Trump, Zelenskiy Say Peace Deal Near, Donbas Still Unsettled

Florida peace talks tighten the timeline for Ukraine risk premia

U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy met on Sunday, Dec. 28, 2025, in Palm Beach, Florida, and said negotiations to end the war have advanced, with remaining disputes concentrated on territory in eastern Ukraine. After talks at Trump’s Mar-a-Lago resort, Trump said the sides were “getting a lot closer” to a deal, but that a few thorny issues still need resolution and the outcome should be clearer within “a few weeks.”

The Trump Zelenskiy peace talks make timing matter for markets because it compresses the key variables that drive pricing in Ukraine’s hard-currency debt, Eastern Europe FX and European energy. A credible path to security guarantees typically lowers hedging costs; a stall over territory keeps a tail-risk bid in place into early 2026.

Donbas remains the high-impact variable

Zelenskiy said Ukraine security guarantees are agreed, while Trump said talks are about 95% complete and that European countries should carry a large share with U.S. backing. In Donbas territory negotiations, the unresolved issue is the Donbas, the Donetsk and Luhansk regions that Russia says it wants in full.

Moscow has pressed for Ukraine to withdraw from parts of Donetsk it does not occupy, while Kyiv has argued for freezing the map at current battle lines. Zelenskiy said any agreement must be approved by Ukraine’s parliament or a referendum, a political trigger that can extend implementation risk even after negotiators settle text. The United States has floated a free economic zone concept if Ukraine leaves the area Russia demands, but the enforcement design remains open.

Trump-Putin call reopens the energy and sanctions channel

Shortly before Zelenskiy arrived, Trump spoke with Russian President Vladimir Putin for more than two hours. A senior Kremlin aide said Putin argued that a 60-day ceasefire proposal discussed by European leaders and Ukraine would prolong the war and urged a Donbas decision “without further delay.”

Trump said Putin pledged to help rebuild Ukraine and mentioned supplying cheap energy. Even without policy change, those remarks can shift expectations for sanctions durability and post-war energy arrangements, which in turn influence European gas volatility and regional inflation hedges.

Zaporizhzhia talks target a key infrastructure chokepoint

The leaders discussed the Zaporizhzhia nuclear power plant, Europe’s largest, under Russian control near the front line. U.S. negotiators have proposed shared control, and Trump said progress has been made and that the plant can “start up almost immediately.”

The International Atomic Energy Agency said power line repairs have begun after another local ceasefire around the facility. If talks produce an operational plan that stabilises generation and grid links, it reduces the probability of sudden power shortfalls that force costly emergency generation and imports.

Weekend strikes underline why tail risk still trades

On Saturday, Dec. 27, Russia attacked Kyiv and other areas with hundreds of missiles and drones, knocking out power and heat in parts of the capital. Putin has said Moscow would keep fighting if Kyiv does not seek a quick peace, and Russia has reported battlefield advances in recent months.

Russia annexed Crimea in 2014 and, by Russian estimates, controls about 12% of Ukraine, including roughly 90% of the Donbas and about 75% of the Zaporizhzhia and Kherson regions, plus smaller parts of other regions. Those claims keep territory as the main market catalyst because they shape whether any deal is seen as stabilisation or a pause.

Europe’s guarantee contribution sets the financing envelope

French President Emmanuel Macron said progress was made on security guarantees and said countries in a “Coalition of the Willing” would meet in Paris in early January to finalise concrete contributions. European leaders joined part of Sunday’s meeting by phone, reinforcing the expectation that Europe will take on a larger share of post-war commitments.

The structure of that support matters for funding. Multi-year commitments that lower rollover risk can tighten Ukraine’s external borrowing costs and reduce the price of FX protection for firms exposed to the region.

Market implications: bonds first, then FX, energy and freight

Ukraine’s hard-currency bonds and credit protection are usually the first instruments to move because they price default and recovery expectations directly. A monitored ceasefire path plus enforceable Ukraine security guarantees can compress the Ukraine Eurobond risk premium quickly; a Donbas impasse can widen them just as fast.

In FX, the first adjustment tends to be hedging demand rather than an immediate spot shift, especially around year-end liquidity. Energy and freight are the higher-beta spillovers: a calmer outlook for Ukraine’s grid reduces emergency fuel demand risk, while shifts in the sanctions narrative and military activity around export corridors can move European gas volatility and Black Sea war-risk insurance.

Scenarios to watch into January 2026

The base case is continued drafting over the next few weeks, with a near-final guarantee package and staged territory decisions that still face domestic approval in Kyiv. An upside scenario is a signed framework in January 2026 plus an operational plan for Zaporizhzhia, supporting tighter spreads and lower hedging costs. A downside scenario is a Donbas hard stop paired with heavier strikes on infrastructure, which would widen credit spreads, lift hedging costs and keep energy and freight volatility elevated into the first quarter of 2026.