Muzinich Weekly Market Comment: Resilience
Insight
January 19, 2026
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“Resilience” best captures the behavior of financial markets during a week that, yet again, saw investor attention absorbed by international and domestic politics, amid both expected headlines and unforeseen developments.
From an international perspective, investors closely monitored headlines for clarity on whether Iran’s social unrest might trigger global intervention. Iran exported approximately 1.375 million barrels per day (mbpd) of oil in December. [1] Using our rough rule of thumb that a 1 mbpd change in supply equates to a ±US$3 per barrel price move, this implies a potential increase in energy prices of around US$4 per barrel – broadly consistent with the year-to-date move observed in Brent crude prices. Energy investors also kept a close eye on developments in Venezuela. This week, President Trump met Venezuelan opposition leader María Corina Machado at the White House, where she symbolically presented him with her 2025 Nobel Peace Prize medal in recognition of what she described as his support for Venezuelan freedom and decisive action during the country’s political crisis. Trump publicly praised the gesture as “a wonderful gesture of mutual respect.” [2]
Meanwhile, the United States has intensified its effective blockade of Venezuelan oil exports by targeting the so-called “shadow fleet” of tankers used to move sanctioned crude. US forces have seized six vessels in recent weeks as part of this enforcement campaign, underscoring Washington’s efforts to restrict unauthorized oil flows and tighten control over Venezuela’s energy exports.
Looking ahead, the Trump administration has signaled its intent to maintain long-term oversight of Venezuelan oil sales, positioning the US as the central authority in coordinating and approving future exports. From a geopolitical perspective, this would significantly expand US influence over global oil markets given that the US and Venezuela account for roughly 24% of global reserves. If considered alongside Iran’s known reserves, US leverage would extend to close to 40% of global oil reserves –although it is important to note that these figures are theoretical, as the vast majority of these resources remain undeveloped and in the ground. [3] Nevertheless, the scale of such potential influence is likely to be viewed with concern by China and other major energy-importing nations. See Chart of the Week.
If not content with asserting influence over global energy, President Trump reiterated that Greenland is vital for national security, urging NATO to support his efforts to gain greater control of the Arctic territory. This followed a meeting last week between Vice President JD Vance, Secretary of State Marco Rubio, and the foreign ministers of Denmark and Greenland. After the talks, the parties agreed to establish working groups to explore possible avenues forward. However, Denmark’s foreign minister emphasized that a fundamental disagreement with the US remains, adding that any demands violating Denmark’s or Greenland’s sovereignty are “totally unacceptable.” [4]
Greenland’s significance lies in its strategic location: it sits between North America and Europe, providing a crucial position for monitoring the Arctic and North Atlantic. Its proximity to Russia allows the US to track military activity, including submarines and missile tests, both during the Cold War and today. Additionally, as climate change opens new Arctic shipping lanes, Greenland serves as a key point to oversee emerging airspace and maritime routes.
On a different front, a general election is now expected in Japan. Prime Minister Takaichi is expected to dissolve the lower house shortly after it reconvenes on January 23, hoping to capitalize on her high approval ratings and strengthen her slim parliamentary majority. If called, the election could take place in early to mid-February. The announcement pushed investors to increase the so-called “Takaichi trade” – anticipation of stable governance combined with proactive fiscal policies aimed at supporting economic growth.[5] This sentiment contributed to Japanese government bonds underperforming for the week, with the 10-year yield rising 9 basis points, while equities outperformed, with the Nikkei 225 gaining over 5% during the same period.
While investors in the US await the Supreme Court’s rulings on the legitimacy of tariffs and the Lisa Cook case, the White House maintains that mortgage-related allegations justified her removal. In a surprise move, Jerome Powell informed investors that the Federal Reserve (Fed) had been served grand jury subpoenas, potentially threatening criminal charges related to his testimony on renovations at the central bank’s headquarters. Powell characterized the subpoenas as part of the administration’s “ongoing pressure” on interest rates. [6]
The questioning – or potential erosion – of central bank independence represents a key tail risk for the US in 2026. However, the market’s muted reaction was likely influenced by vocal rebukes from several Republican senators, including Senator Thom Tillis, who sits on the Senate Banking Committee. Additionally, President Trump announced that he had no intention of firing Powell, further reducing market concerns.
Given the magnitude of recent headlines, investors may be surprised to see that our preferred measures of equity and government bond volatility – the VIX and MOVE indices – remain low, signaling a high level of confidence and an environment conducive to taking risk. This may be because the headlines, while attention-grabbing, are unlikely to materially affect either economic growth or inflation. Meanwhile, economic data releases that have been relegated in importance in the current geopolitical, headline-driven environment are painting a picture of robust global activity and normalizing of prices.
Last week, China’s reported stronger-than-expected December export growth indicates that its export engine continued to support the economy in the final quarter of 2025. Non-US markets again more than offset the tariff-driven slump in exports to the United States, as global trade normalizes. [7]
In Europe, after two years of contraction, the statistical office confirmed a modest rise in GDP in 2025. German GDP increased by 0.3% from a year earlier. Consensus projections for 2026 are even more optimistic, at around 1%, as a combination of lower interest rates, rising real incomes, and fiscal spending is expected to drive growth. While in the UK, investors were surprised by a better-than-expected November GDP print, suggesting that the economy managed to expand in the final quarter of 2025[8]. Momentum is expected to pick up in 2026 as budget-related uncertainty eases and inflationary pressure recedes. Consensus growth estimates for the UK also center around 1%.
For the US, the December consumer price report confirmed that tariff pass-through has peaked. The headline CPI index rose just 0.31%, while the core CPI increased 0.24%, both well below expectations. [9] Although a soft labour market remains a key risk for the US economy, weekly initial jobless claims fell to 198k in the week ending January 10, bringing the 4-week moving average to 205k, the lowest level in nearly 2 years. The NFIB Small Business Optimism Index ticked higher, reflecting more optimistic expectations for business conditions ahead. [10] Activity indicators further support this trend: the New York Fed’s Empire State manufacturing survey rose to 7.7 in January, and the Philadelphia Fed’s manufacturing business outlook survey increased to 12.6 – both signaling a pickup in economic activity. [11]
Chart of the Week: US to Control Global Oil Reserves?
Note: Data excludes oil sands, which are mainly exploited by Canada.
Source: OPEC (Organization of the Petroleum Exporting Countries)/CNN, as of January 3, 2026. For illustrative purposes only.
Past performance is not a reliable indicator of current or future results.
References to specific companies is for illustrative purposes only and does not reflect the holdings of any specific past or current portfolio or account.
References
[1] Bloomberg, as of January 16th, 2026
[2] Bloomberg, “Trump Praises Venezuela’s Machado for Giving Him Her Nobel Medal,” January 15, 2026
[3] CNN Business, “Trump says US is taking control of Venezuela’s oil reserves. Here’s what it means,” January 3, 2026
[4] Newsweek, “Denmark Says It Has ‘Fundamental Disagreement’ With US After Talks,” January 14, 2026
[5] UBS Global Research, as of 16th January 2026. Japan Equity Strategy & Thematic Research.
[6] Bloomberg, “Powell Probe Stirs Republican Outcry, Jeopardizing Trump Agenda,” January 12, 2026
[7] Bloomberg, “CHINA REACT: Upside Export Surprise Hints at Resilient 2026,” January 13, 2026
[8] Bloomberg, “GERMANY REACT: Modest 2025 Growth, Fiscal Help to Spur Rebound,” January 15, 2026
[9] Bloomberg, “US REACT: Weak CPI Adds to Proof Tariff Pass-Through Has Peaked,” January 13, 2026
[10] National Federation of Independent Business (NFIB), “Uncertainty declines to lower level since June 2024,” January 13, 2026
[11] Deutsche Bank, “Early Morning Reid, Macro Strategy,” January 16, 2026
This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed by Muzinich & Co. are as of January 16, 2026, and may change without notice. All data figures are from Bloomberg, as of January 16, 2026, unless otherwise stated.
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