Tariff War Over Greenland Triggers a Renewed Risk-off Trade

Greenland and tariffs take center stage, triggering a flight out of the risk-on trade and back to the safe havens.

Key Takeaways

• Tariffs on the EU May Soar Over Greenland Dispute: The tariff file is back on the front pages as President Trump is on the warpath again, using the threat of a 10% levy on those countries (as in virtually all major NATO members) who stand in the way of his desires and ambitions in mineral-rich Greenland. The EU is hitting back with retaliatory measures of its own.

• Gold Rallies on Renewed Geopolitical Risk: Precious metals are seeing a classic flight to safety and hitting fresh record highs. ETF gold inflows, as an aside, swelled by +0.9% last week (+28 tons) in the biggest intake in four months, and have now expanded in seven of the past eight weeks as all these geopolitical risks begin to add up.

• China is Meeting Growth Expectations: On the data front, China was front and center, but the numbers were more in line with expectations. Real GDP growth came in at +4.5% YoY in the fourth quarter (down from +4.8% in Q3 and +5.2% in Q2) and still achieved the +5.0% target for the year. In an ongoing show of deflationary pressures, the trend of nominal GDP cooled off to +3.8% from +3.9%, setting the second-weakest pace since the height of the pandemic back in 2020Q2.