Watching the Situation in Venezuela and Awaiting Some Key Data Due Soon
January 7, 2026
The Trump Administration continues to unfold sweeping changes in policies toward other countries in the Western Hemisphere. Precise details remain sketchy, but the roll-out of assertions has been very bold, with implications stretching well beyond Latin America and Canada to include China, Russia and Europe. A claim that Venezuela will transfer 30-50 million barrels of high grade oil equal to nearly $3 billion, whose usage will be decided by President Trump and presumably targeted to rebuild Venezuelan energy infrastructure to support significantly greater oil production. The political stability of Venezuela going forward is anyone’s guess, but just about everyone agrees that the ambitious plans can not become close to realization without a safety from violence being credibly established.
Key data to be announced later today and over the next two days include from the United States the ISM non-manufacturing purchasing managers survey, the Labor Dept’s monthly employment situation report, job quits and openings, productivity, unit labor costs, factory orders, housing starts, and the trade balance. European releases will feature retail sales, economic sentiment, and many countries’ industrial production figures. Japanese household spending, consumer confidence and current account, China’s CPI and PPI data, and Canadian trade and labor statistics are also on the menu.
Stock markets reacted positively Monday and Tuesday to the capture of Madura, other geopolitical surprises like the street riots in Iran, and the start of a new calendar year. Today may test if investors are predisposed to holding the record highs in the U.S. and elsewhere. U.S. futures are down but not by much. The Japanese, Hong Kong and Taiwanese markets gave back 1.1%, 0.9% and 0.5%, while share prices on major European bourses show moderately mixed results.
There’s been little movement in the dollar since Tuesday’s close. Indian monetary officials have reportedly lent considerable intervention support to counter downward pressures on the rupee near the 90 per USD level.
The week’s strength in riskier assets has been correlated with lower sovereign debt yields, even as more and more 2026 outlook pieces in the financial press are questioning the sustainability of bloated fiscal debt and deficits in several economies. Compared to yesterday, 10-year sovereign debt yields have declined by a further seven basis points in Great Britain, four bps in Germany and France, three bps in the United States, Italy and Spain and even one basis point in Japan.
Venezuela’s oil news appears to be one factor behind a 0.5% drop so far today in West Texas Intermediate oil, whose price edged below $57 per barrel. Profit-taking slammed silver (-3.1%) and has depressed the price of gold by almost 1%. Bitcoin’s price is 1.8% lower.
ADP’s estimate of U.S. private-sector employment in December came in a tad lower than anticipated but nonetheless, at +41K, confirming the belief that the figure would be positive after November’s revised decline of 29K. Weekly U.S. mortgage applications in the week to January 2 only rebounded 0.3% from a combined tumble of nearly 20% in the three prior weeks and despite the lowest 30-year fixed mortgage rate (6.25%) since the week of September 24, 2024.
The preliminary consumer price inflation data from the euro area for December shows a 4-month low of 2.0% from 2.1% in both October and November and 2.4% in December of 2024. Excluding food and energy, core inflation edged down 0.1 percentage point as well to a 4-month low of 2.3%, but that largely reflected lessening pressure from non-energy industrial goods. Service sector price inflation remained problematic at 3.4%. Inflation in the four largest economies using the euro receded noticeably between December 2024 and December 2025, but a few economies like Ireland (2.7% versus 1.0%) and Austria (3.9% versus 2.1%) experienced significant rises in inflation between those end-points.
German retail sales in December again disappointed, with the largest monthly slide (-0.6%) in a half year and a 12-month increase of only 1.1%.
Euroland’s construction purchasing managers index for December points to an extended recession in that sector. Demand fell faster than in November, but the overall PMI reading of 47.4 was not as far removed from the 50 level of neutrality as were the readings of 44.0 in October and 45.2 in November. The French and Italian PMI-construction scores (a 2-month low of 43.4 and a 4-month low of 47.9) actually depicted deepening contraction, but the bigger surprise came from Germany, whose construction PMI jumped 5.1 points to a 45-month high of 50.3. Germany also reported an as-expected 6.3% rate of unemployment in December, matching the level of the eight previous months.
Britain’s construction PMI climbed 0.7 points in December but, at 40.1, was still deeply in contractionary territory.
French consumer confidence recovered slightly in December but, at 90, was still will below the long-term mean of 100.
Japan’s composite and service sector PMI scores fell in December to 7-month lows of 51.1 and 51.6, respectively.
The Swedish Composite purchasing managers index fell back 1.5 index points to a 2-month low of 56.3 in spite of a deceleration in the growth of manufacturing. The service sector PMI also slid to a 2-month low (56.7).
Lebanon’s private PMI index edged 0.1 point lower to a 2-month low of 51.2.
China’s holdings of foreign exchange reserves climbed by $11.5 billion in December and by $158 billion in 2025 to a 10-year high of $3.358 trillion.
In Australia, which recently switched to reporting consumer price inflation on a monthly rather than a quarterly basis, posted a 3-month low inflation rate of 3.4% in November. That’s still well above the Reserve Bank’s target range of 2-3%.
Wholesale price inflation in Austria fell back to a 5-month low of 0.1%, and Hungarian producer prices recorded a 2.7% drop between November 2024 and November 2025. Czech CPI inflation in December of 2.1% matched expectations and November’s reading.
Copyright 2025, Larry Greenberg. All rights reserved.
Tags: constuction PMI readings in Euroland and Britain, Euroland consumer price inflation, German unemployment and retail sales, Japanese composite and service sector purchasing manager surveys
ShareThis
