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The Meme Generation We start the week with another boost from a trade deal. The European Union has emulated Japan in securing a nearly-uniform 15% tariff on goods exported to the US. The signed agreement included autos, pharmaceuticals and metals (with a...

Higher and higher Markets keep rising on incoming liquidity. Growth optimism is improving, helped by strong early Q2 earnings reports. Volatility – both in measured and implied terms – has fallen dramatically, but measured more than implied (the cost of insuring against...

Trump turns nasty; markets turn niceMarkets were on summer holidays last week: volatility dropped and stocks broke all-time highs in local currency terms, thanks to abundant liquidity. However, nasty Trump is back and markets frayed a little as the negotiating tactic of...

Markets bask in the sunshineMarkets broke all-time highs last week. Small and mid-cap stocks outperformed the ‘Magnificent Seven’ – and even UK stocks climbed to new heights, despite the government’s policy u-turn. The rise and fall of UK bond yields showed investors...

Markets calibrate to Trump 2.0 We wrote before that US involvement in the Israel-Iran war was ‘priced in’ and therefore unlikely to hurt markets. Quite the understatement. US stocks approached all-time highs and oil prices fell the moment Iran struck a US...

The risks are real – but priced in – up to this point of escalation Last week’s Israel-Iran escalation ended with higher oil prices, a slight knock to equities and a slightly stronger dollar. Even if that seemed a relatively muted reaction...

Markets calm but not comfortable Markets’ reaction to the war that broke out Friday, after Israel’s strike on Iran, has been mild. Global stocks have fallen slightly, while gold prices and the dollar have edged up. Oil prices climbed the most –...

Summer starts with less springGlobal stock markets edged close to all-time highs, but the Trump-Musk spat knocked Tesla shares – though thankfully not much else. The bust-up is probably less important than the week’s other political news: the UK Defence Review suggests...

Complacency or checks and balances?The pullback a couple weeks ago has proved just a blip, thanks to the TACO trade (Trump Always Chickens Out) and a US trade court ruling Trump’s tariffs illegal (though the ruling was quickly suspended). Markets were happy...

Return of the bond vigilantes We probably should have expected some stock market pullback, after weeks of recovery. We certainly should have expected that Trump wasn’t done with tariff threats – his, now delayed until 9 July, 50% EU tariff threat hit...

A rally that requires beliefUS large cap stocks have erased all of the year’s losses in dollar terms. Investors are split between ‘buy the dip’ bulls and still-sceptical bears. The former see lower volatility and rapid trade deals, and think profits will...

Markets calm but trouble still bubblesDespite India-Pakistan hostilities, markets remained calm – thanks to trade deal progress and a sense that global growth will resume. Friedrich Merz’s failure to get first-round confirmation of his chancellorship was embarrassing but proved a market irrelevance...

Markets cheer US policy stabilisation It was a good week for markets, despite a negative US Q1 GDP and mixed Mega Tech earnings reports. The GDP print caused a selloff in early Wednesday trading, but strong earnings from Meta and Microsoft precipitated...

Improving mood versus slowing growth Capital markets bounced last week, supposedly because of Trump backing down on Chinese tariffs and Federal Reserve independence. We should be careful about these rationalisations. Greater liquidity led to a better mood in stocks and bonds, and...

Volatility drops but uncertainty remains Markets were calmer last week but there was no strong rebound. Falling government bond yields were welcome, after the previous week’s spike in US treasury yields. It now looks like markets once again see tariffs primarily as...

Ceasefire, not truce, in global trade war Last week had eye-watering ups and downs. US bond yields spiked, prompting Donald Trump to pause his “reciprocal” tariffs for 90 days on all countries except China, which faces a whopping 145% – although somewhat...

Trump’s Liberation Day turns into market routDonald Trump’s tariffs upset markets unprepared for their magnitude. The shockingly high “reciprocal” tariffs aren’t a response to “Tariffs charged to the U.S.A” as claimed, but a calculation based on regional trade deficits. This widely panned...

Tariff ‘stick’ to be followed by fiscal ‘carrot’?Markets have been fluctuating, initially with some positivity due to Trump’s planned phased and toned down tariff “Liberation Day” announcement. However, Trump’s unexpected permanent 25% tariffs on autos and threats of further tariffs swiftly reversed...

Bracing for tariff “Liberation Day” Capital markets were calmer last week. We said before that US investor sentiment had swung too far and could bounce back – and so it proved. This was helped by the Federal Reserve holding interest rates steady...

Just another growth scare, or more?The stock market sell-off has resumed and US equities are officially in correction (-10%). US inflation was lower than expected, which usually pushes down bond yields, but the opposite happened – demonstrating that capital is flowing out...