Daily Commentary

MarketMinder’s View: The Swedish finance ministry is reportedly opening an investigation to reopen the question of whether to join the 21-nation euro (Bulgaria just adopted it on January 1) or retain the krona as its currency. Sweden is already in the EU, so it enjoys the internal free trade with the other 27 members. But it, Czechia, Denmark, Hungary, Poland and Romania aren’t Economic and Monetary Union members (those who use the euro). This would be a notable shift, considering Sweden rejected joining the currency bloc in 2003 and the public is divided on the matter. Joining would also put the world’s oldest central bank, the Riksbank, under the ECB’s thumb, eliminating its control of monetary policy. If it did so, it could be beneficial for trade and market access, as well as easing the journey for travelers. But those aren’t major problems for Sweden today, so the benefits seem pretty small. Anyway, it is worth watching to see how this goes.

MarketMinder’s View: Hyperbole alert! This article is way over the top with fear-laden rhetoric surrounding Japanese bond yields’ short-term jumps lately (to levels still well below much of the developed world’s) after new Prime Minister Sanae Takaichi called snap elections for next month and started floating tax-cut goodies and stimulus plans to voters in hopes of winning a majority. The article dubs this a possible “Liz Truss moment” (can we please stop doing this!) for Japan, risking much higher yields as bond vigilantes and domestic investors punish the profligate plans by fleeing bonds, ultimately rendering the country’s vast debt unaffordable. Now, we could say, simply scroll down to the first visual in this piece, which plots Japanese interest payments’ share of GDP and pins it at 1.3%, just above Germany and below France, the UK, Canada, Italy and the US, to see why this isn’t a likely crisis in the making. But we won’t stop there. One, it isn’t clear Takaichi can pass what she promises on the campaign trail. Two, bond markets are often volatile—maybe less than stocks, but they do chop on headlines and uncertainty in the short term. It is a mistake to overrate the wiggles. Three: Japanese bond yields have been rising for well over a year, as the piece notes. Yet its stocks outperformed last year and the economy grew until a one-off building code change hit Q3 2025 GDP. This is not, in our view, a likely threat. It is more likely a positive cast as negative: Japan’s monetary policy and interest rate complex are moving closer to in line with the world’s. That is a plus, considering there is little to no evidence its extraordinary monetary policy and super-low rates were good for the country’s economy and markets.

MarketMinder’s View: With legislation approving the 2025 US-South Korea trade deal that cut tariffs to 15% still pending approval in Seoul’s National Assembly, President Donald Trump is threatening to hike tariffs on the country’s pharmaceuticals, autos and lumber to 25%. This article is a good rundown of the state of play, particularly in the back half. But it also notes, probably correctly, “The threat was a reminder that the tariff drama unleashed last year by Trump is likely to be repeated again and again this year. The global economy and U.S. voters might find the world’s trade structure constantly being subject to disruption and new negotiations as Trump has already sought to levy tariffs in order to bend other nations to his will.” Greenland, Canada and China all speak to this. But here is the thing: All the attention paid to all the talk, every threat and any action (if one follows!) mutes the market effects. Last year’s selloff in April was about the surprise of the vast scope and degree of tariffs. When those proved watered down, relief set in. Today, the margin of negative surprise and relief is much smaller because stocks are so familiar with the playbook. We would likely have to see something pretty extreme to deliver downside surprise from here—and upside surprise on trade looks much smaller than last year, too.