OPTIONS: Expiries for Feb06 NY cut 1000ET (Source DTCC)

The prospect of Greenland coming under the control of the US appears increasingly feasible amid statements from Washington, D.C., both bellicose and negotiatory in nature. Speaking on 6 January, White House Press Secretary Karoline Leavitt said that President Donald Trump views securing Greenland as "vital to deter our adversaries in the Arctic region," and that the administration is "discussing a range of options to pursue this important foreign policy goal, and of course, utilising the US military is always an option at the commander in chief's disposal." 

• However, the WSJ reports that during the course of a briefing to senior members of Congress on 5 Jan, Secretary of State Marco Rubio indicated "recent administration threats against Greenland didn’t signal an imminent invasion and that the goal is to buy the island from Denmark", with the apparent aim of scaring Copenhagen and Nuuk into a peaceful handover.
• Kuno Fencker, a member of the pro-independence Naleraq party in the Greenlandic parliament posts on social media, "I am almost certain now, and the rumours are now that the US is coming up with a Compact of Free Association offer, which is much better than the current self-government law."
• COFAs are currently in place between the US and several small Pacific island nations. These deals give the US military free access to operate in the country in question, duty-free trade, while the US would also provide basic social functions. This option would not see Greenland become a state of the US, or even a territory with the same status as Guam or Puerto Rico.

• RES 4: 113-00+ 61.8% retracement of the Nov 25 - Dec 10 bear leg
• RES 3: 112-31   High Dec 18 and key short-term resistance 
• RES 2: 112-25+ High Dec 30 / 31 
• RES 1: 112-19+ 50 -day EMA
• PRICE:‌‌ 112-17 @ 11:17 GMT Jan 7
• SUP 1: 112-01+/111-29 Low Dec 23 / 10 and the bear trigger
• SUP 2: 111-19   1.236 proj of the Oct 17 - Nov 5 - 25 price swing
• SUP 3: 111-11   1.382 proj of the Oct 17 - Nov 5 - 25 price swing 
• SUP 4: 111-00   Round number support 

Treasuries continue to trade above key support at 111-29, the Dec 10 low and bear trigger. The trend set-up remains bearish and a breach of 111-29 would confirm a resumption of the bear cycle. This would open 111-19 initially, a Fibonacci projection. On the upside, key short-term resistance is unchanged at 112-31, the Dec 18 high, where a break would undermine a bear theme and signal scope for a stronger recovery instead.

• Fed Funds implied rates are 0.5bp higher on the day for the late January FOMC meeting but 0.5-1bp lower for 2H26 meetings as they follow European rates after inflation data.
• It holds yesterday’s trimming of rate cut expectations for the remaining meetings under Fed Chair Powell (cumulative 17.5bp Apr) despite downward revisions for the S&P Global US services PMI.
• Cumulative cuts from 3.64% effective: 4bp Jan, 12.5bp Mar, 17.5bp Apr, 32.5bp Jun, 49.5bp Sep and 59.5bp Dec.
• SOFR futures are up to 2.5 ticks firmer looking out to end-2027 contracts vs 4.5 ticks for Euribor, with the SOFR terminal implied yield of 3.10% (H7) holding recent ranges.  
• Today’s calendar focus is on data with monthly ADP at 0815ET before ISM Services, JOLTS and factory orders all at 1000ET.
• The Fedspeak schedule is light, with VC Supervision Bowman (voter) on banking supervision and regulation (1610ET, text + Q&A).