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What you need to know

U.S. military posture near the Middle East

Available indicators suggest the U.S. is shifting toward a posture that preserves credible strike options near Iran, but it still looks more like a measured adjustment than a full, unmistakable pre-war surge.

The USS Abraham Lincoln Carrier Strike Group is operating in the Indian Ocean and is expected to enter the U.S. 5th Fleet and Central Command area of responsibility in the next few days. Three F-15E Strike Eagle squadrons are now forward-deployed, and increased KC-135 and C-17 flights suggest a thicker logistical tail to support a larger or faster-moving posture.

At the same time, Washington appears to be reducing exposure at vulnerable sites by pulling some personnel back, a classic force-protection move that often accompanies deterrence signaling.

However, there’s no major new bomber concentration at Diego Garcia: the base is a proven option for long-range strike messaging, but there is no clear sign of a large influx of military aircraft at present.

Taken together, the most plausible reading is that the U.S. is widening its options and reinforcing deterrence while managing retaliation risk.

We expect to see a steady build up of forces in coming weeks and months as the U.S. prepares to have the capabilities in place to launch major operations against Iran if the White House finally decides to do so.

Move fast and break things

America walks out of the WHO

The United States formally left the World Health Organization yesterday, completing a one-year withdrawal process set in motion by President Donald Trump on 20 January 2025.

The administration framed the move as a response to what it calls the agency’s failures during the COVID-19 pandemic and an unwillingness to reform. Public-health specialists and former officials argue the departure will weaken disease surveillance, emergency coordination, and technical assistance that protect Americans as well as poorer countries, while shrinking Washington’s influence over the rules and standards that shape global outbreak responses.

The exit also leaves a potential legal and financial dispute. A 1948 congressional resolution governing U.S. participation requires Washington to provide a year’s notice and settle its outstanding obligations before leaving. The WHO says the U.S. still owes about $260bn in arrears for 2024 and 2025, a sum that matters both symbolically and practically for an organization that relies heavily on a small number of large contributors.

Administration officials dispute that payment is a legal condition of withdrawal, setting up a fight that could spill into Congress.

The ultimate complex system

China trims its Treasury pile as Japan’s bond market strains

China is reducing its holdings of U.S. Treasuries while adding to its gold reserves. New data put China’s Treasury portfolio at about $680bn, an 18-year low, while its gold reserves have climbed to a record of roughly 74m ounces.

The picture, though, is more nuanced than the headline suggests. Overall foreign holdings of U.S. Treasuries rose by $112.8bn in November, to a record $9.4trn, even as China, the third-largest foreign holder, cut its position by $6.1bn to $682.6bn, the lowest level since 2008.

Japan, the largest foreign holder, increased its holdings by $2.6bn to $1.2trn, the highest since July 2022.

The United Kingdom, the second-largest holder, added $10.6bn to reach $888.5bn, its second-highest level on record.

In short, foreign demand for U.S. public debt remains strong, even as China steps back.

Meanwhile, gold has been reported above $4,900 an ounce for the first time, and silver has been reported at $100 an ounce.

Japan’s bond market is also under increasingly heavy pressure as the Bank of Japan continues to shrink its footprint.

The central bank’s share of outstanding Japanese government bonds has fallen to about 48%, its lowest in eight years, down roughly seven percentage points from its 2022 peak.

Under its quantitative tightening program, the Bank of Japan has cut monthly JGB purchases from ¥5.7trn (about $36.0bn) in mid-2024 to ¥2.9trn (about $18.3bn) now, with purchases expected to fall further to ¥2.1trn a month (about $13.3bn) in early 2027.

Foreign ownership of JGBs has slipped to around 12% of the total, near its lowest since 2019, leaving both the Japanese central bank and overseas investors reducing exposure at the same time.

Birthplace of civilization

Lebanon claims Army control south of the Litani as Israel extends reserve call-up

Lebanese Prime Minister Nawaf Salam said the Lebanese Army has achieved “full operational control” south of the Litani River as part of a nationwide effort to disarm Hezbollah.

Speaking to Bloomberg Television on the sidelines of the World Economic Forum in Davos, Salam described the claim as historic, saying it marked the first time since 1969 that the Lebanese state had secured full operational control in the area. He added that the government was also moving to extend state authority over Hezbollah forces north of the Litani, though he gave no timetable or operational detail.

However, across the border, Israeli media have reported that Israel’s government is set to approve an extension of reserve call-ups totaling 280,000 troops through March 2026.

The Israel Defence Forces are expected to maintain a large deployment across northern and Gaza fronts, with officials arguing that any sustained confrontation with Iran and Hezbollah, or the remnants of Hamas, will demand additional manpower.

It’s the U.S. vs China, everyone else needs to pick a side

Putin meets U.S. envoys as talks shift to Abu Dhabi; no progress so far

Talks between President Vladimir Putin and a U.S. delegation ended late on Thursday at the Kremlin after lasting more than three and a half hours. Commenting on the meeting, Yuri Ushakov, a Kremlin aide, called it constructive and useful, saying it focused on American readouts from contacts with Ukraine and European partners.

Ushakov added that Russia had agreed to take part in trilateral talks in the United Arab Emirates today.

Ushakov said yesterday’s talks involving U.S. envoys Steve Witkoff and Jared Kushner reinforced Moscow’s view that any durable settlement will hinge on territory, which the Kremlin frames as a Ukrainian withdrawal from the Donetsk region.

He said Russia preferred a political and diplomatic outcome but would continue pursuing its stated war aims if no agreement emerged.

Trilateral discussions are continuing today in Abu Dhabi. Witkoff and Kushner are leading the U.S. side; Kyrylo Budanov, Ukraine’s military-intelligence chief, and Rustem Umerov, Ukraine’s defense minister; and Kirill Dmitriev, a Russian presidential envoy, alongside General Igor Kostyukov, the head of Russia’s military-intelligence directorate, representing Moscow.

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