Recap | 26 January 2026
- Edward von der Schmidt
- Jan 27
- 7 min read
US-Ukraine-Russia talks in UAE aim to restore ceasefire momentum
Iran's heated rhetoric confronts US build up of naval assets in Middle East
New tariffs risk alienating major trading partners further
The Fed will hold - but for how long and why?
Gold climbs to another record amid stocks' advance
Yen stems losses ahead of snap elections in Japan
India and EU announce trade agreement
Xi's purge targets China's top military official
Final hostage recovery paves way for progress on Gaza ceasefire
New US defense strategy looks inward - to Western Hemisphere
Winter storm cripples travel, power, and business
Partial government shutdown possible as funding bills meet resistance
AI, social media under scrutiny
EDWARD VON DER SCHMIDT
Headlines
US-Ukraine-Russia talks in UAE aim to restore ceasefire momentum
Delegations from Russia and Ukraine met with US counterparts in Abu Dhabi over the weekend in the first publicly-disclosed trilateral talks since Russia's invasion in 2022. Territory in Ukraine's eastern Donbas region remained a point of contention along with the operation of the Zaporizhzhia nuclear power plant. Officials cited constructive progress nonetheless.
Russia continued to target Ukraine's power infrastructure while maintaining its demands for control of regions that it has not been able to fully capture. Ukraine continued to emphasize the importance of US backing in order to uphold any potential ceasefire agreement.
The UAE-hosted talks are expected to resume this coming weekend. Early Tuesday, the Financial Times reported that Ukraine might be required to cede territory in exchange for US security guarantees.
Comment:
Ukraine has heavily fortified the industrial areas in dispute. Ceding Donetsk in its entirety would forgo not just land but one of the principle bulwarks against Russia's invasion, which would leave Ukraine particularly vulnerable absent meaningful security assurances. Such territorial concessions are also prohibited by Ukraine's constitution and may require a wartime vote to resolve.
AP:
US security agreement for Ukraine is '100% ready' to be signed, Zelenskyy says
Talks with US and Ukraine in Abu Dhabi were constructive but major challenges remain, Kremlin says
Reuters:
US-brokered peace talks break off without deal after overnight Russian bombardment of Ukraine (1/24)
Zelenskiy says security guarantees document from US is 100% ready
See also: FT
Iran's heated rhetoric confronts US build up of naval assets in Middle East
Iranian officials and their allies warned against US intervention as the White House weighed a military response to deadly crackdowns that followed widespread civilian demonstrations.
Neighbors lobbied against US strikes, concerned that simmering tensions and explicit threats imperiled regional stability.
AP:
Iran-backed militias in Iraq and Yemen threaten new attacks as US aircraft carrier arrives
Iran's Revolutionary Guard commander warns the US his force has its 'finger on the trigger'
Reuters:
US aircraft carrier enters Middle East region, officials say
WSJ:
Iran's Protest Crackdown Looks Deadlier by the Day
U.S. Carrier Lincoln Arrives in Middle East Amid Iran Tensions
New tariffs risk alienating major trading partners further
President Trump issued new tariff threats against Canada for its trade rapprochement with China and South Korea for a perceived delay in passing last year's investment accord with the US.
Meanwhile, the European Union postponed consideration of a US trade agreement in the wake of recent brinksmanship over Greenland.
Comment:
The expedient use of tariffs for leverage will bear longer-term consequences for US trading relationships. The Supreme Court will also rule on the legality of using IEEPA in such a manner.
AP:
Trump threatens Canada with a 100% tariff over its China trade deal and escalates feud with Carney (1/24)
Carney says Canada has no plans to pursue free trade agreement with China as Trump threatens tariffs (1/25)
Trump threatens to hike tariffs on South Korean goods over inaction on trade deal
Reuters:
Trump says he is raising tariffs on South Korean imports after trade deal delays
EU lawmakers divided over resuming work on US trade deal after Greenland crisis
Bloomberg:
Trump Vows to Raise Tariffs to 25% on South Korean Goods
WSJ:
Trump's Tariff Threats Designed to Influence Pending USMCA Talks, Canada PM Carney says
Markets & Economies
The Fed will hold - but for how long and why?
The Federal Open Market Committee (FOMC) will begin its two-day meeting Tuesday and author its next policy statement on Wednesday, January 28. Markets largely expect the Fed to hold steady at the January meeting given an active debate concerning residual inflation risks and officials' refrain that policy is currently "well-positioned". Will that characterization change?
Beyond needing an opportunity to assess delayed data and evolving risks to a resilient-if-stagnant labor market, the Fed must also confront overt challenges to its independence. The latter strike at the heart of the central bank's inflation-fighting credibility and threaten the achievement of its price stability mandate (as well as moderate longer-term interest rates).
The FOMC's assessment of inflation risks will be of interest since diminishing price fears should lower the bar to continue easing. A concerted attempt to assert the Fed's independence, however, would signal a longer holding pattern - possibly through the end of Powell's tenure as Chair in May.
In the event of an anticipated hold, it is possible that President Trump will announce his chosen successor to upstage the meeting.
Gold climbs to another record amid stocks' advance
Gold vaulted to new highs and silver spiked as geopolitical and inflation risks provided tailwinds to precious metals. Global equity indices ticked higher with earnings releases underway.
AP:
US stocks rise as gold hits another record and the dollar's value sinks again
Reuters:
How silver is traded, from stocks and shares to coins and bars (1/23)
Dollar under fire again as investors reassess Trump's policies, geopolitical risk
Gold hits record above $5,100 as geopolitics drive safe-haven rush
Bloomberg:
Silver Retreats After Best Jump Since 2008 as Gold Tops $5,000
WSJ:
Stocks Gain as Gold Passes $5,000 Milestone
Yen stems losses ahead of snap elections in Japan
Japanese PM Takaichi's call for snap elections on February 8 to cement her coalition's majority in the lower house of Parliament dovetailed with yen and government bond weakness amid mounting fiscal concerns.
The yen's pronounced depreciation abated in the face of rumored intervention plans that exacerbated dollar weakness.
Comment:
Sometimes, policymakers suggesting or hinting that they might do something obviates the need to actually do it by triggering the desired response - as long as markets do not call their bluff.
AP:
Japan will hold an early election next month as Takaichi aims to capitalize on her popularity (1/23)
Reuters:
Stocks rise, yen strengthens against dollar as intervention eyed
Bloomberg:
Japan's Leader Has Few Good Options on Yen Before Election
WSJ:
Wall Street Is Fixated on a Possible Yen Intervention
Around the World
India and EU announce trade agreement
A landmark trade deal between India and the EU will cover two of the world's largest economic blocs as global counterparties seek to diversify their trading exposure.
Apropos, India and Canada sought to reset diplomatic relations while exploring greater cooperation in energy commodities and refinement.
Reuters:
EU carmakers face tough India market even after trade deal
Bloomberg:
EU and India Conclude Trade Talks, Seeking Trump Alternatives
Canada, India Pledge to Grow Oil, Petroleum Trade in Energy Reset
WSJ:
EU and India Reach Free-Trade Deal as World Responds to Trump Tariffs
Xi's purge targets China's top military official
China ousted its foremost military leader, Zhang Youxia, the vice-chairman of its Central Military Commission, a Politburo member, and long-time ally of President Xi. The investigation follows a slate of dismissals amid ongoing corruption probes and a further consolidation of power.
AP:
China's top general under investigation in latest military purge
How a purge of China's military leadership could impact the army and the future of Taiwan
Reuters:
China investigating top general over serious violations, says defense ministry (1/24)
Taiwan monitoring 'abnormal' China military leadership changes after top general put under investigation
Bloomberg:
Xi's Purge of Top General Spurs Questions on Taiwan, Succession
WSJ:
Exclusive: China's Top General Accused of Giving Nuclear Secrets to U.S.
Final hostage recovery paves way for progress on Gaza ceasefire
Israel announced that it had recovered the remains of the last remaining hostage taken by Hamas in Gaza and would work to reopen the Rafah crossing into Egypt.
While Palestinians await international aid and the release of prisoners, the second phase of the US peace proposal involves Hamas' complete disarmament (among other conditions).
AP:
Israel recovers remains of the last hostage in Gaza. Ceasefire moves into tricky new phase
The Rafah crossing is Gaza's lifeline to the world and could open soon
Reuters:
Israel recovers last hostage body from Gaza, paving way for crossing to open
Bloomberg:
Israel Recovers Last Gaza Hostage Body in Boost for Peace Plan
WSJ:
Israel Says It Will Reopen Gaza Border Crossing as Last Hostage's Remains Are Found
Odds & Ends
New US defense strategy looks inward - to Western Hemisphere
The US released its latest defense strategy on Friday, deemphasizing threats from Russia and China while asserting the importance of preserving regional security and access.
Comment:
The emphasis on "hemispheric security" represents both a retreat from hegemony and an expansionist view of US claims.
AP:
Trump stirs talk of 'new world order' as leaders signal shifting global alliances (1/23)
How the old and new US defense strategies differ on traditional priorities (1/24)
Reuters:
Pentagon foresees 'more limited' role in deterring North Korea (1/23)
Bloomberg:
US Defense Strategy Downplays Threat of Confrontation with China (1/23)
WSJ:
Pentagon's New Defense Strategy Strikes Conciliatory Tone on China (1/23)
Winter storm cripples travel, power, and business
A massive winter storm that swept across the country precipitated widespread transportation and power outages while crimping economic activity, particularly in the southern and eastern US.
AP:
US braces for more freezing cold as winter storm leaves at least 29 dead
Paralyzing winter storms put a big chill on the US economy, but how much?
Reuters:
Millions of Americans, digging out after deadly snowstorm, face days of bitter cold
US energy sector reels after winter storm knocks out 2 million bpd of crude output
WSJ:
Deadly Winter Storm Disrupts Air Travel, Leaves Hundreds of Thousands Without Power
Partial government shutdown possible as funding bills meet resistance
Passage of six appropriations bills before the Senate is at risk as a battle over DHS funding in light of recent events in Minnesota and elsewhere raised the prospect of a partial government shutdown.
AP:
Democrats vow to oppose homeland security funds after Minnesota shooting as shutdown risk grows (1/25)
Reuters:
Shutdown looms as ICE shootings spawn partisan fight over DHS funding in US congress
Bloomberg:
Trump, Democrats Hurtle Toward Shutdown After Minnesota Killing
WSJ:
Risk of a Partial Government Shutdown This Weekend is Rising. Here's Why.
AI, social media under scrutiny
Formal inquiries, usage bans, and civil lawsuits put unregulated AI and social media usage in the crosshairs as the public weighs the risks of ubiquitous technological platforms largely exempt from restrictions or liability.
AP:
European Union opens investigation into Musk's AI chatbot Grok over sexual deepfakes
Reuters:
France's National Assembly approves banning under-15s from social media
Meta, Tiktok, YouTube to stand trial on youth addiction claims
Bloomberg:
French Lawmakers Vote to Ban Under-15s from Social Media (see AFP)
WSJ:
Landmark Trial Tests Claims That Social Media Harms Teens