• The return of President Trump implies a higher level of policy uncertainty, making the traditional year-ahead outlook an even more difficult exercise. Our core assumption is that Republicans cannot afford another inflation shock into the mid-term election, hence will prioritise policies rather than embracing full-on Trumponomics.

• Global growth is set to stabilise at cruise speed in 2025, with marked regional differences, e.g. 3 times faster in the US than the Euro Area. The desynchronisation of the growth cycle is set to feed into the inflation one: we see risks balanced in the EA but skewed to the upside in the US.

• Greater policy uncertainty, selected ambitious valuations (SPX, USD), and concentration all point towards a rise in financial volatility in 2025. This has started already in the FX space; next credit and equity. Instead, we see room for rates volatility to normalise further, though inflation uncertainty will keep it above the pre-Covid lows.

• Our directional views are constructive for 2025. We embrace a small long duration in EUR but wait for a better entry in the US (10-year UST > 4.50%). Our structural long in Credit remains, even at these tight levels. In a challenging year for EM markets, our preference goes to Hard Currency debt. We expect single-digit equity returns in 2025 and run a moderate over-weight; cheap implied volatility offers hedging opportunities. We expect further (moderate) USD gains, with risk on both sides. A transactional Trump would push the dollar lower, while “full-on” Trumponomics would push it much higher, at the risk of derailing global growth and financial stability.

You can now read the full whitepaper at the link below