8% y/y, while consumer goods were 1.0% cheaper than a year earlier, led by food items. Capital goods import prices were 0.5% lower y/y, while intermediate goods rose 1.2% y/y. On average, import prices were down 0.3% y/y in 2025, largely reflecting lower energy costs. DAX +0.684% to 24475.79, EURUSD -0.401% to 1.1923, 10y Bund +1.1bp to 2.851%.

German employment edged lower in December, with the number of people in work shrinking by 0.2% y/y and broadly flat m/m on a seasonally adjusted basis. Total employment stood at around 45.9 million, down 5,000 m/m in adjusted terms, following average monthly declines since May. On an unadjusted basis, employment fell 0.3% m/m, a larger drop than the typical December decline in recent years. The downward trend y/y has persisted since August. In Q4, employment was 0.1% lower q/q on a seasonally adjusted basis. Meanwhile, unemployment rose further, with 1.60 million people out of work in December, up 13.0% y/y. The unemployment rate increased to 3.6%, while the seasonally adjusted rate held steady at 3.8%.

Germany’s Q4 GDP in 2025 rose 0.3% q/q on a price, seasonally and calendar-adjusted basis, driven mainly by higher private and government consumption. On a y/y basis, GDP was up 0.6% in price-adjusted terms and 0.4% after also adjusting for calendar effects, reflecting fewer working days in the prior year. For 2025 as a whole, GDP increased by 0.2% in price-adjusted terms and 0.3% on a price and calendar-adjusted basis, confirming the earlier estimate released in mid-January. Destatis also revised the figures for earlier quarters slightly, lifting Q1 and Q2 growth by 0.1 percentage points, while Q3 was left unchanged. The figures continue to underscore the growth and competitiveness challenges facing Europe’s largest economy.

France’s Q4 GDP slowed to 0.2% q/q after 0.5% in Q3, according to the first national accounts estimate, while average growth in 2025 reached 0.9%. Final domestic demand excluding inventories eased slightly, as fixed investment growth slowed to 0.2% while household consumption accelerated to 0.3%, together contributing 0.3 percentage points to quarterly growth. Net trade again made a positive contribution of 0.9 percentage points, as export growth decelerated to 0.9% and imports fell 1.7%. This was offset by a sharply negative contribution from inventories of -1.0 percentage points. For 2025 as a whole, domestic demand excluding inventories contributed 0.7 percentage points, while external trade subtracted 0.5 percentage points from annual growth. CAC 40 +0.333% to 8098.23, EURUSD -0.401% to 1.1923, 10y OAT +1.7bp to 3.437%.

France’s retail sales volume in November shrank m/m, with the overall volume of sales across all commerce falling 0.4% after a near-flat October. The contraction was driven mainly by wholesale trade excluding autos, where volumes dropped 0.8% m/m, led by sharp decreases in specialized wholesale segments such as fuels, chemicals and wood, as well as food, beverages and tobacco. Retail sales excluding autos still rose 0.2% m/m, though this represented a clear slowdown from October, while non-store retail grew 0.7% m/m. On a three-month basis, total sales volumes from September to November were up 2.0% y/y, with gains across wholesale, retail and auto-related trade.

France’s industrial producer prices in December rose 0.3% m/m, while remaining down 2.2% y/y. Monthly gains on the domestic market slowed sharply to 0.2% m/m, while prices for exports were flat. Energy-related components continued to dominate volatility, with coke and refined petroleum prices plunging m/m, offsetting firmer prices in some manufactured goods. Excluding energy, producer prices were flat m/m and up 0.4% y/y. Import prices fell 0.6% m/m and were down 3.9% y/y, reflecting lower energy and refined product prices. Overall, the data point to easing price pressures at both the production and import stages.

French household consumption of goods fell 0.6% m/m in December, marking a second consecutive monthly decline after a 0.3% fall in November. The drop was driven by a sharp contraction in manufactured goods consumption, down 1.0% m/m, with notable weakness in durable goods and clothing. Food consumption also declined by 0.9% m/m, while energy consumption rebounded by 0.8% m/m following a sharp fall in November. Despite the weak December showing, household goods consumption rose 0.4% q/q in Q4, accelerating from Q3. This was supported by a recovery in manufactured goods and steadier energy demand, while food consumption was broadly flat over the quarter.

France’s private sector employment in Q4 was flat q/q, edging down 0.1%, according to INSEE’s flash estimate, leaving payrolls 0.2% lower y/y but still 5.3% above pre-pandemic levels. The quarterly decrease equated to 28,700 jobs, similar to Q3, taking the annual fall to 40,800. Temporary employment was flat q/q after a prior decline, and was 1.1% lower y/y and 9.0% below its pre-COVID level. Agricultural employment rallied by 2.6% q/q following an earlier weather-related drop, but was still down 1.2% y/y. Employment in industry fell 0.1% q/q and 0.4% y/y, while construction employment declined by 0.2% q/q and 1.0% y/y. Market services excluding temporary jobs fell 0.2% q/q.

Italy’s Q4 GDP grew 0.3% q/q on a seasonally and calendar-adjusted basis and 0.8% y/y, according to a preliminary estimate, despite having two fewer working days than the previous quarter. Growth was broad-based across sectors, with the strongest increases in agriculture, forestry and fishing, and industry, while all major components of value added rose. On the demand side, domestic demand excluding inventories made a positive contribution, whereas net external demand weighed on growth. For 2025 as a whole, GDP increased by 0.7% y/y in real, adjusted terms, with three fewer working days than in 2024. The carry-over growth into 2026 was estimated at 0.3%, while final annual national accounts will be released in early March. FTSE MIB +0.62% to 45355.01, EURUSD -0.401% to 1.1923, 10y BTP +1.8bp to 3.467%.

Spain’s January CPI (advance) fell 0.5 percentage points y/y to 2.4%, according to the INE’s preliminary estimate, while core inflation was unchanged at 2.6% y/y. On a m/m basis, headline prices declined by 0.4%, reflecting seasonal effects. The easing in headline inflation was driven mainly by electricity prices, which rose less than a year earlier, and by motor fuels, which fell y/y after increasing in the previous January. The advance HICP measure eased 0.5 percentage points y/y to 2.5%, with core HICP at 2.8% y/y, while HICP fell 0.7% m/m. The release also marks the implementation of the new 2025 CPI base, updating weights and classification without revising previously published rates. IBEX 35 +0.984% to 17772, EURUSD -0.401% to 1.1923, 10y Bono +1.7bp to 3.221%.

Spain’s Q4 GDP (advance) rose 0.8% q/q, accelerating by 0.2 percentage points from Q3, while y/y growth eased to 2.6% from 2.7%. Domestic demand contributed 3.6 percentage points y/y, offset by a -1.0 percentage point drag from net trade. Household consumption grew by 1.0% q/q, public consumption by 0.1% and gross fixed capital formation by 1.7%. Exports increased by 0.8% q/q, while imports rose 1.4% q/q. On the supply side, construction value added rose by 2.1% q/q, services by 0.8% and industry by 0.3%, with manufacturing up 0.1%. For full-year 2025, GDP expanded by 2.8%, with domestic demand adding 3.6 percentage points and net trade subtracting 0.8 percentage points.

Dutch GDP grew 0.5% q/q in Q4, matching Q3, driven mainly by exports and public consumption. Exports of goods and services rose 1.3% q/q, while imports fell 0.6% q/q, making net trade the largest positive contributor to growth. Public consumption increased by 1.1% q/q, supported by higher spending on healthcare and wages, while household consumption rose 0.3% q/q. By contrast, gross fixed capital formation contracted by 0.5% q/q, with lower investment in aircraft a key drag. On the production side, the public sector contributed most to growth, followed by manufacturing, while value added also rose 2.5% q/q in agriculture, forestry and fishing. For 2025 as a whole, GDP expanded 1.9% y/y, up from 1.1% in 2024, mainly reflecting stronger exports and domestic consumption. AEX -0.101% to 995.92, EURUSD -0.401% to 1.1923, 10y NGB +1.2bp to 2.92%.

U.K. businesses became more cautious in January as concerns about the global economic outlook intensified, following renewed trade threats from President Trump. A Lloyds survey indicated that external optimism deteriorated sharply after Trump warned of potential tariffs on the U.K. and other European countries amid tensions over Greenland. The softer global outlook contrasted with greater confidence in firms’ own activity, with many reporting improving trading prospects and stronger hiring intentions at the start of the year. Lloyds said companies were increasingly focused on managing external risks while pursuing growth opportunities, even as overall sentiment slipped from the levels seen in mid-2025. FTSE 100 +0.141% to 10186.14, GBPUSD -0.428% to 1.375, 10y gilt +1.1bp to 4.522%.

U.K. household and corporate borrowing eased in December, according to Bank of England data. Net mortgage borrowing was unchanged at £4.6bn, while mortgage approvals for house purchases fell by 3,100 to 61,000, partly offset by a rise in remortgaging approvals to 38,400. Net consumer credit borrowing softened to £1.5bn from £2.1bn, reflecting lower credit card borrowing (£0.7bn) and reduced borrowing via other forms of consumer credit. Private non-financial corporations repaid £1.4bn to banks and capital markets after strong borrowing in November. Broad money growth slowed, with M4ex inflows of £13.2bn, while sterling lending to households and firms (M4Lex) declined to £12.6bn, driven mainly by household borrowing.

Switzerland’s January KOF economic barometer fell by 1.1 points to 102.5, down from a revised 103.6 in December, but remained above its medium-term average of 100. The decline was driven mainly by weaker indicator bundles for hospitality and construction, while manufacturing and financial and insurance services provided positive offsets. Within the producing sector, sub-indicators for employment prospects, production barriers, profits and exports deteriorated, whereas order backlogs, general business conditions and competitive positioning improved. Manufacturing showed mixed signals, with setbacks in the electrical industry and wood, glass, stone and earth, contrasting with gains in machinery and equipment, metal production, and paper and printing. SMI +0.059% to 13155.67, EURCHF +0.249% to 0.91717, 10y Swiss GB +1.2bp to 0.236%.

Sweden’s retail trade declined m/m in December, with the volume of retail sales falling 0.4% after calendar and seasonal adjustment. Both durable and non-durable goods contributed to the m/m weakness, while retail trade excluding fuel was also down. Despite the monthly drop, retail volumes were higher y/y, supported by stronger sales earlier in the autumn. Over the three-month period to December, retail trade volumes increased compared with the previous three months, indicating that underlying momentum remained positive despite the weaker year-end showing. OMX +0.219% to 3038.029, EURSEK +0.093% to 10.5491, 10y Swedish GB +0.9bp to 2.864%.

Sweden’s business lending conditions eased further in November, with interest rates continuing to fall across most sectors. The average lending rate for real estate offices fell to 3.46% from 3.50% in October, while the rate for real estate housing fell to 3.09% from 3.11%. Tenant owners’ associations recorded the lowest rate at 2.88%, down from 2.89%, while information and communication remained the most expensive sector at 4.52%. Annual lending growth was positive in seven out of 11 industries, led by real estate offices at +5.1% y/y, while real estate housing contracted by 0.8% y/y. Lending growth to large enterprises accelerated to 3.9% y/y, compared with 2.6% growth for SMEs.

Sweden’s employment in November increased by y/y, with the number of ongoing employments rising 0.6% compared with the same month a year earlier. Employment growth was driven mainly by longer-duration jobs, while short-term employments were flat. Total hours worked increased slightly y/y, and gross pay rose 4.2%. Sickness absence stood at 2.0%, unchanged from a year earlier, with higher absence rate among women than men. The data point to a resilient labor market despite softer momentum compared with earlier years.

Norway’s December retail sales volume fell 0.7% m/m on a seasonally adjusted basis, reversing a strong November increase. The decline was broad-based, with grocery stores making the largest negative contribution, while furniture and electronics sales also weighed on the m/m performance after a robust November supported by Black Friday and early Christmas shopping. In Q4, retail sales volumes rose 0.5% q/q, indicating firmer underlying momentum despite the December setback. For 2025 as a whole, retail sales volumes increased by 3.5% y/y, marking a clear improvement from 2024. Specialized stores selling household goods recorded a 3.2% m/m drop in December. Euro area retail sales rose 0.2% m/m over the same period, compared with a larger decline in Norway. OSE +0.109% to 1758.49, EURNOK +0.149% to 11.4349, 10y NGB +2.5bp to 4.228%.

Norway’s labor market in January showed a moderate level of slack, with 68,932 people fully unemployed, corresponding to 2.3% of the labor force. Men accounted for 41,876 of the fully unemployed (2.6%), compared with 27,056 women (1.9%). Including partially unemployed people and those on labor market schemes, total registered jobseekers exceeded 102,000. Unemployment was highest among young people aged 20-24, at 3.0%, while unemployment among the 60+ group stood at 1.4%. By region, unemployment rates were highest in Østfold (3.1%) and Oslo (2.9%). Registered vacancies totaled 56,893, down 3% y/y, while recipients of unemployment benefits numbered 49,715, up 2% y/y.

Poland’s GDP grew 3.6% y/y in 2025, accelerating from 3.0% in 2024, according to GUS estimates, marking a clear strengthening of economic momentum. Growth was driven primarily by domestic demand, which expanded by 4.0% y/y, despite easing from 4.5% in 2024. Total consumption rose 3.9% y/y, with household consumption increasing by 3.7% y/y, supported by improving real incomes. Gross fixed capital formation bounced back strongly, rising 4.2% y/y after a 0.9% contraction in 2024, reflecting stronger investment activity. Gross value added increased by 3.0% y/y, led by industry at 3.0%, while construction returned to growth at 1.7% y/y after a deep decline in the prior year. WIG -0.412% to 124482.6, EURPLN +0.174% to 4.2126, 10y PGB +2bp to 5.103%.

Hungary’s Q4 2025 GDP grew by 0.7% y/y on a non-adjusted basis and 0.5% y/y on a seasonally and calendar-adjusted basis, while output increased by 0.2% q/q. For 2025 as a whole, economic growth was 0.4% y/y in raw terms and 0.3% y/y on an adjusted basis. Growth in the fourth quarter was driven mainly by services, with particularly strong contributions from financial and insurance activities, and wholesale and retail trade, alongside continued support from construction. These gains were partly offset by a contraction in industry, which acted as the main drag on overall performance. The data point to modest late-year growth momentum, underpinned by services rather than goods-producing sectors. Budapest SI +0.407% to 128410.5, EURHUF +0.242% to 381.55, 10y HGB +3bp to 6.54%.

Czech GDP increased by 2.5% y/y in 2025, according to a preliminary estimate, supported mainly by domestic demand. In Q4, output rose 0.5% q/q and 2.4% y/y on a seasonally adjusted basis. Quarterly growth was driven primarily by higher final consumption expenditure, while the external trade balance made a small positive contribution. In y/y terms, household consumption and external demand were the main growth drivers, while gross capital formation weighed on activity. On the supply side, trade, transportation, accommodation and food services contributed most to value added growth, alongside industry, while construction continued to perform well. Employment rose 1.0% y/y in 2025; in Q4, it was flat q/q and up 0.9% y/y. Prague SE +0.003% to 2761.09, EURCZK +0.087% to 24.344, 10y CZGB +0.7bp to 4.462%.

Türkiye’s services producer prices remained elevated in December, with the S-PPI rising 35.1% y/y and 0.8% m/m. Annual price increases were broad-based, led by real estate services (+41.2% y/y), professional, scientific and technical services (+40.3%), administrative and support services (+37.9%) and accommodation and food services (+35.5%). Transportation and storage services rose 32.3% y/y. On a m/m basis, transportation and storage prices increased by 1.23%, while real estate services declined by 2.20% m/m. The 12-month moving average of services producer prices stood at 36.8% y/y, pointing to continued, though gradually easing, cost pressures in the services sector. BI 100 -0.526% to 13758.4, USDTRY +0.153% to 43.5004, 10y TGB +9bp to 29.56%.

Türkiye’s December foreign trade showed strong y/y growth in both directions. Exports rose 12.7% y/y to $26.4bn, while imports increased by 10.7% y/y to $35.7bn, leaving a foreign trade deficit of $9.3bn, up 5.6% y/y, with the export coverage ratio at 73.9%. Excluding energy and non-monetary gold, exports grew by 14.6% y/y and imports by 17.9% y/y. For January-December, exports increased by 4.4% y/y to $273.4bn and imports rose 6.2% y/y to $365.4bn, widening the annual deficit by 11.9% y/y to $92.1bn. Manufacturing products accounted for over 93% of exports, while intermediate goods made up about 65% of imports, highlighting the dominance of manufacturing trade and reliance on imported inputs.

Japanese inflation fell faster than expected in January. Headline CPI fell from 2.0% to 1.5% y/y, the lowest since March 2022, while the core ex-fresh food measure stood at 2.0% (December: 2.3% y/y) and core ex-fresh food and energy at 2.4% y/y (December: 2.6% y/y). On the month, the headline rate was -0.1% m/m (December: -0.2%), in the first back-to-back m/m fall since November-December 2020, with ex-fresh food at -0.2% m/m (December: -0.2%) and ex-fresh food and energy at -0.2% m/m (December: -0.2% m/m). Energy prices were a key drag: energy fell 4.2% y/y, with gasoline down 14.8% y/y, shaving roughly 0.04 percentage points off headline inflation. Fresh food prices declined further (-7.9% y/y), subtracting about 0.23 percentage points from the headline rate. Services momentum softened, notably in accommodation, which eased vs. December and reduced core pressures.

Japan’s labor market remained tight in 2025, with the unemployment rate flat y/y at 2.5%, unchanged from 2024, as employment gains were offset by a continued expansion in the labor force. The number of unemployed people averaged 1.76 million, flat y/y, while employment rose by 470,000 to a record 68.28 million. The labor force also increased by 470,000 to 70.04 million, the highest level since records began in 1953, reflecting higher participation rates among women and older workers. Job availability deteriorated slightly, with the average job-to-applicant ratio down 0.03 points y/y to 1.22. In December, the unemployment rate was flat m/m at 2.6%, while the job availability ratio edged up 0.01 points m/m to 1.19.

Japanese industrial production for December showed a slight contraction of 0.1% m/m (November: -2.7% m/m) but rose 2.6% y/y vs. -2.2% in November. Shipments fell 1.7% m/m, but were up 1.2% y/y, while inventories were up 1.0% m/m but down 2.7% y/y. The inventory ratio rose 1.9% m/m but fell 2.1% y/y. Key production declines were recorded in production machinery, chemicals and paper products; increases were seen in general-purpose machinery, electrical machinery and motor vehicles. The Survey of Production Forecast in Manufacturing is forecasting that production will rise 9.3% m/m in January 2026, then fall 4.3% in February.

Japan’s December industrial production fell 0.1% m/m, marking a second consecutive monthly decline, as output dropped in production machinery and chemical industries excluding pharmaceuticals. The seasonally adjusted production index stood at 101.8. By industry, output declined in seven out of 15 sectors, while shipments also fell for a second successive month, down 1.7% m/m, with weakness led by production machinery and motor vehicles. Inventories rose for the first time in two months, increasing by 1.0% m/m, while the inventory ratio climbed for a second month in a row. Looking ahead, manufacturers’ plans point to a 9.3% m/m rise in January production, followed by a 4.3% m/m decline in February. METI maintained its assessment that production is on a “one step forward, one step back” trend.

Japanese commercial sales increased by 0.3% y/y to ¥5,880tn in December, while seasonally adjusted sales fell 1.8% m/m, signaling weaker momentum at year-end. Wholesale sales rose 0.9% y/y to ¥4.398tn but declined by 1.7% m/m after seasonal adjustment. Retail sales also grew 0.9% y/y to ¥1.483tn, while falling 2.0% m/m on a seasonally adjusted basis. For 2025 as a whole, commercial sales increased by 1.3% y/y to ¥634.97tn. Wholesale sales rose 1.3% y/y to ¥477.46tn, while retail sales climbed 1.4% y/y to ¥157.51tn. The seasonally adjusted retail sales index stood at 113.5 points, down 2.0% m/m, while the three-month moving average edged up 0.1% m/m to 114.8.

Japanese housing starts weakened at the end of 2025, with new housing starts falling 1.3% y/y to 62,118 units in December, marking a second consecutive annual decline. Softness in owner-occupied (-1.8% y/y) and rental housing (-3.4% y/y) outweighed a recovery in condominiums (+1.9% y/y); seasonally adjusted annualized starts nevertheless rose 7.3% m/m, indicating some month-end stabilization. By type, publicly financed owner-occupied housing increased (+13.3% y/y) but private funding continued to act as a drag, while rental starts funded by the public sector rose (+9.7% y/y) against a sharper contraction in privately funded rentals. By region, starts rose in the Tokyo metropolitan area (+3.3% y/y) and Kansai (+8.7% y/y) but fell in Chubu (-0.4% y/y). On the non-residential side, total construction floor area decreased by 2.6% y/y, with gains in offices and factories offset by continued weakness in retail and warehouses, underscoring uneven investment momentum amid still-tight financing and cost pressures.

Australia’s Q4 2025 Producer Price Index (PPI) for final demand rose 0.8% q/q and 3.5% y/y, mainly driven by the services and construction industries. Key contributors included property operators (+0.9% q/q) due to strong demand and rising residential rents, and residential building construction (+1.3% q/q) on modestly higher property demand. Short-term accommodation prices also rose, supported by seasonal demand and major sporting events. No significant negative price movements were reported to offset these increases. Elsewhere, financial aggregates for December 2025 showed total credit growth of 0.8% m/m and 7.7% y/y, up from 0.6% m/m and 6.5% y/y in November 2025. Housing credit rose 0.7% m/m and 6.9% y/y, personal credit increased by 0.5% m/m and 4.0% y/y, and business credit grew 1.0% m/m and 9.7% y/y. Broad money expanded by 0.5% m/m and 7.2% y/y. ASX -0.139% to 5479.68, AUDUSD -0.356% to 0.7008, 10y ACGB -3bp to 4.806%.

New Zealand’s January consumer confidence improved sharply, with the ANZ-Roy Morgan index rising to 107.2 from 101.5, the highest level since August 2021. The lift was driven by stronger current conditions, which rose to 97.7, and future conditions, which increased to 113.5 – both multi-year highs. Perceptions of household finances over the past year improved markedly, while expectations for the year ahead strengthened further. The share of households viewing now as a good time to buy a major household item turned positive for the first time in nearly four years. Inflation expectations were flat, with two-year-ahead CPI expectations unchanged, while house price inflation expectations eased slightly. By region, confidence rose broadly, led by Wellington. NZX 50 +0.559% to 13423.18, NZDUSD +0.1% to 0.606, 10y NZGB -0.9bp to 4.606%.

South Korea’s December 2025 Monthly Industrial Statistics show a 1.5% m/m and 1.8% y/y increase in the Index of All Industry Production. Industrial production came in at -0.3% m/m, -1.9% y/y from -1.2% m/m, 0.8% y/y in November; construction showed signs of recovery at -4.2% m/m, 12.1% y/y vs. -16.6% m/m, 6.7% y/y in November. Manufacturing production rose 1.9% m/m but fell 0.4% y/y, while manufacturing shipments increased by 2.5% m/m but declined by 1.9% y/y. The capacity utilization rate improved by 2.4% m/m and 1.3% y/y, with average utilization at 72.7% (up 1.7 percentage points m/m). Retail sales grew by 0.9% m/m and 1.2% y/y. Equipment investment dropped 3.6% m/m and 10.3% y/y. Construction orders rose 18.7% y/y. The composite leading index increased by 0.8% m/m, 5.5% y/y; and its cyclical component rose 0.6% m/m, 2.59% y/y. KOSPI +0.06% to 5224.36, USDKRW -0.414% to 1440.4, 10y KTB +4.5bp to 3.562%.

Thailand’s Q4 GDP expanded, supported by stronger exports and improving domestic demand, with December activity also rising m/m. External demand strengthened alongside supply-side improvements, while domestic demand was underpinned by higher private consumption and private investment, supported by government measures. Thailand recorded a current account surplus of $3.1bn in December. Exports increased by 18.1% y/y, while imports rose 18.0% y/y, resulting in a monthly trade surplus of $2.7bn. The Bank of Thailand is forecasting economic growth of 2.2% for 2025 and 1.5% for 2026. The baht has appreciated by 0.3% so far this year, following a 9% rise in 2025. SET -0.427% to 1325.38, USDTHB -0.607% to 31.35, 10y TGN +1.3bp to 1.94%

Taiwan’s 2025 GDP expanded by 8.63%, the fastest pace in 15 years, exceeding the 7.5% median forecast, as strong demand for AI-related technology drove growth. Fourth-quarter GDP rose 12.68%, the strongest since 1987 and well above expectations. Exports reached record levels during the year, supported by advanced chip shipments, with more than 60% of exports exempt from U.S. duties. Taiwan’s trade surplus with the U.S. widened to a record $150.1bn, more than double the prior year’s level. Investment momentum remained strong, with Taiwan Semiconductor Manufacturing Co. signaling up to $56bn in capital spending for 2026. Growth prospects were further supported by a new U.S.-Taiwan trade agreement reducing tariffs to 15%. TAIEX -1.452% to 32063.75, USDTWD -0.449% to 31.468, 10y TGB -0.5bp to 1.41%.

Hong Kong’s Q4 2025 GDP grew 3.8% y/y, up from 3.7% in Q3, while output increased by 1.0% q/q on a seasonally adjusted basis. For 2025 as a whole, GDP expanded by 3.5% y/y, accelerating from 2.6% in 2024. Private consumption rose 2.5% y/y in Q4 and 1.6% y/y over the year, while government consumption increased by 1.4% y/y in Q4 and 1.6% y/y in 2025. Fixed investment surged 10.9% y/y in Q4, lifting full-year growth to 4.5%. Goods exports jumped 15.5% y/y in Q4 and 12.0% y/y in 2025, with imports up 18.4% and 12.6%, respectively. Service exports grew by 4.9% y/y in Q4 and 6.3% y/y for the year. Hang Seng -2.077% to 27387.11, USDHKD +0.03% to 7.8079, 10y HKGB -1.2bp to 1.417%.