Danish Pension Fund Akademiker Pension to Exit US Treasuries

President Trump has escalated his campaign to acquire Greenland, turning his focus to Canada after threatening European nations with tariffs. In an overnight post on Truth Social, Trump shared an edited map that depicted not only Greenland but also Canada as part of the United States, signaling a new pressure point in his foreign policy.

The image, a modified photograph from a 2025 meeting with European leaders, showed President Emmanuel Macron, Prime Minister Keir Starmer, and European Commission President Ursula von der Leyen in the Oval Office. In the background, the altered map presented Canada, Greenland, Venezuela, and Cuba as American territories.

Figure 1: An edited image posted by Donald Trump on Truth Social depicts a revised map of North America, showing Canada and Greenland as U.S. territories, escalating his geopolitical messaging.

This follows a weekend warning where Trump threatened to impose a 10% tariff on imports from several European countries opposing his Greenland plan, suggesting the tariff could rise to 25% if they failed to comply.

An Arctic Pressure Campaign

In a separate post, Trump shared an AI-generated image of himself with Vice President JD Vance and Secretary of State Marco Rubio in Greenland. The picture shows them planting an American flag next to a sign that reads, "Greenland-US Territory. Est. 2026." With these moves, the administration is now clearly putting Canada on notice for aligning with European resistance to his Greenland policy.

Figure 2: Trump also shared an AI-generated image portraying himself, VP JD Vance, and Secretary of State Marco Rubio claiming Greenland as a U.S. territory, reinforcing his intentions.

An unnamed U.S. official told NBC that Trump is "really worried about the U.S. continuing to drift in the Western Hemisphere." This concern is driving a new focus on America's northern neighbor. According to officials, the president has grown increasingly frustrated with what he views as Canada's inability to defend its borders from potential Russian or Chinese encroachment and has been privately arguing that Canada must spend more on its defense.

These discussions have accelerated internal talks about a broader U.S. Arctic strategy, potentially leading to an agreement this year to fortify Canada's northern border. However, officials clarified that there are no discussions about stationing American troops in Canada or acquiring the country through purchase or military force.

Canada's Risky Counter-Move: A Deal with Beijing

Canada is now in a difficult position. The government of Prime Minister Mark Carney has considered sending a small, symbolic troop deployment to Greenland to join European allies in joint exercises. Retired Royal Canadian Air Force General Thomas Lawson noted that such deployments signal a unified NATO stance—excluding the U.S.—in support of Denmark and Greenland.

While Carney has expressed "concern" over U.S. "escalation," his government has made a stunning pivot toward China. Carney is now pitching Canada as a pillar in a reshaped global trade order by strengthening ties with Beijing, even as his country remains deeply integrated with the U.S. economy.

Last week, Carney struck a deal with Beijing, a significant move after years of strained relations following the 2019 arrest of Huawei executive Meng Wanzhou. His visit was the first by a Canadian Prime Minister to China in nearly a decade.

Unpacking the Canada-China Trade Agreement

The new agreement marks a reversal of previous policies, which included 100% duties on Chinese electric vehicles. The deal includes:

• Canada lowering tariffs on Chinese EVs to 6.1% for an annual quota of 49,000 vehicles.

• China dropping its tariffs on Canadian canola to 15%.

Carney, who previously called China the greatest threat to Canada's national security, now says relations with Beijing are more predictable than those with the United States.

A High-Stakes Geopolitical Gamble

Analysts describe Carney's China pivot as a "vintage Gaullist move"—an attempt to leverage Trump by signaling that Canada has other powerful partners. By flirting with sending troops to Greenland and signing deals with Beijing, Carney is testing the limits of his relationship with Washington. The Trump administration, which has worked to eject Chinese influence from Venezuela and the Panama Canal, is unlikely to welcome a new Chinese geopolitical foothold in the Arctic.

However, this strategy carries immense risks for Canada.

• Economic Blowback: The reduced tariffs on Chinese EVs threaten Canada's domestic auto industry, drawing criticism from figures like Ontario Premier Doug Ford.

• U.S. Retaliation: Poking the American bear could provoke a severe response. The United States accounts for approximately 75% of Canada's goods exports and is its largest arms supplier.

Carney may be hoping that his actions will prompt Trump to offer a better deal than the one from Xi Jinping. But with the USMCA trade agreement up for renegotiation and the U.S. adopting a Great Power mindset, the gamble could backfire. Instead of an offer, Trump might decide that Canada, like Greenland, is also "very nice."

Gold prices surged to a new all-time high on Tuesday, breaking through a key level as investors flocked to safe-haven assets. The rally is being driven by geopolitical uncertainty surrounding the Trump administration's persistent demands to acquire Greenland.

By 08:45 ET, spot gold was trading 1.1% higher at $4,730.47 an ounce after hitting a session record of $4,737.45. Gold futures for February delivery also climbed 3% to $4,733.45 per ounce.

Unpredictable Foreign Policy Fuels Market Anxiety

Bullion's appeal has intensified amid the ongoing dispute over Greenland. President Trump reaffirmed his position on Monday and, in an NBC News interview, did not dismiss the possibility of using military force to take the island.

These comments have heightened market anxiety, drawing parallels to a U.S. incursion in Venezuela in January that resulted in the capture of President Nicolas Maduro.

As Trump prepares to meet European leaders at the World Economic Forum in Davos, analysts note that his administration's approach is weakening the U.S. dollar. "When U.S. foreign policy leans towards transactional, unpredictable and bypassing multilateral frameworks, it can erode policy credibility and incentivises diversification away from the USD," noted analysts at OCBC. They added that this environment of "geopolitical uncertainty and policy unpredictability" provides sustained support for precious metals.

Silver and Platinum Join the Precious Metals Rally

The move into physical assets has extended beyond gold, fueling a broader rally in metals that gained momentum through late 2025.

Silver has seen particularly strong performance, climbing 30% year-to-date and building on its robust gains from the previous year. Gold is up approximately 8% over the same period. According to ING, "The move has been driven by a series of geopolitical shocks, including the U.S. arrest of Venezuela's leader and the continued uncertainty surrounding Washington's stance on Greenland."

On Tuesday, spot silver surged over 7% to a new record of $95.185 an ounce, while spot platinum gained over 4% to trade at $2,418.45 an ounce.

Industrial Metals Buoyed by Weaker Dollar

Even industrial metals have benefited from the demand for physical assets. While benchmark copper futures on the London Metal Exchange dipped 0.8% to $12,872.00 a tonne, the price remains close to recent record highs.

Analysts attribute this strength to a combination of factors. "Trump's threat of new tariffs on several European countries pushed the dollar lower, sparking broad-based metals buying," ING explained.

Furthermore, market sentiment was supported by news that China's GDP met the government's official target. "This helped stabilise demand expectations following weeks of mixed data," ING added.

President Trump is expected to announce his nominee for the next Federal Reserve chair as early as next week, according to Treasury Secretary Scott Bessent. This high-stakes decision is currently in the evaluation phase and could pivot U.S. monetary policy, with significant implications for markets, interest rates, and crypto assets like Bitcoin and Ethereum.

The Frontrunners for the Top Fed Job

The selection process is reportedly competitive, with several prominent figures in consideration. According to reports, President Trump already has a candidate in mind.

Key names in the running include BlackRock’s Rick Rieder and current Fed Governor Christopher Waller. President Trump is said to be personally involved in the decision, focusing on selecting a candidate who aligns with his agenda for economic growth.

How a New Chair Could Reshape Monetary Policy

The choice of Federal Reserve chair is critical because of the role's immense influence over the direction of the U.S. economy. A new leader could usher in significant shifts in monetary policy.

President Trump has historically favored lower interest rates to stimulate economic activity. A nominee who shares this view could steer the Fed toward a more accommodative stance, directly impacting market dynamics and the cost of borrowing.

Potential Impact on Crypto and Risk Assets

The crypto market, in particular, will be watching closely. A move toward lower interest rates could benefit rate-sensitive digital assets like Bitcoin (BTC), which often perform well alongside other risk assets in such environments.

Historically, looser monetary policy has supported assets that are further out on the risk spectrum. The strategic role of the Fed also means that any major policy shifts are likely to be accompanied by new regulatory considerations.

Trump's History with the Federal Reserve

This decision is informed by President Trump's past interactions with the central bank. He was a vocal critic of current Fed Chair Jerome Powell, particularly regarding what he viewed as overly cautious interest rate cuts.

Any nominee will ultimately face Senate scrutiny, requiring a strategic pick who can secure political support while advancing the administration's economic goals. Analysts note that the current situation mirrors past instances where strategic appointments were made during key economic transitions, suggesting the decision will have a calculated impact on both traditional and crypto markets.

Bank of England Governor Andrew Bailey has publicly defended the central bank's recent decision to lower bank capital requirements, pushing back against sharp criticism from former senior officials who argue the move compromises the UK's financial stability.

The controversy centers on the BoE's December move to reduce headline bank capital requirements by one percentage point to 13%. In a statement to Parliament's Treasury Committee, Bailey addressed claims that this decision weakens the financial system.

BoE Faces Criticism Over Reduced Capital Buffers

The criticism was led by John Vickers, a former BoE chief economist, and David Aikman, who previously worked on financial stability. In a blog post, they argued that capital requirements should have been raised, not lowered.

They asserted that the "most likely practical effect of this weakening of resilience will be higher payouts to bank shareholders." Higher capital requirements act as a crucial buffer, enabling banks to absorb significant losses during a crisis and reducing the need for taxpayer bailouts.

Bailey's Rationale: Basel Rules and Global Standing

In his testimony, Governor Bailey broke down the logic behind the one-percentage-point reduction, attributing it to two specific factors based on updated assessments.

• Basel 3.1 Rules: Bailey explained that incoming international banking regulations, known as Basel 3.1, justified a reduction of approximately 0.5%. "Basel 3.1 is worth about half a percent off the sort of buffer that we maintain," he stated.

• Systemic Importance: An additional 0.5% buffer had been put in place based on the expectation that UK lenders would grow in systemic importance globally. According to Bailey, this has not happened. "The UK banks have not become relatively more systemically significant," he told lawmakers, concluding that the extra buffer was no longer justified.

The Capital vs. Growth Debate

The decision intersects with a wider political objective from Prime Minister Keir Starmer and finance minister Rachel Reeves, who aim to lower regulatory barriers they see as hindering economic growth.

Bailey acknowledged a "philosophical point" at the heart of the debate. He noted that banks "will assert, strongly, that you'll get more growth by having less capital." Conversely, critics like Vickers and Aikman "take the reverse view, that more capital is a sign of strength, which will support growth."

Bailey outlined his own position, stating that "you don't get growth without financial stability." However, he cautioned that regulators should avoid forcing banks to hold more capital than is necessary to maintain that stability.

Reliance on Post-Crisis Safety Nets

A key part of Bailey's defense rested on the UK's resolution regime, a framework established after the financial crisis to safely wind down failing banks. He argued that the credibility of this system justifies allowing banks to hold less capital.

Without this framework, Bailey said, capital requirements would need to be much higher, potentially closer to 19%. He conceded that there was a "genuine difference of view" with Vickers and Aikman on how much trust can be placed in the resolution regime.

"Obviously they're entitled to do that, but that's not our view," Bailey concluded.

Crude oil deliveries to Russia's refineries plunged in 2025 to their lowest point in at least 15 years, a direct consequence of unplanned outages following a wave of Ukrainian drone strikes on the country's energy infrastructure.

The decline in deliveries caused a significant drop in crude processing. According to data from the Russian daily Kommersant, crude supply to domestic refineries fell to 228.34 million tons last year, pushing processing rates down by 1.7% compared to the previous year.

Industry insiders expect this trend of lower processing rates and reduced fuel output to persist. The ongoing risk of further refinery outages, combined with limited economic incentives to increase processing, points toward continued pressure on the sector.

Drone Strikes Paralyze Key Infrastructure

Analysts link the sharp drop in supplies to unscheduled maintenance at multiple refineries, which they attribute to "a series of external factors" that emerged in the second half of 2025. The Russian Energy Ministry has not issued a comment on the situation, and the government has not publicly acknowledged any details regarding refinery shutdowns or unplanned outages.

Throughout the latter half of 2025, Ukraine escalated its attacks on Russia’s oil infrastructure, targeting refineries, depots, and export terminals. This campaign marked a new phase in the war’s impact on energy markets, running parallel to Russian strikes on Ukraine's own gas and power networks.

The impact was substantial. At one point in September, nearly 15% of Russia's total crude processing capacity was offline due to damage from drone hits. In November, a major attack on the key Black Sea port of Novorossiysk forced a multi-day suspension of oil exports.

A Strategic Shift to Cripple Russian Capacity

Ukrainian forces have increasingly used drones and missiles to target Russia's oil refining, storage, and export facilities. A recent analysis from the Center for European Policy Analysis (CEPA) highlights a critical evolution in this strategy.

According to CEPA, the attacks have shifted from targeting storage tanks to focusing on high-value, hard-to-replace refinery equipment. This includes critical components like cracking units, many of which were originally manufactured in the West and are now subject to sanctions, making repairs exceedingly difficult for Russia.

After a historic performance in 2025, Malaysia's export growth is expected to slow significantly in 2026. Economists are flagging several headwinds, including the impact of renewed US tariffs, rising geopolitical risks, and the tapering effects of "front-loading" trade activities.

This cautious forecast follows a record-breaking year. In 2025, Malaysia's exports hit an all-time high of RM1.61 trillion, a 6.5% increase from the previous year. The result was bolstered by a powerful finish in December, when shipments surged 10.4% year-on-year to RM153 billion, easily beating the 2.5% median estimate from a Bloomberg survey.

A Look Back at 2025's Record Numbers

The full-year data for 2025 paints a picture of robust trade activity. Key figures include:

• Total Trade: Exceeded RM3.1 trillion for the first time, growing by 6.3%.

• Exports: Grew by 6.5% to RM1.61 trillion.

• Imports: Rose by 6.2% to RM133.7 billion.

• Trade Surplus: Increased by 9.2% to RM151.8 billion, with December marking the 68th straight month of surplus since May 2020.

Despite these strong results, analysts believe this momentum will be difficult to sustain.

Why Economists Expect a Slowdown

Multiple research firms have tempered their expectations for 2026, pointing to a confluence of external pressures that could dampen demand.

Fading Front-Loading and Softer Demand

A key factor cited by analysts is the anticipated end of aggressive "front-loading," where businesses rushed exports to the US to get ahead of potential tariffs. OCBC Group Research expects this "payback" effect, combined with softer external demand, to slow export growth to just 2.2% in 2026.

Similarly, MBSB Research revised its 2026 export growth forecast down from 6% to 4.5%, citing the fading front-loading effect and a high base from the previous year.

The Impact of US Tariffs and Geopolitics

Renewed tariff threats from the United States and escalating geopolitical tensions are central to the cautious outlook. UOB Global Economics and Markets Research anticipates a "bumpy" trade environment, holding its export growth forecast at a modest 2.5%.

The electrical and electronic (E&E) sector, Malaysia's primary export engine, is under particular scrutiny. MBSB Research noted that a new 25% US tariff on certain semiconductor products could create additional pressure. UOB added that while most local firms don't produce high-end fabrication tools, multinational electronic manufacturing services and advanced equipment makers could be affected if their products are shipped to the US.

CIMB Treasury and Markets Research, while expecting E&E to provide momentum in the first half of 2026, is cautious about the second half due to potential weakness in non-E&E exports and the impact of US tariffs.

Potential Bright Spots and Mitigating Factors

While the outlook is challenging, analysts see several factors that could support Malaysia's trade performance.

• Global Tech Cycle: MBSB Research expects E&E exports to remain resilient, supported by the ongoing global technology upcycle.

• Supply Chain Diversification: UOB noted that recent US tariffs on European countries, while not directly impacting Malaysia, could create a "potential tailwind" as global firms continue to diversify their supply chains.

• Trade Agreements and Market Diversification: The Agreement on Reciprocal Trade (ART) with the US is expected to reduce trade uncertainties and improve market access. The government's continued efforts to diversify its export markets are also seen as a key strategy to mitigate external headwinds.

Broader Economic Implications

The trade slowdown is expected to have wider consequences for Malaysia's economy. OCBC's forecast for slower export and import growth aligns with its projection that headline GDP growth will moderate from 4.9% in 2025 to 3.8% in 2026.

Based on its trade and inflation outlook, CIMB is maintaining its call for an unchanged overnight policy rate (OPR) at 2.75% for the entire year, alongside a 2026 GDP forecast of 4.4%.