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A cautious optimism has emerged following weekend developments in Venezuela, though the situation remains complex. Despite initial assessments labeling the events as “more than skirmishes,” a targeted operation against a leader perceived by many as illegitimate appears to have temporarily stabilized the region, even amidst procedural concerns. As one analyst noted, “We’re just getting going – welcome to 2026.”
Risk-On Sentiment Dominates Early 2026
Monday was characterized by a distinctly risk-on approach from investors, a signal that speaks volumes about market sentiment. this trend is unfolding against the backdrop of a week culminating in the release of key US payroll data.The prevailing view is that 2026 will see continued proactive measures initiated by the US, notably on the geopolitical front. Cuba is expected to be a focal point, alongside renewed attention to Greenland, spurred by recent comments from President Trump reiterating the US’s strategic interest in the territory.
ING’s 2026 Outlook, which predicted a “SNAFU” scenario – a military acronym for “Situation Normal: All Fouled Up” – appears increasingly prescient.
Limited Impact on interest Rates, Initial Oil Price Volatility
The most immediate transmission mechanism from the weekend’s events is expected to be through the oil price. however, forecasts are not anticipating notable shifts. The spot price experienced initial fluctuations, falling before subsequently rising, but “in the big scheme of things, if nothing had happened over the weekend, the pictures we saw through Monday looked like any other day when prices move, and rationales are then reverse-engineered on to events.” While the situation is understandably linked to Venezuela, the overall market reaction has been muted.
Venezuelan Bonds Rally Amidst Reduced Default Risk
Despite the volatility, Monday saw equity markets surge, and surprisingly, Venezuelan bonds demonstrated bullish behavior. This is attributed to a reassessment of the country’s credit rating, with a growing expectation that the probability of default has decreased. According to a company release, this positive outlook is based on the theory of a potential “positive macro and credit tilt” resulting from the recent developments.
US Payroll Data and the Unemployment Rate: Key Indicators to watch
Looking ahead, all eyes are on the upcoming US payroll report. The market consensus anticipates a figure of 60,000 new jobs. However, applying the “Chair Powell algorithm” – a reference to the Federal Reserve Chair’s analytical approach – suggests a potential outcome of zero jobs created, coupled with a slight easing of the interest rate to 4.5%.
The most crucial metric, however, remains the unemployment rate. The market is expected to exhibit tolerance for weaker payroll numbers, given the current immigration policy. As one senior official stated, “The unemployment rate tells the real story.”
Investors should also monitor jobless claims data, released every Thursday.While less novel than the payroll report, this data provides a “real thing” – a non-survey-based indicator – and therefore deserves greater consideration in an environment where data is often viewed with skepticism.
Remarkably, current jobless claims data suggest a stable labor market, a surprising outcome given the turbulent events of 2025.
Disclaimer: This publication has been prepared by ING solely for facts purposes irrespective of a particular user’s means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more.
