Democratic-led US States Sue Over HHS Grant Conditions Targeting Transgender People

Political

Economic

Summary:

Twelve Democratic state attorneys general sued on Tuesday seeking to block the Trump administration from withholding hundreds of billions of dollars in funding from them, hospitals and universities unless they comply with new conditions they say would force them to discriminate against transgender Americans.

U.S. Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. announces new nutrition policies during a press conference at the Department of Health and Human Services in Washington, D.C., U.S., January 8, 2026. REUTERS/Jonathan Ernst

· States challenge HHS grant conditions as unlawful

· Lawsuit claims HHS lacks authority to impose conditions

· Policy was adopted following executive order by President Trump

The state attorneys general, including from New York and California, in the lawsuit challenged conditions U.S. health agencies imposed on grants after Republican President Donald Trump signed an executive order last year instructing them to end the funding of "gender ideology." The suit was filed in federal court in Providence, Rhode Island.

That order directed the government to recognize only two sexes - male and female - and sought to undo what it described as the "misapplication" of laws prohibiting sex discrimination to protect transgender people by the administration of Democratic President Joe Biden.

The states say the U.S. Department of Health and Human Services' policy applies retroactively rather than only to new grants, exposing funding recipients to potential grant terminations, repayment demands, and civil and criminal penalties.

"This policy threatens healthcare for families, life-saving research, and education programs that help young people thrive in favor of denying the dignity and existence of transgender people," New York Attorney General Letitia James, a Democrat who is leading the lawsuit, said in a statement.

HHS, which has also sought to restrict gender-affirming care for transgender youth, referred a request for comment to the White House.

"The administration is committed to using every lever of executive power to prevent federal funds from being dispensed towards child mutilation," White House spokesperson Kush Desai said in a statement.

The lawsuit alleges that HHS under the leadership of Health Secretary Robert F. Kennedy Jr. has sought to shoehorn Trump's executive order into Title IX -- the landmark civil rights law barring sex discrimination in federally funded education programs -- by imposing retroactive conditions on grants.

Agencies within HHS did so by imposing conditions on grants that would require recipients to certify compliance with Title IX protections, which were characterized as "including the requirements" of Trump's executive order.

The agencies that have adopted the funding condition in recent months include the Centers for Medicare & Medicaid Services and the National Institutes of Health.

The lawsuit argues HHS lacks the authority to impose those conditions, has infringed on Congress' power over spending under the U.S. Constitution, and has not provided a reasoned explanation for the change in how it interprets Title IX.

Other states included in the case were Colorado, Delaware, Illinois, Michigan, Minnesota, Nevada, Oregon, Rhode Island, Vermont and Washington.

Source: Reuters

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George Anderson

Data Interpretation

Bond

Economic

Central Bank

Traders' Opinions

UK government bond yields have dropped to their lowest point since December 2024, driven by a combination of strong investor demand for new debt and mounting evidence of a slowing economy.

The yield on the 10-year UK government bond, or gilt, fell by four basis points to 4.36% on Wednesday, a more significant move than seen in its European counterparts. The rally gained momentum after a successful auction of £4.5 billion in 10-year notes, which was oversubscribed by more than 3.2 times, signaling robust appetite from investors.

Economic Headwinds Fuel Easing Bets

The rally in UK bonds is underpinned by growing expectations that the Bank of England will pursue monetary easing as the nation's inflation and labor markets show signs of cooling.

A recent survey indicated that UK employers scaled back hiring again in December, adding to policymakers' concerns about a weakening jobs market. This follows slower-than-expected inflation data in November, together prompting money markets to increase wagers on future interest-rate cuts.

Markets Price In Rate Cuts

The financial markets are now actively anticipating policy changes from the Bank of England. Swap markets are currently implying nearly two quarter-point interest rate reductions by the end of the year. The consensus suggests the first of these cuts will be delivered within the first half of this year.

This outlook is further supported by a more cautious fiscal stance from the UK government and a strategic shift by the nation's Debt Management Office to focus debt sales on shorter-maturity bonds.

Analyst View: Gilts a "Preferred Long"

According to Jamie Searle, a strategist at Citigroup Inc., gilts are "a preferred long for 2026." He points to two primary factors supporting this view:

• Greater scope for rate cuts: The weakening economic data gives the Bank of England more room to lower interest rates.

• A more supportive issuance backdrop: The government's debt management strategy is seen as favorable for the bond market.

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Adam

Cryptocurrency

Ethereum may be poised to end years of lagging performance and finally outrun Bitcoin in 2026, driven by a regulatory overhaul and a confluence of key on-chain and market metrics.

Ethereum’s bull run since 2023 has yielded 160%, less than half of Bitcoin’s staggering 457% return, according to CoinGecko data. The difference in gains highlights Ethereum’s muted performance over the years despite improving market conditions.

But several catalysts suggest that the outlook could change.

Catalysts for Ethereum

The first signal is a clear market rotation highlighted by a decline in Bitcoin’s dominance.

Bitcoin dominance, or the coin’s share of the total market, peaked in July at 66% and has since trended lower, suggesting diversification of investor interest into altcoins, including Ethereum.

The second signal can be viewed through the ETH/BTC ratio, which measures Ethereum’s performance relative to Bitcoin. It has risen 3.59% year-to-date, according to market data.

“A rising ETH/BTC ratio, coupled with stagnating Bitcoin dominance, has historically been associated with the start of an altcoin season,” Jimmy Xue, co-founder and COO of the quantitative yield protocol Axis, told Decrypt. “Analysts observe that this rotation is being fueled by investors seeking higher ‘beta’ exposure in the Ethereum ecosystem following the stability of the Bitcoin ETF market.”

The setup suggests “capital rotation rather than Bitcoin weakness” and “often precedes selective Ethereum and large-cap altcoin rallies,” Shivam Thakral, CEO of Indian exchange BuyUCoin, told Decrypt.

However, prediction markets reflect skepticism about an imminent, broad-based altcoin rally. Users on Myriad assign only a 19% chance that an alt season will occur before April 2026. (Disclaimer: Myriad is owned by Decrypt’s parent company Dastan.)

Still, the rotation of capital and investor interest is underpinned by strengthening fundamentals. The total transaction count on the Ethereum network has grown 6.8% to 2.05 million in 2026, spiking 31% since mid-December, highlighting increased adoption.

Will these conditions translate into short-term outperformance for Ethereum? Both experts see a path, though they emphasize different catalysts.

Thakral points to increased demand from exchange-traded funds, Layer 2 adoption, fee burn dynamics, restaking growth, and renewed DeFi activity. Xue looks to successful protocol upgrades such as Fusaka, the Glamsterdam fork, and ERC-8004, which could position Ethereum as the primary settlement layer for the new "Agentic AI" economy.

Although Ethereum’s year-to-date return of 11% already outperforms Bitcoin’s 8.5%, Thakral said that these moves are likely cyclical rather than a regime shift, at least without sustained support from improving macroeconomic and liquidity conditions.

Source:decrypt

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Julia Daniels

Remarks of Officials

Economic

Central Bank

Political

A top Federal Reserve official argued Wednesday that the Trump administration's push for deregulation will cool inflation, providing a fresh reason for the central bank to cut interest rates.

Speaking at an economic forum in Greece, Fed Governor Stephen Miran explained that these regulatory changes could have a significant macroeconomic impact. He projected that initiatives started in 2025, combined with future plans, could eliminate as much as 30% of business regulations by 2030. This, he estimated, could lower annual inflation by half a percentage point.

Deregulation as a Productivity Shock

Miran framed the policy as a major boost to the economy's supply side. "The substantial deregulation that has occurred in 2025 will continue over at least the next three years and be a large positive shock to productivity that will put downward pressure on prices," he said.

He concluded that this dynamic ultimately justifies a shift in central bank policy. "On net, this supports a more accommodative stance of monetary policy," Miran stated.

The Risks of Fed Inaction

Miran warned that if the Fed fails to account for these productivity gains, financial conditions could become unnecessarily tight. He argued that when supply and productivity improve, the central bank must respond accordingly to avoid negative outcomes.

"If the Federal Reserve fails to reduce policy rates in response to deregulation, there will be adverse consequences," he cautioned, adding that inaction could needlessly result in "deflation and economic contraction." In his view, policy has already been "tighter than it should have been."

A Split View Within the Central Bank

Miran has consistently advocated for more aggressive rate cuts than many of his colleagues at the Federal Reserve, including other appointees from the Trump administration.

While some other Fed policymakers have recently acknowledged potential improvements in productivity, they remain cautious. They suggest it is too early to adjust monetary policy based on supply-side shifts whose durability and impact on inflation are still uncertain.

The Federal Reserve last lowered its policy rate by 0.25 percentage points, bringing it to the current range of 3.50%-3.75%. However, the central bank is widely expected to hold rates steady at its upcoming meeting on January 27-28.

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James Riley

Economic

Remarks of Officials

Energy

Political

The UK has doubled down on its commitment to offshore wind, securing a massive 8.2 gigawatts of capacity in its latest subsidy auction. The result surpasses analyst expectations and puts the government’s ambitious 2030 clean-power goals back on track, but it comes at a higher cost that will ultimately be paid by consumers.

This outcome creates a difficult balancing act for Prime Minister Keir Starmer, who has pledged to cut household bills. The auction’s success is a major step toward phasing out fossil fuels in power generation, but it forces the government to navigate the tension between long-term energy security and short-term economic pressures.

Energy Secretary Ed Miliband framed the result as a historic win, stating, "With these results, Britain is taking back control of our energy sovereignty." He highlighted that it represents the single largest procurement of offshore wind in British and European history.

Auction by the Numbers: A Record Haul at a Higher Price

To meet its 2030 target, the UK now needs to secure roughly 7 more gigawatts of capacity in its next auction, which is seen as the last realistic opportunity for projects to be built in time.

The price secured in this round was £65.45 ($88) per megawatt-hour based on 2012 prices, a standard industry benchmark. In today's terms, that translates to £91.20 per megawatt-hour, reflecting inflation. While this is higher than the price in last year's auction, an analysis from Aurora Energy Research suggests it will still deliver a "net benefit to bills over the next decade."

The government also significantly increased its spending to achieve this result. The budget for fixed-bottom offshore wind was originally £900 million but was expanded to nearly £1.8 billion. This was done under new rules allowing officials to select additional projects if they are considered good value for consumers.

RWE Emerges as the Dominant Player

German energy giant RWE AG was the auction's biggest winner, with its projects accounting for all but one of the contracts awarded. Following the auction, RWE announced a deal with KKR & Co to develop, construct, and operate two of its winning projects, Norfolk Vanguard East and Norfolk Vanguard West.

The successful auction propelled RWE's shares up by as much as 3.5%, reaching their highest level in almost 15 years.

However, a potential obstacle remains. Another one of RWE’s winning projects, Dogger Bank South, has not yet received planning permission. This uncertainty raises questions about whether it can be completed in time to contribute to the 2030 goal.

The Shifting Economics of Offshore Wind

For years, the cost of building offshore wind farms steadily declined as technology matured and turbines grew more powerful. That trend has recently reversed. Several factors are now pushing prices higher for new projects:

• Supply-chain disruptions

• Rising raw-material costs

• Higher financing expenses

This new cost environment has made developers more cautious across Europe, and governments have struggled to attract sufficient bids for offshore wind developments over the past year.

High Bills and Political Headwinds

The UK continues to face some of the highest electricity prices in Europe, putting pressure on households and threatening the nation's ability to attract energy-intensive sectors like data centers. It also slows the adoption of technologies like electric vehicles and heat pumps.

The government maintains that investing in renewables to move away from a gas-dependent system will lower electricity costs in the long run. However, the high upfront expense of building massive wind farms is passed on to consumers in the short term.

At the same time, the UK's leadership on climate policy has become increasingly politicized. This reflects a broader trend, influenced by figures like former US President Donald Trump, whose administration rolled back support for renewable projects. This shift has impacted the US operations of several European developers. During a visit to Scotland last year, Trump restated his opposition to wind farms, particularly those near his golf courses, and called for further expansion of the oil sector.

What's Next for the UK's Energy Transition?

Including more nascent floating offshore wind projects, the total capacity procured in the auction reached 8.4 gigawatts. James Alexander, CEO of the UK Sustainable Investment and Finance Association, called the results "a significant step forward in delivering the UK's evolution to clean energy."

With power demand set to rise, the UK's energy system faces a dual challenge. It must rapidly scale up wind and solar generation while also upgrading its grid infrastructure to transport that power from where it is generated to where it is needed. This auction's success underscores both the potential and the high cost of that transition.

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Warren Takunda

Economic

The boss of JP Morgan, the largest US bank, has said Donald Trump’s attacks on the Federal Reserve chair, Jerome Powell, are putting central bank independence at risk and could backfire and ultimately push up interest rates and inflation.

Jamie Dimon told reporters on Tuesday he had “enormous respect” for the Fed chair, who on Friday became the target of a controversial criminal investigation by the US Department of Justice (DoJ) over alleged “abuse of taxpayer dollars”.

Powell has denounced the investigation, linked to a $2.5bn (£1.9bn) renovation of the Fed’s headquarters in Washington DC, claiming it is punishment for not setting interest rates in line with the US president’s wishes.

“Everyone we know believes in Fed independence,” Dimon said during an earnings call. “And anything [that] chips away at that is probably not a great idea, and in my view, will have the reverse consequences. It’ll raise inflation expectations and probably increase [interest] rates over time.”

Central banks around the world have also rallied to defend the Fed and its chair.

Ten central bank governors including the Bank of England governor, Andrew Bailey, and European Central Bank chair, Christine Lagarde, issued an extraordinary joint statement offering “full solidarity” for Powell, who Trump has repeatedly criticised for failing to cut interest rates fast enough.

Trump, who appointed Powell in 2018, has claimed he is unaware of the DoJ investigation.

Speaking about broader geopolitical risks – with Trump issuing fresh threats against Iran less than two weeks after seizing Venezuela’s president Nicolás Maduro – Dimon said JP Morgan would focus on serving clients. “We’ll deal and navigate with the politics and the issues that we have to deal with around the world … and we’re comfortable we can build our business,” he said.

He made the comments as JP Morgan released fourth-quarter earnings results showing a 7% drop in profits to $13bn. That fall was linked to a one-off cost associated with its takeover of a credit card partnership with Apple, previously held by rival US bank Goldman Sachs.

The deal was announced days before Trump called for a 10% cap on credit card interest rates, which has caused shares in major credit card providers to tumble.

“We’ll be doing all the relevant contingency planning,” JP Morgan’s chief financial officer, Jeremy Barnum, told analysts on Tuesday.

He said the credit card market was among the most competitive sectors that JP Morgan was involved in. Barnum warned the potential cap would not simply weigh on company profits, but “people will lose access to credit, like on a very, very extensive and broad basis, especially the people who need it the most”.

Barnum added: “And so that’s a pretty severely negative consequence for consumers, and frankly, probably also a negative consequence for the economy as a whole.”

He said the lack of details, particularly on how the cap would be imposed and enforced, made it hard to assess how it would ultimately affect JP Morgan’s own earnings.

Later on Tuesday en route back to Washington from making a speech in Detroit, Trump further defended his opposition to Powell and also lashed out at Dimon.

“Yeah, I think it’s fine what I’m doing,” he said in response to a reporter’s question. He called Powell “a bad Fed person” who has “done a bad job”. He called again for lower interest rates.

“Jamie Dimon probably wants higher rates. Maybe he makes more money that way,” Trump said.

Source: Theguardian

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Adam

Forex

FUNDAMENTAL OVERVIEW

USD:

The US Dollar weakened across the board yesterday following the soft US core inflation data but the initial moves were eventually faded and the greenback gained. It’s hard to explain such a price action but we got also renewed Trump’s threats against Iran following the US CPI report which weighed on the risk sentiment and could have been the reason for the comeback.

In terms of market pricing, traders firmed up bets on Fed rate cuts with the total easing by year-end increasing to 54 bps from 52 bps before the CPI release. Fed members continue to support the current patient and data-dependent stance. The outlook for the USD remains neutral/bearish for now.

Today, the focus will be on a potential US Supreme Court decision on Trump's tariffs. If tariffs get struck down, we might see general risk on sentiment as initial reaction and that could weigh on the US Dollar in the short-term. On the other hand, if tariffs are kept in place, it shouldn't change much given that the market got already used to tariffs.

EUR:

On the EUR side, the ECB remains in a neutral stance reaffirming its data-dependent and meeting-by-meeting approach to policy decisions. ECB members continue to repeat that the current policy is appropriate, and they won’t respond to small or short-term deviations from their 2% target. The data has been supporting the central bank’s neutral stance, with inflation data recently surprising to the downside.

EURUSD TECHNICAL ANALYSIS – DAILY TIMEFRAME

EURUSD - daily

On the daily chart, we can see that EURUSD rallied into the key 1.17 resistance after the DOJ subpoena news but eventually erased all the gains as the sellers piled in to position for new lows. The price remains confined between the 1.1615 level and the trendline. The sellers will likely continue to lean on the trendline to keep pushing into new lows, while the buyers will look for a break higher to open the door for a move into the 1.18 handle next.

EURUSD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

EURUSD - 4 hour

On the 4 hour chart, there’s not much we can glean from this timeframe given that the only key technical levels remain the trendline and the 1.1615 level. We need to zoom in to see some more details.

EURUSD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

EURUSD - 1 hour

On the 1 hour chart, we can see that we have a minor downward trendline defining the current bearish momentum. The sellers will likely lean on the trendline with a defined risk above it to position for a drop into new lows, while the buyers will look for a break higher to pile in for a rally into the major trendline targeting a breakout. The red lines define the average daily range for today.