LATAM: MNI LatAm Week Ahead - Mex/Brazil Mid-Month CPI, Banxico QIR

Tsy futures remain modestly firmer (TYH6 +1.5 at 111-15 vs. 111-12.5 low) ahead of the $13B 20Y bond auction re-open (912810UQ9) at 1300ET, WI is currently at 4.865%, 6.7bp cheap to last month's stop.

• December auction recap: Treasury futures showed little reaction (TYH6 -3 at 112-13.5) after $13B 20Y Bond auction re-open (912810UQ9) stopped slightly through - drawing a high yield of 4.798% vs 4.800% WI at the cutoff; 2.67x bid-to-cover vs. 2.41x prior.
• Peripheral stats: indirect take-up rose to 65.19% vs. 59.47% prior; direct bidder take-up retreated to 22.24% from 29.15% prior; primary dealer take-up at 12.57% vs. 11.38% prior.

• The turn higher in risk sentiment has helped re-open a gap between USDCHF spot and the 0.7862 December lows. While a break of 0.7829 would place the pair at the lowest level since the removal of the CHF peg, eleven years ago, to the upside, resistance stands at 0.8041, the Jan 15 and YTD high.
• Key focus ahead for CHF remains incoming comments from both US and Europe on how outstanding Greenland tensions can be resolved. Denmark's response that Trump's "not using force" line is positive highlights the possibility of Europe retaining the territorial status quo via diplomatic means. However, a renewed escalatory turn from the US is not out of the question, and would favour the CHF.
• Morgan Stanley flag options data which suggests tactical investors are short CHF, mirroring positioning in futures markets. Rabobank meanwhile think that "national fiscal positions may also be coming under fresh scrutiny", which underpins their view that CHF is "on course for another strong year in 2026". They retain a 3-month forecast of EUR/CHF 0.92, which a key support level around 80 pips below spot.

Bloomberg reports that Danish Foreign Minister Lars Lokke Rasmussen has rejected any talks over a US takeover of Greenland, in doorstep remarks to reporters at the World Economic Forum. 

• Asked by reporters whether Trump’s demand to negotiate an acquisition of Greenland would be rejected by Danes, he said: “That goes without saying… We will not enter into any negotiations on the basis of giving up fundamental principles. That is something we will never do.”
• Bloomberg notes, “Rasmussen, who didn’t hear the speech but was briefed on it, says that, 'what is clear after this speech is that the president’s ambition remains intact.' He added that Trump ruling out using force in Greenland is “positive” but that “does not make the problem go away.””
• Danish Defence Minister Troels Lund Poulsen said during the same press gaggle that the question of Arctic security “is not only an issue for the Kingdom of Denmark, it is also an issue for NATO,” which he has discussed with NATO Secretary General Mark Rutte in recent days. European leaders likely consider enhanced European defensive posture on the island as the most likely off-ramp to the crisis.
• Speaking to reporters a short time ago alongside Egyptian President Abdel Fattah el-Sisi, Trump reiterated that the military option is ‘not on the table” for Greenland: “We’ll see what happens. The military is not on the table. I don’t think it will be necessary… I think people will use their best judgment and that will not be necessary.”