Gold & Silver Surge as Global Tensions Escalate

The Kremlin confirmed on Monday that Russian President Vladimir Putin has been invited to join the "Board of Peace," a U.S.-led council created by President Donald Trump to address the Gaza conflict.

Moscow is now reviewing the proposal, which aims to bring international leaders together to maintain the ceasefire between Israel and Hamas and manage the reconstruction of Gaza.

Figure 1: U.S. President Donald Trump and Russian President Vladimir Putin are the central figures in a new diplomatic proposal concerning the Gaza peace process.

Kremlin Confirms Offer, Seeks Clarification

Kremlin Spokesman Dmitry Peskov announced that the offer was received through diplomatic channels and is under careful consideration.

"President Putin has indeed received an offer... to join this Board of Peace. We are currently studying all the details of this proposal," Peskov told the Russian state news agency TASS. He added, "We hope to contact the U.S. side to clarify all the details."

The invitation to Putin is particularly noteworthy given Russia's ongoing war against Ukraine, a conflict approaching its four-year mark that has resulted in hundreds of thousands of casualties.

A Global Council With a High Price Tag

The Trump administration has extended invitations to a number of other world leaders. According to a Bloomberg report, Canadian Prime Minister Mark Carney and Argentine President Javier Milei are among those invited.

AP News reported that Hungary, India, Jordan, Greece, Cyprus, and Pakistan have also confirmed receiving invitations.

However, membership may come at a steep cost. Citing a draft charter, Bloomberg noted that the Trump administration reportedly wants nations to pay $1 billion for a permanent position on the board.

Israel Voices Opposition to Board's Structure

The initiative is already facing pushback from key regional players. Israel has expressed its dissatisfaction with the board's formation, particularly its leadership structure.

On Friday, Prime Minister Benjamin Netanyahu's office released a statement clarifying its position: "The announcement regarding the composition of the Gaza Executive Board, which is subordinate to the Board of Peace, was not coordinated with Israel and runs contrary to its policy."

The "founding Executive Board" announced by the U.S. on Saturday includes former U.K. Prime Minister Tony Blair, Trump's son-in-law Jared Kushner, and U.S. Secretary of State Marco Rubio, among others.

CNBC has contacted the White House for confirmation regarding Putin's invitation.

Japanese Prime Minister Sanae Takaichi has called a snap general election for February 8, centering her campaign on a bold promise to suspend the country's 8% consumption tax on food for two years. The proposal aims to tackle the rising cost of living but mirrors policies from her rivals and raises serious questions about Japan's already strained public finances.

Cutting the consumption tax, a move also advocated by several opposition parties, would carve a significant hole in government revenue. This comes as concerns over Japan's fiscal stability are already pushing government bond yields to their highest levels in decades.

Currently, Japan operates a dual-rate system, levying an 8% tax on food and a 10% tax on other goods and services to help fund the escalating social welfare costs of its rapidly aging population.

Election Gamble Centers on Suspending 8% Food Tax

At a press conference, Takaichi argued that a two-year exemption on the 8% food levy would provide direct relief to households struggling with inflation. She insisted the government would not issue new debt to cover the shortfall, suggesting funds could be found by reviewing existing subsidies.

"We will overhaul past economic and fiscal policy," Takaichi stated. "My administration will put an end to an excessively tight fiscal policy and a lack of investment for the future."

Bond Market Reacts as Yields Hit 27-Year High

Investors immediately reacted to the growing likelihood of a tax cut and Takaichi's commitment to expansionary fiscal policy. On Monday, the yield on the 10-year Japanese government bond surged to 2.275%, a 27-year high.

The move has drawn skepticism from economists who worry about its potential to backfire.

"I can't see why Japan needs a consumption tax cut after compiling a significant stimulus package to counter rising inflation," said Keiji Kanda, a senior economist at the Daiwa Institute of Research. "I'm worried these steps could accelerate inflation and lead to further rises in bond yields."

Opposition Parties Echo Calls for Tax Relief

Takaichi's proposal enters a political arena where tax cuts have become a common theme. Mindful of public frustration over inflation, opposition parties have also called for the consumption tax to be reduced or eliminated.

A new political party, formed last week from a merger of two major opposition groups, has called for the 8% tax on food to be abolished permanently. In its campaign platform, the party suggested creating a new sovereign wealth fund to generate the necessary revenue. Other groups, including the Democratic Party for the People, have also demanded that the consumption tax be lowered.

The Fiscal Tightrope: Weighing Revenue Loss vs. Voter Appeal

The push for tax cuts comes as inflation has remained above the Bank of Japan's 2% target for nearly four years, largely driven by stubbornly high food prices.

Historically, Takaichi's ruling Liberal Democratic Party (LDP) has resisted calls for consumption tax cuts, arguing that they would undermine market confidence in Japan's commitment to fiscal discipline.

The financial stakes are high. According to government data, scrapping the 8% food tax would cost an estimated 5 trillion yen ($31.71 billion) in annual revenue—an amount roughly equivalent to Japan's entire yearly budget for education.

Analysts warn that a permanent cut would put immense pressure on Japan's finances and heighten the risk of a bond selloff. These concerns are amplified by the fact that Takaichi's government has already compiled a record $783 billion budget for the next fiscal year, in addition to a major stimulus package designed to ease cost-of-living pressures.

($1 = 157.6900 yen)

Chief Secretary to the Government Tan Sri Shamsul Azri Abu Bakar said weaknesses in the government's procurement process were largely due to non-compliance with established procedures, despite the Ministry of Finance (MOF) having introduced various forms of flexibility to facilitate procurement matters.

He stressed that the irregularities identified were not solely the result of shortcomings in the system, but were mainly caused by members of Procurement Board Committees and officers who lacked a thorough understanding of procurement procedures and the underlying principles governing them.

"The MOF has provided considerable flexibility in the procurement process, but it is still imperative that every procurement procedure is strictly adhered to.

"Procurement cannot be arranged or manipulated at will. What is crucial is that all members of the Procurement Board fully understand the procurement procedures. When irregularities occur, it is because board members, committees and officers fail to grasp the spirit of procurement," he said.

He said this after the KSN Media Strike Challenge 2026 with media practitioners here on Sunday.

Also present were Prime Minister's Department (JPM) senior deputy secretary general Datuk Abd Shukor Mahmood; deputy secretary general (Finance and Development) Datuk Ikmalrudin Ishak, and deputy secretary general (Management) Nasaruddin Abdul Muttalib.

Also in attendance were Ministry of Communications secretary general Datuk Abdul Halim Hamzah and Malaysian National News Agency (Bernama) editor-in-chief Arul Rajoo Durar Raj.

Shamsul Azri said weaknesses in the procurement process often stemmed from a lack of understanding of procurement procedures, as well as internal shortcomings among officers in appreciating the principles and objectives of the regulations.

"Weaknesses occur due to insufficient understanding of procurement procedures and our own internal shortcomings," he said.

When asked whether the issue was caused by weak oversight or shortcomings in standard operating procedures (SOPs), Shamsul Azri said it was the result of a combination of several factors.

Therefore, Shamsul Azri said the MOF would further tighten procurement guidelines for all ministries and statutory bodies to prevent leakages.

Last Friday, Prime Minister Datuk Seri Anwar Ibrahim was reported to have said that all procurement decisions involving the Malaysian Armed Forces (MAF), the Royal Malaysian Police (PDRM) and related agencies linked to corruption issues had been temporarily shelved pending full compliance with procurement procedures.

He said the government, through the relevant ministries, would review and restructure all procurement processes to ensure transparency within the existing system.

Following the announcement, Defence Minister Datuk Seri Mohamed Khaled Nordin reportedly said that his ministry was seeking further information and clarification regarding the directive.

He added that the Ministry of Defence (Mindef) was also reviewing measures to enhance procurement processes, strengthen governance and prevent future leakages.

Source: Theedgemarkets

A threatened 10% tariff from President Donald Trump could slice approximately 0.1% off the euro area's gross domestic product, according to a new analysis by Goldman Sachs Group Inc. economists.

The proposed levies target European nations that have supported Greenland following US interest in the semi-autonomous Danish territory. The list of affected countries includes Denmark, Norway, Sweden, France, Germany, Finland, the UK, and the Netherlands.

Gauging the Economic Damage

The Goldman Sachs team estimates that a 10% duty would directly reduce real GDP by 0.1% to 0.2% in the targeted countries due to lower trade volumes.

Germany is positioned to take the largest economic hit. Economists project a 0.2% GDP reduction if the measure is an incremental reciprocal tariff, rising to 0.3% if it's a blanket levy across the board.

"The hit could be larger should there be adverse confidence or financial market effects," warned the team, which includes Sven Jari Stehn, in a research note.

Market Tremors and Investor Outlook

The escalating trade tensions have already sent ripples through global financial markets. On Monday, European stocks and U.S. index futures slid while safe-haven assets like gold rallied.

However, several strategists suggest the impact on European equities may be short-lived, citing a resilient underlying economic outlook.

Europe's Potential Countermoves

While Goldman's economists noted it was "highly uncertain" whether the tariffs would be implemented, they outlined several potential responses from the European Union:

• Stalling the current U.S. trade deal.

• Imposing retaliatory counter-levies.

• Launching its "anti-coercion instrument."

According to individuals familiar with the matter, the EU is already discussing potential tariffs on €93 billion ($108 billion) of U.S. goods. However, the bloc reportedly aims to find a diplomatic solution first before resorting to countermeasures. The UK is expected to pursue a similar diplomatic strategy with the Trump administration, mirroring its approach during trade negotiations last year.

Looking ahead, Goldman economists see a "very small" impact on inflation from the tariffs and anticipate that central banks would likely lower interest rates in response to the weaker GDP forecast.

Source: Poundsterlinglive

Facing historic deflation and declining investment, China is betting its economic future on a single strategy: selling more goods to the world. As Beijing doubles down on this export-driven growth model, Donald Trump's aggressive rhetoric toward U.S. allies is creating unexpected openings.

China's powerful export engine was crucial in helping the nation hit its 5% growth target for 2025, contributing the largest share to economic expansion since 1997. This performance masked deep structural weaknesses at home, including a stagnant property market, the longest stretch of deflation since the 1970s, and the first annual drop in investment ever recorded.

While Trump's initial tariffs forced China to diversify its markets—prompting countries like Mexico to impose their own duties—his latest threats against Europe are providing Beijing with strategic breathing room. This shift was highlighted when Canadian Prime Minister Mark Carney recently signed a deal with China to roll back electric vehicle tariffs, signaling a closer relationship in a "new world order."

Beijing Seizes an Opportunity in Europe

President Xi Jinping is looking to replicate this success with key European partners. Upcoming visits to Beijing from UK Prime Minister Keir Starmer and German leader Friedrich Merz present prime opportunities to strengthen trade ties. Even Trump is scheduled to visit China in April for the first of four meetings planned this year.

"China's trade friction risks will decline significantly this year," noted Larry Hu, head of China economics at Macquarie Group, pointing to the U.S.-China detente as a stabilizing force. He forecasts Chinese shipments will grow 6% in 2026, adding, "It's precisely because we think exports will stay strong we don't think China will significantly boost stimulus for domestic demand."

The changing sentiment in Europe is palpable. Germany's Finance Minister recently declared that a "limit has been reached" on the provocation the EU would tolerate from Trump after he announced new tariffs. In a sign of its evolving stance, the bloc is now considering a plan to accept minimum prices on Chinese electric cars instead of imposing tariffs—a potential advantage for giants like BYD engaged in fierce domestic price wars.

Beijing is also working to revive the EU-China Comprehensive Agreement on Investment (CAI), which was frozen in 2021 over human rights concerns and the Biden administration's push for transatlantic unity. While EU officials have shown little public interest in restarting talks, the geopolitical calculus may be changing.

"The Chinese are putting a lot of pressure," said Alicia Garcia Herrero, chief Asia Pacific economist at Natixis. "Maybe the EU will give it to them because they're desperate now with Trump."

When Keir Starmer makes the first visit by a British leader to Beijing in nearly eight years, market access will be a key topic. The potential is clear: Chery Automobile Co.'s Jaecoo brand, which launched in the UK in January 2025, already outsells established names like Honda, Citroen, and Porsche.

Export Focus Curbs Domestic Economic Support

China's reliance on its export machine has significant domestic policy implications. Last year, despite facing America's harshest tariff regime since the 1930s, Chinese shipments drove a record trade surplus.

Initially, authorities pledged "extraordinary" measures to support the economy as Trump returned to office, even raising the official budget deficit to a three-decade high. However, as exports found new global markets, the focus shifted toward paying down local government debt, which led to a rare decline in infrastructure investment.

"In the next five years—or at least in the foreseeable future—exports will still be an important pillar of growth," said He Wei, China economist at Gavekal Dragonomics, attributing this partly to strong global demand. "This transition from external to domestic demand will be a mid- to long-term one."

The risk of this strategy is that policymakers may delay the crucial work of rebalancing the economy toward consumption. The hypothetical geopolitical shock of Trump pushing an expansionist foreign policy, such as using force to take Greenland, could also introduce market volatility that Beijing would find unwelcome.

Underlying Weakness and Future Risks

With only incremental measures planned to boost consumer spending, economists predict the GDP deflator—a broad measure of prices—will remain negative or flat in 2026. Sluggish domestic demand is unlikely to generate significant reflation, keeping pressure on corporate revenues and wages while helping to cool inflation overseas through cheaper exports.

Recent improvements in consumer prices appear to be driven by temporary factors. A rebound has been linked to a surge in gold prices and cold weather driving up the cost of fresh vegetables. A modest price recovery has also been seen in a few commodities, like polysilicon for solar panels, targeted by a government campaign to reduce overcapacity. However, the fundamental driver of China's economic woes—the property market crash—has not yet found a bottom.

According to Dongshu Liu, an assistant professor at the City University of Hong Kong, Trump's approach to U.S. allies has improved Beijing's position compared to a few years ago, but significant challenges remain.

Persistent distrust, particularly over Xi's support for Russia's invasion of Ukraine, means that the risk of future trade barriers remains high. "Even if you cooperate with China, the factors that made you cautious in the first place haven't disappeared," Liu explained. "We won't see a massive turnaround but it's definitely an opening."