# Roundup of the week: 23 January 2026

_A week that began with horrific events in Iran quickly pivoted to a geopolitical storm over Greenland, briefly rattling markets before calm was restored at Davos. The bigger question now is not whether investors are adapting to the emerging world order — but whether Europe and the UK can do so quickly enough to avoid further marginalisation._

Neil Woodford · 23 January 2026 · 6 min read

![Protesters hold placards as they participate in a demonstration in front of US Embassy in Copenhagen against Vice President JD Vance visiting Greenland, March 29, 2025, Copenhagen, Denmark](https://cdn.sanity.io/images/v3acfbvo/production/8b311bcd85129353f1d9fce8d896ce7488486c81-3462x2304.jpg?w=1600&fit=max&auto=format)

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The tragic events in Iran, which the UN special rapporteur on human rights has estimated may have resulted in the death of 20,000 civilians, have almost disappeared from this week’s media agenda and have been replaced by the row over Greenland. Although this geopolitical story had been bubbling away for months, it exploded over the last week following President Trump’s pretty extraordinary statements last weekend, which some alarmist reports suggested would lead to an inevitable internecine NATO confrontation. For a while, this pretty dramatic interpretation of the war of words between the US administration and eight European countries destabilised financial markets around the world, but, once again, calm has been restored at the end of the week as the respective parties have got together in Davos at the WEF, and agreed another “deal”.

In parallel with these discussions, it appears there has been some progress on efforts to end the war in Ukraine, also at Davos, where Presidents Zelenskyi and Trump have been meeting. This deal will now be put to President Putin in Moscow. How he will respond is not yet clear, but if he agrees, it will involve a considerable shift from his historic position on land and the demilitarisation of Ukraine, both of which were previously unacceptable to Europe and Ukraine. Interestingly, even though it is far from certain that the Russian president will compromise, oil prices have been notably weak today since this news broke.

Elsewhere in what has been yet another somewhat frenetic week, the snap election in Japan and the Prime Minister’s promise to cut taxes has unnerved the Japanese bond market. A significant rise in yields, especially on Monday and Tuesday, was violent and rippled through other government bond markets worldwide. Some soothing words on Wednesday and the promise by some leading Japanese banks to buy the market led to a significant rally later in the week, and relative calm has once again been restored, albeit with yields still noticeably higher than at the end of last week.

All in all, it’s been a very odd week in which financial markets have had ample opportunity to respond very badly to another round of extraordinary Trumpian geopolitics and financial market shocks. Reassuringly, though, the week is ending with equity markets rallying and government bond markets stabilising after yields have risen modestly nearly everywhere. In summary, this looks surprisingly sensible from my point of view. Although there is always the risk of a black swan outcome, the balance of probabilities is that the new world order rapidly unfolding, led by an assertive US president clearly motivated by an America-first agenda, is one that financial markets are quickly adjusting to. It may not be a world that established elites like, and it is clearly directly contradictory to the WEF’s globalist agenda. Still, it is rapidly becoming the established norm and should be the lens through which all US and Chinese geopolitical developments should be viewed.

Perhaps its greatest challenge is to Europe and the UK, which have been caught off guard by these tectonic changes. Unless Europe’s leaders learn to adapt quickly to this new world order, they will, in my view, become increasingly marginalised and fall even further behind economically and diplomatically. I saw this chart this week, which to some extent encapsulates the problems Europe and the UK face. It clearly demonstrates the gulf that has opened up between the US and these economies over the last twenty years, and needs to be front and centre of policymakers' minds here in the UK and across Europe if the relative economic ossification is not to get even worse.

![Roundup of the week: 23 January 2026](https://cdn.sanity.io/images/v3acfbvo/production/993c68f2fef7cf3fb27bc61ebece59f7c941cee0-2268x1374.png?w=1600&fit=max&auto=format)

The Eurozone, by the way, was formed in 1999.

## Economics

### US

There has been a flurry of economic announcements from the US this week. Without going into detail on all of the releases, I think it’s fair to say that the data has been encouraging. Growth appears to be strong, as represented by the 4.4% growth rate for Q3 released on Thursday, the fastest rate of increase in two years, and the personal spending data for October and November, which was better than expected. Also, the Fed’s preferred inflation measure rose 0.2% in November and 2.8% over the past 12 months, in line with expectations. Labour market data was also in line, but still shows a relatively weaker trend.

### UK

This week, the ONS has released data on the labour market, inflation and public borrowing. Briefly, the labour market data confirmed a slightly weaker trend, with unemployment static at 5.1%, which has risen mostly because of an increase in the participation rate, which is now surprisingly above long-term averages at 64%. The most interesting aspect of this set of data was the pay growth numbers, which showed private sector pay growth at 3.6% in the three months to November, which compares with a rate of 6% a year ago. Public sector earnings growth is at an elevated 8%. With private-sector wage settlements having fallen to around 3% in recent months, this is likely to remove the frequently voiced MPC concerns about elevated pay growth and should pave the way for lower rates as early as next month. Consensus currently expects no change, but I remain of the view that the impediments to lower rates have evaporated.

The inflation data were broadly in line with expectations, and based on what we know about base effects and the measures announced in the budget, it is likely to fall close to the 2% target in April and remain at this level thereafter as wage cost pressures moderate further.

The Chancellor got some good news in the form of lower-than-expected public borrowing on Thursday. In summary, the December figure was £7.1bn lower than last year’s, and for the period from April to December, the total is also marginally lower than last year’s. Once again, in my opinion, the standout figure was the growth in tax receipts, which over the same period were 7.5% higher than a year earlier, or £61bn. Ouch.

In a late-breaker, right at the end of the week, more important UK macro data has been released: retail sales (for December) and the S&P Global purchasing managers’ index (for January). Retail sales data is generally well regarded as an accurate series, as is the PMI. Both sets of data were a lot better than expected.

After a generally lacklustre series in the lead-up to the budget at the end of November, retail sales bounced back strongly in the critical last month of the year, illustrating once again what many had suspected: that pre-budget doom-mongering had badly impacted both consumer and business confidence. In fact, the margin over consensus was one of the largest I can recall in this series. For example, retail sales, excluding auto fuel, were expected to grow by 1.7% YOY but came in up 3.1%.

In the same vein, the S&P Global PMI was significantly better than expected, both in manufacturing and, especially, in the more important services sector, which, according to the data, is expanding at its fastest rate in almost two years.

Albeit that one swallow does not make a summer, these data are encouraging and give me more confidence that my non-consensual view about the UK economy is correct.

## Markets

I won’t repeat here what I have already written in the rather lengthy introduction to this weekly update. Suffice to say that, in general, equity markets have endured a challenging week and are showing gains across the board. Government bond markets have had a similarly difficult week and are down marginally, except in Japan, where yields are about 60 bps higher than at the end of last week. Significant, but hardly the disaster that many were writing about earlier this week.

## What to look out for next week

It’s hard to predict what geopolitical conflagration will explode next week. We may get a pause in the pace of announcements, which will give us time to assimilate the latest developments. My guess, though, is that President Putin’s response to the Ukraine peace initiative will be a focus, and I suspect that the uprising in Iran may once again preoccupy the discourse. It’s hard to predict what will happen, but one thing is clear: if peace inches closer in Ukraine, oil prices will be weak.

Elsewhere, there will be a whole host of trading and results announcements in the US, the UK, and Europe. I will endeavour to keep on top of the most salient issues, and, of course, the packed economic diary will once again attract a lot of attention.