Heaven and Earth in monetary policy
Global shocks as drivers of policy and the implications for central banks' models and communications.
A CEPR-based analysis traces the shifting drivers of monetary policy in 13 advanced economies from 1970 to 2024, with the latest period showing global shocks explaining roughly half of the variation in domestic policy rates. The study highlights how the character of global shocks differs from domestic disturbances: they carry more of a supply component, exhibit greater volatility, and persist much longer, creating asymmetries that tend to push policy rates higher in tightening phases. The implication for policy is a move away from assumptions of temporary, linear shocks towards models that acknowledge the enduring and uneven impact of global disturbances.
Policy implications are wide. With shocks from abroad now playing a central role, central banks may need to adjust reaction functions and broaden framework reviews to incorporate greater uncertainty and longer horizons. Scenario analyses could become more central to informing guidance, helping clarify how policy would respond under different global disturbance regimes. The work also raises questions about communication strategies, as forecasters seek to articulate a more nuanced view of risk paths and trade-offs between inflation and employment in a world where external shocks can be persistent and large.
Analysts emphasise that the evolution in shock dynamics calls for careful attention to how domestic expectations interact with global spillovers. If global supply shocks continue to loom large, and if inflation remains intertwined with geopolitics and energy markets, central banks may prioritise resilience in policy design and communication. The research thus invites policymakers to test a broader set of models, including nonlinear dynamics and scenario-based governance, to sustain credibility in the face of evolving macro drivers. The broader takeaway is that understanding both heaven and earth is essential to navigating today’s contested and interconnected macroeconomy.
For market participants, the message is a caution against complacency in traditional forecasting and a reminder to monitor global disturbance channels closely. As framework reviews proceed through 2025 and 2026, the debate over how best to embed global shocks into policy analysis will likely intensify, with practical questions about the balance between forecast-based policy and scenario-driven contingency planning.
References cited include a range of literature on policy trade-offs and the evolution of global shocks, with the CEPR discussion paper detailing the new FAVAR approach and the observed patterns across 13 advanced economies.
The impact of Brexit on foreign-born workers in the UK
Synthetic-differences-in-differences estimates quantify Brexit’s labour-market effects by origin and timeline.
New analysis using synthetic-differences-in-differences estimates suggests EU-origin workers in post-Brexit UK fell by about 785,000 in 2024, while non-EU-origin workers rose by about 992,000, yielding a net increase of roughly 207,000 in 2024. The EU-origin result implies a material reallocation of the UK workforce after the referendum and the end of free movement, with implications for skill shortages, wage dynamics and policy debates on immigration and labour mobility. The non-EU result reflects shifts in the visa regime implemented in 2021, and broader labour-market dynamics post-pandemic.
The study notes that migration patterns saw a sharp rise through 2023 before easing in 2025, with the UK diverging from comparable EU economies after the referendum and the end of free movement. The EU-origin analysis relies on non-national employee data from HMRC and EU-origin data from Eurostat’s foreign-born employees, applying a SDID framework to approximate a credible counterfactual. The results indicate most EU-origin effects materialised by 2023, with 2024 presenting a broadly flat gap relative to the counterfactual.
For non-EU workers, the counterfactual shows a strong rise post-2021, with actual UK employment outpacing that trend and implying an employment impact of nearly a million in 2024. While the precise magnitudes depend on the chosen treatment start, the broad pattern remains: Brexit has altered the composition of the UK labour force, with potential implications for policy responses to immigration, training and skills, and wage-setting in EU-origin cohorts versus non-EU cohorts.
The analysis does not attempt to capture all migration channels, focusing instead on the workforce composition. It emphasises that migration patterns recorded in UK data should be interpreted alongside broader international dynamics, as migration to other advanced economies surged post-pandemic. The results contribute to ongoing policy discussions about the immigration regime, the skill base of the UK economy, and how government policy could mitigate talent shortages in the short to medium term.
Gold sector rally and miners' valuation
Mining outperformance and valuation dynamics in a multi-year gold cycle.
Over the past five years, gold has rallied, with miners delivering a standout performance in the last year. Miners now trade around NAV 0.7x versus a long-run average near 0.8x, while mining stocks have posted considerable outperformance relative to gold, supported by diversified investor demand and renewed Western investment. All-in sustaining costs for the sector sit within a broad range, highlighting the resilience of miners to currency moves and macro shocks when gold itself remains well supported.
The narrative around mid-cycle momentum emphasises not only price action but also the structure of the sector’s earnings and cash flow. A health funding environment, improving regulatory clarity, and ongoing M&A activity are supporting a dynamic that could sustain value creation even if gold prices stabilise or pull back modestly. Investors are watching physical and ETF gold flows alongside miner earnings and valuation signals to gauge the durability of the current cycle.
Ever-sharp investor focus on the balance between gold’s price trajectory and miners’ operating leverage could keep the mining complex attractive, particularly where miners have demonstrated robust cost control and higher margin potential. However, market discipline remains important as the gold cycle evolves, with attention to how mining guidance, capex plans and debt levels shape durable returns in a high-volatility macro environment.
Watch indicators include physical-gold demand, ETF inflows, miner earnings, and the valuation metrics that commonly govern sector rotations. The evolving cycle could be sensitive to any shift in global risk appetite, inflation expectations, or the trajectory of real yields, all of which feed through to both gold prices and miner multiples.
Biotech funding environment improves
Constructive financing signals for biotech in 2025-2026.
Biotech funding conditions have improved, with the J P Morgan Healthcare Conference signalling stronger commercial execution and more robust revenue guidance. IPO activity is rising, with around 20-30 offerings expected in 2026, and capital raised in early January 2026 exceeding $3 billion. Regulation and M&A remain supportive themes, underpinning a more favourable environment for capital deployment, deal-making and portfolio strategies in the biotech sector.
An improving funding landscape could sustain value creation and M&A activity through 2026, particularly as large pharmaceutical players seek to secure strategic capabilities and therapeutic franchises. The improved environment may also accelerate pipeline progress, clinical milestones, and the pace of partnerships, enabling smaller biotech companies to scale more quickly and attract sensible strategic partnerships.
Watch for the progression of IPO pipelines, regulatory developments that could shape deal timing and pricing, and large-pharma activity that might influence the returns available to investors in biotech. Regulatory clarity and targeted policy levers could further bolster activity as the year unfolds.
Rincon lithium at scale
Rio Tinto begins commercial exports from Rincon with a major expansion planned.
Rio Tinto has begun exporting lithium carbonate from Rincon in Argentina, targeting 60,000 tonnes per year of production with a staged build that starts from a 3,000-tonne starter plant and expands to a 57,000-tonne facility in 2028. A $1.175 billion financing package from the International Finance Corporation, IDB Invest, Export Finance Australia and the Japan Bank for International Cooperation supports the Rincon expansion, underscoring Rio Tinto’s commitment to growing its lithium materials business.
Rincon’s ramp positions it as a flagship asset within Rio Tinto’s lithium strategy, following the shelving of the Jadar project in Serbia. The project’s long-life outlook anticipates a multi-decade lithium platform, with production guidance implying substantial annual output across a four-decade horizon and significant cash-flow potential if market demand holds. Argentine incentives under RIGI are being pursued to expedite development, alongside ongoing regulatory and logistical considerations.
The Rincon development is part of a broader push to secure scale in lithium supply, complementing other projects in the region and helping link production to key export routes and end-use markets. The financing package widens Rio Tinto’s funding base for Rincon and underpins confidence in the company’s battery materials strategy as demand for high-purity lithium carbonates grows globally.
Trafigura backs US lithium with take-or-pay offtake
Trafigura commits to a long-term lithium offtake with Smackover Lithium, anchoring US supply growth.
Trafigura has signed a binding take-or-pay offtake for 8,000 tonnes per annum of battery-grade lithium carbonate from Smackover Lithium in South West Arkansas for ten years. The deal accompanies first-phase capacity of 22,500 tpa and potential expansion, with Smackover a joint venture between Standard Lithium and Equinor. The arrangement anchors a growing US lithium supply, supporting domestic battery supply chains and project financing as the sector eyes a 2028 final investment decision.
The deal reflects a broader strategic push to diversify supply chains for batteries within the United States, reducing reliance on foreign sources while supporting localisation of critical minerals. Offtake arrangements such as this are often leveraged to help secure project finance, streamline development finance, and enable the commercial viability of expansion plans toward higher capacity milestones. Market observers will watch for any further offtake agreements and the timing of the next round of project financing.
With Smackover’s near-term development plan, the offtake supports a trajectory toward a 2028 FID and potential scale-up that could align with other US-based lithium projects and policy objectives to accelerate domestic production of key battery minerals. The deal also highlights how major traders are integrating into the supply chain to secure new volumes in a tightening market.
La Mancha’s biggest investment to date in G Mining Ventures
La Mancha raises its stake to 19.9% as G Mining expands Tocantinzinho and Oko West.
La Mancha Resource Capital has become the largest shareholder in G Mining Ventures, increasing its stake to 19.9% via a C$427 million share purchase. The move signals strong conviction in Tocantinzinho and Oko West as production targets rise toward 2028. G Mining expects Tocantinzinho to produce between 160,000 and 190,000 ounces of gold in 2026, with a ramp towards 2028 aimed at delivering higher volumes as the Oko West project moves toward production.
The investment underscores La Mancha’s role as a long-term partner in mid-tier growth assets and reflects confidence in G Mining’s development trajectory. Tocantinzinho’s first full year of production, combined with Oko West progress, positions the company as a meaningful mid-tier producer in the current cycle. The deal follows broader market moves toward mid-tier energy and mining assets that benefit from resilient demand for gold and stable cash flows.
Following the funding, G Mining’s market activity reflected mixed sentiment, with shares trading in response to broader energy price moves and geopolitical risk. The capital raise signals durable support for the company’s strategy and continued progress toward pre-production milestones in a volatile macro environment.
ICMM releases Global Mining & Metals GHG Emissions Dataset
Sector emissions baselines and regional concentrations inform policy and decarbonisation plans.
ICMM has released a Global Mining & Metals GHG Emissions Dataset, showing non-coal mining accounting for about 0.54 per cent of global emissions in 2024, with sector Scope 1+2 emissions at around 3 per cent and metal processing at about 8 per cent. Asia accounts for roughly 80 per cent of sector emissions, highlighting regional concentration of climate impact and the scale of potential policy and investment levers.
The dataset provides an industry-wide baseline to inform policy, investment decisions, and decarbonisation strategies as demand for minerals for clean energy rises. Policymakers and investors will likely use the dataset to frame emissions-reduction pathways, set sectoral benchmarks, and monitor progress over subsequent years. The release signals an ongoing emphasis on emissions accounting and a need for credible, verifiable data to guide capital expenditure and regulatory decisions.
Observers emphasise that regional differences and commodity mix will matter for decarbonisation strategies, with implication for mining operators, equipment suppliers and energy-intensive processing sectors. The dataset may become a reference point for policy debates and corporate strategy as the sector aligns with broader climate targets.
Daye Non-Ferrous orders SpectraFlow Crossbelt Analyzer for Huangshi smelter
Real-time ore-blend optimisation aims to reduce variability and improve smelting efficiency.
Daye Non-Ferrous Group placed an order for SpectraFlow Crossbelt Analyser equipment for its Ausmelt TSL copper smelter in Huangshi to optimise concentrate blending and stabilise feed to the smelter. The goal is to enhance throughput and margins by reducing variability in input material and improving process control. The installation and first-blend performance will be watched closely as a potential efficiency benchmark for Chinese smelters.
The crossbelt analyser deployment reflects a broader trend toward real-time analytical instrumentation in smelting operations, enabling tighter control of ore grades and feed consistency. If successful, the technology could be adopted more widely across Chinese copper smelters and associated supply chains, potentially lowering processing costs and improving metal recoveries. Industry watchers will monitor early performance data and integration timelines.
The move also underscores how process automation and digital instrumentation are reshaping margins in copper production, particularly as concentrate processing becomes more complex and commodity grades vary. With China remaining a dominant copper producer, the Huangshi installation could influence regional competitiveness and the global supply chain.
XCMG XDE260 mining trucks arrive in Australia
A six-truck batch signals growing electrification among ultra-large mining fleets.
The first batch of XCMG XDE260 diesel-electric mining trucks has arrived in Australia, with six trucks delivered and a further six due to complete a 12-truck fleet for a customer. The deployment is part of a broader Fortescue collaboration on battery-electric trucking, aligning with a push to electrify heavy mining equipment and broaden service networks with Emeco and Force.
The move points to the accelerating adoption of ultra-large BE trucks in Pilbara operations, with potential efficiency and emissions benefits. Observers will watch deployment performance, uptime, and the expansion plans to scale to Fortescue’s 200 BE-truck fleet by 2028. The development also reflects growing supplier ecosystems around BE mining equipment and the potential for faster capital cycles in electrification.
Industry commentary suggests BE fleets could reshape operating costs and productivity in remote mining regions, while regulatory and grid implications may influence charging infrastructure and total-cost-of-ownership calculations. The Australia deployment could become a test case for wider BE adoption in major mining belts.
Fortescue accelerates toward Real Zero with new Solomon Airport solar farm
Fortescue scales solar capacity to power its operations and reduce diesel reliance.
Fortescue has begun construction of the 440 MW Solomon Airport solar farm, aiming to become Western Australia’s largest solar project and to power roughly one third of its Real Zero capacity. When combined with the Cloudbreak portfolio (190 MW) and other assets, the group targets around 1.3 GW of solar capacity powering its sites. The project is a cornerstone of Fortescue’s transition away from diesel toward renewables.
The solar expansion is expected to be completed by 2028, with integration into the Pilbara Energy Connect transmission network cited as a key step. The move signals a material shift in energy use for a major mining group, with potential implications for cost structure, reliability and energy security. As the industry pursues large-scale decarbonisation, Fortescue’s strategy could influence capital allocation and procurement decisions across similar operators.
Industry observers note the challenges of synchronising new solar capacity with existing generation and load curves in remote regions. Yet, the scale and pace of Fortescue’s plan underscore the centrality of renewables to mining’s energy transition and the potential for significant cost savings and resilience improvements over the coming decade.
Huawei outlines AI plus connectivity foundations for mining
Digital infrastructure shifts position Huawei as a key mining technology supplier.
Huawei’s Mining Business Unit outlined 5G-private networks and AI-enabled operations, with MineHarmony described as central to building intelligent, connected mines. The platform envisions large-scale autonomous fleets and a broad ecosystem of partners across hundreds of equipment types, signalling a strategic push into the mining digitalisation space and potential influence on regional tech ecosystems and vendor landscapes.
The approach suggests a move toward highly integrated, data-driven mining operations that could improve safety, efficiency and decision-making. If overseas deployments and partnerships expand, Huawei’s role in the mining technology stack could reshape competitive dynamics among hardware, software and systems integrators. Observers will watch for new deployments and MineHarmony uptake across regions.
This signal sits at the intersection of digital infrastructure and mining, where trusted platforms, data governance and interoperability will determine how quickly automated mining becomes mainstream. The implications for procurement cycles, vendor selection and regional technology ecosystems could be meaningful in the year ahead.