Recap | 29 December 2025

We are reintroducing the Datum Research Recap, which will be published on Mondays, Wednesdays, and Fridays (excluding holidays).

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EDWARD VON DER SCHMIDT

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Headlines

China Surrounds Taiwan:

In a second day of live-fire military drills that continued into Tuesday, China's People's Liberation Army (PLA) encircled Taiwan. Dubbed "Justice Mission 2025", the large-scale operation simulated a blockade of the island and has involved naval and aerial forces.

Defense Ministry officials and state media outlets characterized the ongoing drills as a "stern warning" intended to rebuke notions of Taiwanese independence and any semblance of external interference. Notwithstanding the nod toward the US following recently approved arms sales to Taiwan, President Trump sounded nonplussed.

Speaking at a China Institute of International Studies event, Foreign Minister Wang Yi balanced a desire to "promote the healthy, stable, and sustainable development of China-US relations" with a firm reiteration of China's declared core interests, chief among them the "reunification of Taiwan" (Bloomberg).

Comment: The threat of force may be symbolic at this time, but the rhetorical escalation should be unmistakable.

• AP: "China flexes blockade capabilities near Taiwan on second day of military drills"

• Reuters: "China fires rockets towards Taiwan in war games simulating blockade"

• Bloomberg: "China Seeks Better US Ties while Vowing Not to Cede on Taiwan"

• WSJ: "Chinese Military Drills Send 'Stern Warning' After U.S. Arms Sales to Taiwan"

Russia-Ukraine Negotiations at Impasse:

After President Zelenskyy's meeting with President Trump on Sunday and the latter's call with President Putin, peace negotiations still remained at an impasse. Territorial disputes centered on the Donbas and Zaporizhzhia have not been resolved and there are no immediate plans for any temporary ceasefire.

Details of a proposed 15-year security guarantee have not been made public. President Trump remarked that "there will be a security agreement, it'll be a strong agreement, and the European nations are very much involved" (WSJ).

How any post-war monitoring or foreign military "presence" (AP) would work is unclear. Russia has maintained that it will not accept the presence of NATO or other foreign troops in Ukraine and would consider them legitimate targets.

Complicating matters, Russia alleged a drone attack on a presidential compound in Novgorod, which Ukraine has denied. Russian officials signaled forthcoming retaliation and plans to revisit their negotiating positions.

• AP: "US offers Ukraine a 15-year security guarantee as part of peace plan, Zelenskyy says"

• Reuters: "Peace hopes dented as Russia says Ukraine tried to attack Putin residence"

• Bloomberg: "Trump's Ukraine Plan Faces New Obstacles After Putin Call"

• WSJ: "Ukraine Seeks Decadeslong Security Guarantee as Trump Offers 15 Years"

• See also: RIA

Iran Facing Economic, Military Pressure:

Days after President Masoud Pezeshkian stated that his country was in a "full-scale war with the U.S., Israel and Europe - they don't want our country to remain stable" (AP), economic instability compelled protests in Tehran and the resignation of the head of Iran's central bank. The rial fell to a record low against the dollar amid accelerating inflation.

At the same time, President Trump warned against any ballistic missile buildup or resumption of Iran's domestic nuclear program under the threat of reprisal. Whether Iran's launching of three satellites from Russia might be construed as a provocation is unclear.

• AP: "Protests erupt in Iran over currency's plunge to record low"

• AP: "During Netanyahu visit, Trump warns Iran of further US strikes if it reconstitutes nuclear program"

• AP: "Iran's president says his country is in a full-scale war with the West"

• AP: "Russia sends 3 Iranian satellites into orbit, report says"

• Reuters: "Trump warns Iran of possible strike, urges Hamas to disarm after meeting Netanyahu"

• Bloomberg: "Protests Erupt in Iran's Capital as Rial Drops to Record Low"

• Bloomberg: "Iran Says It Launched Three Satellites Into Space From Russia"

• WaPo: "Iran sends conflicting signals on its missiles as Israeli concerns grow"

US Strikes, Blockade Stifle Venezuela:

President Trump confirmed US involvement in a strike on a dock facility in Venezuela without offering operational details in a potential harbinger of military escalation.

According to Bloomberg, sanctions and a naval blockade have also curtailed oil production in the Orinoco Belt. China is the largest importer of Venezuelan crude.

• AP: "Trump says the US 'hit' a facility along shore where he says alleged drug boats 'load up'"

• WaPo: "Trump says U.S. destroyed loading dock in Venezuela"

• Bloomberg: "Venezuela Starts Shutting Oil Wells as US Blockade Halts Flows"

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Markets & Economies

Precious Metals Pullback:

While major equity indices dipped in light holiday trading, precious metals retreated substantially on Monday. The declines in gold and silver were exacerbated by poor liquidity and increased CME margin requirements.

Comment: When margin requirements are raised, more money must be pledged as collateral. This raises the opportunity cost of financing a given position, making it more "expensive" to put on or hold and thereby reducing any potential return.

• AP: "Surging silver and gold slide after CME raises margin requirements"

• Bloomberg: "Gold, Silver Plunge as Traders Book Profit from Record Rallies"

Trump Chides Powell, Teases Fed Pick:

President Trump floated the possibility of revisiting a lawsuit against Federal Reserve Chair Jerome Powell while suggesting his choice to succeed Powell as Chair could come as soon as next month.

Comment: The President has made his desire for lower policy rates well-known, implying that Powell's replacement may be more inclined to push for monetary accommodation faster.

The Supreme Court is expected to rule in January on a case related to Fed Governor Lisa Cook, with implications for the Fed's independence as well as the composition of the Board of Governors and regional Bank Presidents. Powell's term as Chair may end in May, but he is slated to remain a Governor until 2028 and would remain an influential voice.

The Board vets candidates to run the regional Banks, so effective control of the Board essentially determines the makeup of the Federal Open Market Committee (FOMC), which sets US monetary policy.

• Reuters: "Trump threatens to sue Fed's Powell, will announce replacement next month"

• Bloomberg: "Trump Says He Still Might Fire Powell as Fed Chair Pick Looms"

Interest on China's CBDC:

China's state broadcaster announced that digital yuan holdings (e-CNY) will earn interest beginning in 2026, an apparent first for a central bank digital currency (CBDC).

Comment: Distributed ledger technology and the rise of digital assets have driven governments and central banks to look for ways to adapt and to maintain control of their currencies.

Paying interest directly on digital cash holdings would also disintermediate financial institutions that pay interest on deposits in exchange for custody of funds.

• Reuters: "China's digital yuan to become interest-bearing next year, state broadcaster says"

• See also: CCTV

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Around the World

Saudi Arabia Warns UAE on Yemen:

Saudi Arabia's air force targeted weapons shipments destined for the UAE-backed Southern Transitional Council in Mukalla, splintering the anti-Houthi coalition in Yemen and heightening tensions between the regional powers.

• AP: "Saudi Arabia bombs Yemen port over weapons shipment from UAE and issues warning to Abu Dhabi"

• Reuters: "Saudi Arabia says national security is a red line as UAE forces asked to leave Yemen"

• WSJ: "Saudi Arabia Bombs Yemeni Port City Over Weapons Shipment from U.A.E."

Greece, Israel, and Cyprus Join Forces in Mediterranean:

Military officials in Greece announced that Greece, Israel, and Cyprus agreed on plans to deepen their defense cooperation in the Mediterranean in 2026.

• Reuters: "Greece, Israel and Cyprus to step up joint exercises in eastern Mediterranean"

China Brokers Cambodia-Thailand Talks:

Foreign Ministers from China, Cambodia, and Thailand met in Yunnan on Monday to continue peace talks as a temporary ceasefire held.

• AP: "Top diplomats of China, Cambodia and Thailand meet as Beijing seeks a stronger role in dispute"

• See also: Xinhua