Finance
Morning Bid: Markets cling to hopes of a Davos de-escalation
Published by Global Banking and Finance Review
Posted on January 21, 2026
2 min readLast updated: January 21, 2026
Quick Summary
Markets are hopeful for de-escalation at Davos as Trump's Greenland move impacts equities and Treasury yields approach critical levels.
Morning Bid: Markets cling to hopes of a Davos de-escalation
Market Reactions and Key Developments
A look at the day ahead in European and global markets from Stella Qiu
Wall Street's verdict on Trump's Greenland move is in and it's not pretty. All three U.S. equity benchmarks suffered their worst one-day falls in three months, the dollar slumped by the most in a month while Treasuries were shellacked, with the 30-year Treasury yield racing towards the 5% danger zone.
That brought back memories of the "Sell America" trade, though the question on everyone's mind is whether Trump will "TACO" again like he did with his tariffs last April.
Listening to him, the answer is there's no going back on Greenland. Yet markets are clinging to hopes that this is all just "Art of the Deal" bluster and he might choose to de-escalate during his big speech in Davos later today.
That was enough for Wall Street futures to edge up 0.3% in Asia, while Treasuries steadied. The selloff in regional stocks also slowed, helped by gains in Chinese shares, while Japan's Nikkei narrowed its losses to 0.5%.
European bourses are set for a muted open, with EURO STOXX 50 futures down 0.1%.
The rout in global bond markets also paused, providing some relief to investors that have been caught up in a perfect storm of worries over exposure to U.S. assets and a surge in Japanese government borrowing costs.
The 40-year yield has since fallen 6 basis points, after a 26 bps jump on Tuesday. Fears of a massive spending spree under Japanese Prime Minister Sanae Takaichi still remained, drawing critique from the opposition.
Safe-haven gold remains in demand, up 1.5% to break $4,800 an ounce, while platinum crossed $2,500 for the first time.
Finally, the U.S. Supreme Court is hearing arguments in the Federal Reserve Governor Lisa Cook case later today, just in case anyone forgot what Trump was trying to do to the central bank.
Wall Street's Response
Key developments that could influence markets on Wednesday:
-- Trump delivers key address at the World Economic Forum in Davos
Key Economic Indicators
-- UK CPI for December
-- ECB President Christine Lagarde speaks at the World Economic Forum in Davos
Supreme Court Hearings
-- U.S. Supreme Court hears oral arguments over Trump's effort to oust Fed Governor Lisa Cook
(Editing by Jamie Freed)
Key Takeaways
- •Markets are hopeful for de-escalation at Davos.
- •Trump's Greenland move impacts U.S. equities.
- •Treasury yields approach critical levels.
- •Gold prices surge amid market uncertainty.
- •Key economic indicators and speeches at Davos.
Frequently Asked Questions about Morning Bid: Markets cling to hopes of a Davos de-escalation
1What is the main topic?
The article discusses market reactions to potential de-escalation at Davos amid Trump's Greenland move.
2How did Trump's Greenland move affect markets?
It led to significant falls in U.S. equity benchmarks and a slump in the dollar.
3What are key developments to watch?
Trump's Davos speech and economic indicators like UK CPI and ECB President's address.