The past year has been no stranger to periods of market volatility and turbulence, with events such as the US’ so-called ‘Liberation Day’ creating waves across capital markets as industry players grappled with the impact of the tariffs.
So far, 2026 appears to be following suit, with the year kicking off with the US’ apprehension of Venezuelan president Nicolás Maduro on 3 January and the ensuing US strikes on the South American country.
As a result, financial markets braced themselves for reverberations of the back of the turbulence which began almost a week ago.
So far, Latin America credit markets have recorded little impact from the invasion across both US and European desks, The TRADE understands, with Venezuelan bonds largely taking the hit.
Speaking to The TRADE, Sally Bartunek, trader at Ninety One, explains: “The reaction was very contained to Venezuela and PDVSA bonds itself on this side of the pond. There was an expectation of heightened flow activity to kick off during the London session but even then that didn’t materialise until New York hours.”
Specifically, Venezuela’s government bonds increased to 33 cents before the US’ capture of Maduro, before later spiking to 42 cents on the dollar on Monday, as reported by the Financial Times this week.
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Despite the turbulence, traders appear to have shrugged off any potential for severe hits.
Noting broader stability across a wide majority of markets, the overarching message from industry participants is that the attack on Venezuela remains very much a contained event.
However, although many markets didn’t experience a knock-on impact, some traders noted a growth in other bonds as a result. Specifically in MENA, with many investors viewing certain jurisdictions in the region as comparable and positions being adjusted in markets similar to Venezuela.
“One notable spillover effect, highlighted by our London traders, is Venezuela’s impact on Lebanon. Lebanese bonds rallied on the headlines, as many investors view the two as proxy relative-value trades, driven by consensus underweight positioning, short covering linked to ESG constraints, and similarly low dollar prices,” added Bartunek.
Looking forward
Although the long-term impact and future developments related to the Venezuelan state of affairs is not yet known, vigilance within the industry remains essential as volatility shows no sign of let up.
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Some market experts have indicated that the US’ actions over the last week may well trigger future changes in further asset classes, such as digital assets.
James Butterfill, head of research at CoinShares, underlined the possibility of geopolitical shifts as a result of the Venezuelan developments opening up opportunities to bolster non-sovereign assets, such as cryptocurrencies.
“A decisive shift in Venezuela toward US influence would have indirect but meaningful implications for Bitcoin through energy markets, geopolitics and confidence in the global financial system. Periods of heightened geopolitical realignment and erosion of trust in established power structures often strengthen demand for neutral, non-sovereign assets.
“While a Venezuela transition itself is unlikely to be a direct catalyst, the combination of shifting energy dynamics, pressure on sanctioned states and rising uncertainty around the durability of the existing geopolitical order would, on balance, reinforce bitcoin’s longer-term appeal as a hedge against political and monetary instability.”
With the aftermath of the US military strikes in Venezuela still fresh, whether impact will continue to be felt on financial markets in the months to come is yet to be seen and will certainly be one to watch as 2026 begins to unfold.