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From January 20 to July 4: Why the U.S. Will Dominate Market Attention Throughout 2025

We close the first half of 2025 and begin the second in the same way—with the U.S. at the center of attention. According to experts from international investment firms, the summary of markets over the past month and quarter has been one of strong U.S. recovery compared to Europe.

“Wall Street outpaces Europe with tech gains over 18% compared to 8% for the S&P 500 over the past three months. Defensive sectors are suffering most in this context, with healthcare and energy being the only sectors to retreat—by more than 8% during the last quarter. Industrials is the next strongest sector after tech, with some companies posting strong gains over the quarter. Meanwhile, the dollar just posted its worst half-year since 1973,” summarized Activotrade SV.

In addition, as explained by U.S.-based asset manager Payden & Rygel, volatility characterized the bond market in the first half of 2025. “Stepping back, we’d like to remind investors that risk-free government bond yields remain elevated. High risk-free yields have two implications. First, investors are being compensated more than they were in the 2010s for taking on additional duration risk. Second, elevated risk-free yields increase the yield cushion of corporate bonds, defined as yield per unit of duration. In other words, the current yield could generate enough income to help offset a slight rise in corporate spreads,” noted Payden & Rygel.

That’s a brief summary of the first half—but what matters now is what lies ahead in the next six months. When it comes to outlooks, there’s one word that all investment firms repeat: the United States. Why will the U.S.—and ultimately Donald Trump—be so critical for the rest of the year? The asset managers share their views:

The U.S. Economy: Uncertainty

According to Felipe Mendoza, financial markets analyst at ATFX LATAM, the semester ended with the U.S. drawing the attention of global investors following the release of June’s Nonfarm Payrolls, which showed an increase of 147,000 jobs, surpassing both the consensus estimate of 111,000 and the previous figure of 139,000.

“The optimistic reading of the jobs data has boosted positioning in U.S. equities, also supported by strong technical signals. The S&P 500 just recorded its first ‘golden cross’ since February 2023, with its 50-day moving average crossing above the 200-day—a pattern historically linked to annual returns above 10%. More than 71% of the index’s components currently trade above their 100-day moving average, the highest level this year,” Mendoza noted.

One of the latest data points closing out the first half is the employment rate. As George Brown, chief economist at Schroders, explained, despite all the turmoil around tariffs, the U.S. labor market remains notably strong. “Layoffs also remain low, as companies are hesitant to let go of workers due to the labor shortages of recent years. This may persist in some sectors and states, given the Trump administration’s stance on immigration. Since foreign workers have been a key source of job creation since the pandemic, this could slow hiring below the 100,000 jobs needed to keep the unemployment rate steady. At the same time, tariffs will lead to higher prices this summer. With the Fed focused on not falling behind again, we believe it will hold rates steady for the rest of the year,” said Brown.

For R.J. Gallo, head of the municipal bond team at Federated Hermes, the issue is that the U.S. economy has sustained high levels of political uncertainty, which has weakened both business and consumer confidence and is likely to be reflected in employment and spending decisions. “At Federated Hermes, we believe that hard data will soon begin to soften, which could prompt the Fed to restart the rate-cutting cycle and lead to a decline in Treasury yields in the coming months,” said Gallo.

Sebastian Paris Horvitz, head of research at LBP AM, noted that U.S. economic data remains mixed, pointing to June’s ISM manufacturing index, which showed continued contraction, although production picked up slightly.

“Globally, S&P’s June PMI surveys for manufacturing returned to expansion territory, while industrial activity in China appears to be improving. In the euro area, industrial activity remains stalled. Clearly, the persistence of weak growth is not good news. This reinforces our forecast that inflation will remain well contained and at low levels. We continue to expect the ECB to cut rates one final time before year-end,” Paris added.

Tax Reform Approved

In this context, last Friday the Trump administration approved its tax reform, which extends the provisions of Trump’s previous Tax Cuts and Jobs Act (TCJA 2017)—which were set to expire this year—and includes increased spending on defense and illegal immigration control. However, as analysts from Banca March explain, the law does not include one of Trump’s key campaign promises: cutting the corporate tax rate from 21% to 15%.

“As it stands, the increase in the accumulated primary deficit over the next decade is $3.4 trillion (11.6% of GDP), plus another $700 billion (2.4% of GDP) in interest. Ironically, the final version is even more deficit-expanding than the previous draft, raising publicly held debt by +10 percentage points to 127% by 2034, compared to the previous projection of 117%,” they explain.

Analysts at the firm note that while the reform includes relief measures for businesses—such as accelerated asset depreciation—their impact is limited compared to a direct tax rate cut. “Instead, tax benefits are more heavily directed toward individuals—especially high-income earners—with exemptions on high-income tax and a permanent reduction in personal income tax rates. Among the new measures is also the tax exclusion for overtime and tips,” they note. Additionally, the debt ceiling is raised by $5 trillion, ensuring the federal government’s ability to make payments, which was previously expected to run out as early as mid-August.

According to Blerina Uruci, chief U.S. economist at T. Rowe Price, the prospect of a new fiscal stimulus package should provide a timely boost to an economy that has slowed this year. However, she expects a recession will be avoided in her base case. “Looking to next year, economic growth should improve, as fiscal stimulus typically takes time to impact the real economy. Businesses may respond more quickly than consumers if capital expenditure tax breaks are made retroactive to January 2025, as they would aim to maximize the benefit. However, it’s uncertain whether they can act quickly enough. Nonetheless, it’s unlikely that improved growth will offset the impact of reduced tax revenue on the fiscal deficit,” said Uruci.

Tariff Policy

In the short term—mainly in July and August—U.S. trade policy will once again take center stage. According to the BlackRock Investment Institute (BII) in its latest report, policy-making has been contributing to market volatility, and several key policy developments have occurred in recent days. “Consider the ceasefire in the Middle East, NATO’s commitment to increasing defense spending, and a G7 fiscal deal. The U.S. now appears to be adopting a more flexible approach to tariffs. Although the current effective tariff rate of 15% remains the highest since the 1930s, we’ve repeatedly seen that there are unchanging rules that prevent a rapid shift from the status quo,” they note.

In their analysis, one such rule—that supply chains cannot be quickly reorganized without serious consequences—likely led to exceptions for some industries and the resumption of U.S.–China trade talks. Another—the sustainability of U.S. debt depends on foreign investors—was likely a factor in the 90-day pause on tariffs that had driven up yields. “We don’t foresee a return to the April tariff peaks, and trade uncertainty is now well below the April highs,” they state.

In this context, the U.S. ends the first half by signing a trade agreement with Vietnam, with 20% tariffs and a commitment to fully open the Vietnamese market to U.S. exports. “President Trump announced the signing of a trade deal with Vietnam, with 20% tariffs on all Vietnamese imports and 40% on transshipments. Vietnam will also fully open its market to the U.S. This development makes Vietnam the third country to sign an agreement with the White House. We believe this move will ease the macroeconomic uncertainty weighing on the market,” said Jen-Ai Chua, fixed income research analyst in Asia at Julius Baer.

Raphael Olszyna-Marzys, international economist at J. Safra Sarasin Sustainable AM, pointed out that based on 2024 trade flows, the effective tariff rate has risen by nearly 13% year-to-date—from 2.5% last year to approximately 15.5% now. He notes that assuming full pass-through to import prices, and that half the increase is absorbed in margins while the other half is passed on to consumers, “we estimate that tariffs will increase prices by 0.7% this year.”

The Fed and Powell

The other major focus for the rest of the year is what the U.S. Federal Reserve (Fed) will do—and every word of its chair, Jerome Powell, will be closely watched. The question is how long the Fed will extend its pause in rate cuts, or whether we could even see possible hikes. For Gallo, “hard data will soon begin to soften, which could prompt the Fed to restart its rate-cutting cycle,” and he warns that “the U.S. economy has sustained high levels of political uncertainty, which has weakened both business and consumer confidence.”

Meanwhile, Paul Dalton, head of equity investments at Federated Hermes, examines the implications of the S&P 500’s new all-time high and the risks that could mark a market turning point. According to Dalton, “the pressure on Powell to cut rates is mounting,” and he suggests that “a rate cut could unleash significant capital flows into equities.”

Finally, we cannot overlook the tensions between President Trump and Powell. On this matter, Clément Inbona, fund manager at La Financière de l’Échiquier, believes that “the prospect of appointing a new Fed chair opens the door to speculation,” and that it is “most likely that a leadership transition at the Fed would mark a break” in areas such as “the Fed’s independence from the executive branch” or “in terms of the interest rate path, which may to some extent follow the dictates of the White House.”

BlackRock Acquires ElmTree Funds

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Investment manager BlackRock has announced that it has entered into a definitive agreement to acquire ElmTree Funds, a firm specialized in net lease real estate investments, with $7.3 billion in assets under management as of March 31, 2025.

According to the company, the initial payment for the transaction will be made primarily in stock, with additional compensation contingent on ElmTree’s performance over the next five years. Full financial terms of the agreement have not been disclosed.

Founded in 2011 and headquartered in St. Louis, Missouri, ElmTree has established itself as a leading operator in the commercial net lease sector. Its model focuses on build-to-suit properties for single tenants, designed for essential operations of large corporations. The firm currently has six offices and a portfolio of 122 properties across 31 U.S. states.

Once the acquisition is completed, ElmTree will be integrated into the new Private Financing Solutions (PFS) platform, the result of the recent merger between BlackRock and HPS Investment Partners.

With this addition, PFS aims to scale its presence in the real estate sector, expanding into new markets as an owner-operator. ElmTree will contribute its extensive expertise and network in the commercial real estate market, while HPS will bring its established capabilities as a private credit investor. The synergy between both entities aims to deliver investment solutions with stable income and risk-adjusted returns for both institutional clients and investment-grade companies.

“Structural shifts in the real estate market are creating significant opportunities for private capital. The combination of a leading investor in triple net lease with our private financing platform will allow us to seize those opportunities and offer innovative solutions to our clients,” said Scott Kapnick, chairman of the PFS executive office and CEO of HPS.

James Koman, founder and CEO of ElmTree, noted that the net lease market is estimated at one trillion dollars and reaffirmed the company’s commitment to the build-to-suit industrial model. “Our specialized expertise will be enhanced by HPS’s ability to provide financing and strategic solutions that empower businesses and developers. By joining HPS and BlackRock, we’ll be better positioned to meet market demand and grow alongside our partners,” said Koman.

Koman will continue to lead ElmTree’s investment strategies following the acquisition. The transaction is expected to close in the third quarter of 2025, subject to regulatory approvals and customary closing conditions.

Legal advisors to BlackRock and HPS on the transaction included Skadden, Arps, Slate, Meagher & Flom LLP; Fried, Frank, Harris, Shriver & Jacobson LLP; and Sidley Austin LLP. Goldman Sachs & Co. LLC acted as financial advisor to HPS. On ElmTree’s side, Berkshire Global Advisors served as financial advisor and Kirkland & Ellis LLP as legal advisor.

Through Letters and Warnings, Trump Increases Pressure to Reach Trade Agreements

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For months, July 9 has been circled on the calendar as the deadline for several countries—including the European Union, India, Canada, the United Kingdom, and Vietnam—to reach a trade agreement with the U.S. So far, only the last two have secured deals: the United Kingdom maintains base tariffs of 10%, and Vietnam obtained a reduced rate of 20%, while China has signed a trade truce. Talks with the EU, India, and Canada remain ongoing.

If the pending agreements are not finalized by tomorrow, the next step from the Trump administration is clear: it will issue formal notifications, in the form of letters, signaling the implementation of new tariffs effective August 1. In fact, in a shift in strategy, Trump has already announced that several such letters have been sent to countries where negotiations are stalling. “Among the 14 letters sent, two key trading partners stand out: Japan, which accounts for 4.5% of U.S. imports, and South Korea, with 4%. Both countries will face a 25% tariff. In most cases, the proposed tariffs are very similar to those introduced on Liberation Day, and a new period of dialogue will open until August 1—a deadline the president described as ‘not 100% firm,’ allowing for additional flexibility. Finally, it is worth noting that several of the countries affected by the letters have served as routes for China to reroute exports to the U.S., such as Thailand and Laos,” summarize analysts at Banca March.

Still, amid this trade realignment, the U.S. financial market remains firm: the S&P 500 is headed for its third consecutive monthly gain. “Global financial markets are navigating a week of heightened trade tension, political sensitivity, and mixed macroeconomic signals, with the United States at the center of a tariff realignment with global implications. Statements by Treasury Secretary Scott Bessent have set the tone, with repeated assertions about the U.S. returning to a regime of non-inflationary economic growth, accompanied by new rounds of multilateral and bilateral trade agreements. The Trump administration is preparing to impose tariffs starting August 1 that could revert to the peak levels of April 2 if negotiations with trade partners fail, triggering a chain reaction of adjustments, multilateral criticism, and regulatory uncertainty,” said Felipe Mendoza, financial markets analyst at ATFX LATAM.

In his view, the U.S. appears determined to consolidate a new protectionist cycle. “The tariff letters have already begun to be sent—as Donald Trump himself announced—to dozens of countries in an effort to strengthen the U.S. position in trade negotiations. Bessent confirmed that a series of agreement announcements is expected over the next 48 hours, while also stating that the trade deal with Vietnam is already finalized in principle, establishing a reciprocal tariff of 20%. Meanwhile, talks continue with the EU over a possible extension to avoid sanctions, while threats remain in place for a 17% tariff on European food exports,” he added.

Negotiations on the Table

Assessments of how these trade talks are progressing abound. For instance, Muzinich & Co highlights that U.S.–China relations appear to be in a relatively strong phase compared to recent history. “Last week, the United States lifted export restrictions on Chinese chip design software companies and ethane producers. In exchange, Beijing made concessions in the rare earth sector, signaling further goodwill between both sides. Additionally, China’s Caixin manufacturing index—the country’s leading private-sector and export-oriented business indicator—returned to expansion territory, reaching 50.4 in June. This far exceeded expectations of 49.3 and was a sharp rebound from May’s 48.3, suggesting a recovery in Chinese export activity,” they note.

Regarding Europe, they observe that headlines point to progress toward easing transatlantic trade tensions. “The European Union has shown a willingness to accept a trade agreement with the United States that includes a universal 10% tariff on a broad range of its exports. However, the EU is seeking concessions in return—specifically, pressure for quotas and exemptions that would effectively reduce the U.S. 25% tariff on EU auto and auto parts exports, as well as the 50% tariff on steel and aluminum,” they state.

Philippe Waechter, chief economist at Ostrum AM (an affiliate of Natixis IM), notes that although the 90-day extension expires July 9, Washington has already indicated that 25% tariffs on Japan and South Korea will begin August 1. “Announcements will be staggered through August 1, depending on how negotiations proceed. This hardline strategy was thought to be off the table after the financial market warnings around April 2 and due to America’s large funding needs. However, Trump is returning to it. And one can understand the reason behind this obstinacy,” he adds.

Beyond the Theater

Despite the political theater surrounding these tariff negotiations, David Kohal, chief economist at Julius Baer, believes the threat of higher tariffs remains—even though Trump extended the deadline from July 9 to August 1. This creates hurdles for U.S. investment and adds uncertainty around inflation.

In his view, the ongoing threat of higher tariffs heightens the risk of stagflation in the U.S. and puts pressure on Europe to boost domestic demand to counter challenges in global trade. “These new tariff threats—on top of the 10% base tariff, the 25% auto tariff, and the 50% tariffs on steel and aluminum already in place—serve as a reminder that the trade dispute remains unresolved, and the potential to disrupt U.S. supply chains and corporate investments may grow. Meanwhile, companies outside the U.S. are struggling in an increasingly hostile global environment,” says Kohal.

George Curtis, portfolio manager at TwentyFour Asset Management (Vontobel), believes that trade agreements are complex and difficult to negotiate, and that U.S. trade partners may not be sufficiently incentivized to concede to American demands.

“We believe President Trump will aim to negotiate toward a 10% baseline tariff, but the path to that outcome could be complicated, and the risk is that tariffs will end up higher, not lower—especially if the U.S. finds that other countries aren’t playing along. Ultimately, we expect Trump will outline the framework of a few deals in the coming weeks, but also impose new reciprocal tariffs on countries he views as negotiating unfairly. This is a tactic we’ve seen several times in recent months; however, we don’t necessarily believe markets will react strongly, assuming in the end it will de-escalate,” says Curtis.

Stirring the Tariffs

While the outcome of these negotiations remains to be seen, international asset managers agree that the most relevant factor continues to be the impact of this uncertainty on markets and growth prospects—for both the U.S. and the global economy.

“A global trade war and shifting political alliances could slow growth, fuel inflation, and raise the risk of recession. On the other hand, markets may react positively to announcements of trade talks. Four possible scenarios have emerged: a trade confrontation characterized by high tariffs and protectionist measures; major agreements, which would be the most favorable; a return of great powers; and assertive nationalism. Negotiations are ongoing, but given the complexity and number of trade partners involved, a quick resolution appears unlikely,” Capital Group states in its weekly analysis.

Meanwhile, Curtis of TwentyFour AM (Vontobel) believes that now that the Spending Act is known, the biggest short-term risk for Treasuries is headline news on tariffs and economic data. In his view, the U.S. economy is slowing, labor data will soften, but a recession is unlikely.

“So far, inflation figures have been favorable for cuts, as core inflation has exceeded forecasts for four straight months, but we don’t believe the Fed will act before tariff levels are set and it is confident that second-round effects have not been passed on to prices (unless job growth slows significantly). Deficits will continue to weigh on Treasuries in the coming years, as the government offers the market a new net supply of $2 trillion per year,” Curtis adds.

According to Ebury analysts, tariff-related news is expected to trigger market moves this week. However, they point out that, for now, markets are taking this risk calmly, assuming last-minute agreements or another extension will be announced, as Treasury Secretary Bessent has hinted. Their weekly analysis also notes that last week’s strong U.S. jobs report has temporarily halted the dollar’s slide and eliminated the chance of a Fed rate cut in July.

Less Tied to the U.S.

Another reflection from investment firms is the growing awareness that the global economy may, in the medium term, become less dependent on the United States and more diversified. As Waechter explains, since the time of Ronald Reagan, the global economic cycle has depended on U.S. household consumption, which represents 70% of U.S. GDP—the highest share by far among developed countries. As a result, many national economic cycles have become reliant on American consumer behavior.

“The American trap closes when, suddenly, countries have to pay a tariff to keep exporting to the U.S. To continue doing business with the U.S.—which is essential for almost every country’s economic cycle—nations accept being penalized by this tax. This leads to wealth transfers to the United States. The surge in customs duties collected by the U.S. Treasury proves it. This strategy, though not collectively efficient, also reveals the rest of the world’s inability to be self-sufficient. The U.S. market—so large and attractive for so long—is now ensnaring the rest of the world,” argues Waechter, chief economist at Ostrum AM.

A second conclusion is that the U.S. economy may be the one most affected by Trump’s tariffs. “If tariffs from the Trump administration are implemented—along with any retaliation from U.S. trade partners—it will lead to a supply shock in the U.S. and a demand shock elsewhere. The severity of these shocks will depend on the outcome of current trade talks and legal challenges. But it seems clear that the world’s two largest economies—China and the U.S.—will experience slower-than-expected growth compared to the beginning of the year, and the consequences will be felt globally, regardless of the final trade agreements,” say analysts at T. Rowe Price.

In their view, the U.S. faces downside risks to its growth outlook, even with the suspension of reciprocal tariffs with China and other partners. “Companies are facing higher input costs, which will compress profit margins and could force some to cut back on capital spending. Tariffs on consumer goods are likely to reduce real purchasing power and dampen household spending, which accounts for more than 70% of U.S. GDP. Any further downward pressure on the U.S. dollar could also activate upside inflation risks,” T. Rowe Price concludes.

Allfunds Appoints Daniel Jesús Alonso New Head of US

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Allfunds has announced the appointment of Daniel Jesús Alonso as the new Head of US. Effective July 9 and based in Miami, Alonso will report to Gianluca Renzini, Chief Commercial Officer, and will play a key role in driving Allfunds’ growth in the offshore markets, while also strengthening its wealth management and product development initiatives.

Daniel joins Allfunds from Morgan Stanley Wealth Management, where he played a fundamental role in expanding the international business (offshore in the U.S.), most recently serving as Director of Product Development in International Wealth Management (IWM). In that position, he led the strategy, development, and distribution of investment products for international clients. Previously, he was Executive Director in Morgan Stanley’s Investment Solutions organization, overseeing the team of international product specialists.

Following this announcement, Gianluca Renzini, Chief Commercial Officer of Allfunds, stated: “We are very pleased to welcome Daniel to our team as we strengthen our presence in key markets. His extensive experience in international wealth management and deep knowledge of the U.S. offshore market make him the ideal leader to drive our growth strategy in the Americas. This appointment reflects our commitment to bringing in top-tier talent to accelerate our expansion in high-growth markets.”

For his part, Daniel Alonso, incoming Head of US at Allfunds, added: “Allfunds stands out in the U.S. offshore market for its ability to offer solutions across both private and public markets in multiple currencies within a single integrated ecosystem. Its focus on innovation and deep understanding of market and product trends create a very attractive opportunity. I am excited to be part of this project and to contribute to the sustained growth of the company and its commitment to the region.”

Extensive Professional Career
With nearly two decades of experience in private banking and international wealth management, the firm believes he brings a deep knowledge of capital markets, alternative products, traditional investment solutions, and advisory services. Early in his career, he worked in capital markets providing sales and trading services to international private banking, middle market, and wealth clients, covering structured products, equities, and fixed income.

Daniel holds a degree in Business Administration from Montclair State University and an MBA from Dowling College. He also holds the CFP® and CIMA® certifications and has passed the FINRA Series 7, 24, 55, and 66 exams, reflecting his broad knowledge in investment management and regulatory requirements.

The TACO Effect Drives the Nasdaq 100 Roller Coaster

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In the opinion of Mobeen Tahir, Director of Macroeconomic Research & Tactical Solutions at WisdomTree, this has been a year of acronyms in the financial markets.

“Everything started with MAGA: Make America Great Again. Occasionally, some have given it a satirical twist with MAGA: Make America Go Away, or MEGA: Make Europe Great Again. In fact, this year, the largest investment flows into European rather than U.S. assets have often accompanied this satirical view. In this list, of course, one must include DOGE: the Department of Government Efficiency. And, more recently, TACO,” notes Tahir.

According to him, this last term has been coined by Financial Times contributor Robert Armstrong, and it means Trump Always Chickens Out. And the acronym does not refer to Mexico, although that country does have some ties to it, but rather describes President Trump’s pattern of making bold political announcements, such as imposing tariffs or threatening the U.S. Federal Reserve, only to later backtrack and soften. For the WisdomTree expert, this has, of course, translated into significant market volatility.

“For Nasdaq 100 investors, TACO has meant a roller coaster, as can be seen in the chart below. For those inclined to trade tactically around these sharp market swings, there have been many opportunities to take positions in one direction or the other,” points out Tahir.

Nasdaq 100 Timeline
The chart highlights a selection of notable days when President Trump made hardline announcements (in red) and subsequently backtracked on those positions. “The typical reaction of the Nasdaq 100 has been negative in response to hardline announcements and positive after the subsequent reversals,” emphasizes Tahir. In his opinion, these are the most important moments of the year:

February 1: Trump signs an executive order imposing tariffs on imports from Mexico, Canada, and China. The Nasdaq 100 falls.

February 3: Trump announces a 30-day pause on his tariff threat against Mexico and Canada. The Nasdaq 100 reacts positively.

February 13: Trump announces plans for reciprocal tariffs. This is followed by a series of tariff threats against numerous countries. The Nasdaq plunges.

April 2: Liberation Day: reciprocal tariffs are announced. The Nasdaq 100 suffers a sharp drop.

April 9: A 90-day pause on reciprocal tariffs is announced. The Nasdaq experiences a strong rebound.

April 21: Trump threatens to fire Federal Reserve Chairman Jerome Powell.

April 22: Trump withdraws his threat to fire Jerome Powell.

May 12: The U.S. and China agree to a 90-day suspension of high retaliatory tariffs.

May 23: Trump threatens the European Union (EU) with 50% tariffs and threatens Apple with a 25% tariff on its products unless they are made in the U.S.

May 26: EU tariffs are delayed until July.

“One could argue that no one can predict what will come next regarding tariff announcements. But the real question is whether the TACO effect is still alive. Are there any interesting opportunities left for investors? One hypothesis is that the TACO effect may have ended because the markets have become immune to new and bold announcements from President Trump, knowing they will eventually be reversed or at least softened. While the opposite hypothesis is that political uncertainty is greater than ever,” notes Tahir.

His main conclusion is that the Nasdaq 100, often considered a proxy for the U.S. technology sector, has been greatly influenced by President Trump’s policy measures. “Regardless of whether investors support TACO trading or not, political uncertainty is likely to remain high. And if ultimately the focus shifts away from tariffs, perhaps corporate fundamentals such as earnings and economic data like inflation, labor market strength, and GDP will return to the forefront,” argues the expert.

For Tahir, perhaps then more traditional acronyms like FOMO (Fear of Missing Out), TINA (There Is No Alternative), and RINO (Recession in Name Only) will become relevant again. “In any case, something will continue to attract investors and will keep driving the Nasdaq 100, one way or another,” he concludes.

The Energy Transition: Driver of GSS Bond Issuance Also in Emerging Markets

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Green, social, sustainability, and sustainability-linked bonds (GSS) are a relatively young asset class, established with the first green bond transactions just over a decade ago. In emerging markets, the outlook for this asset class remains solid, with the energy transition being the driver that has pushed their issuance over the past decade.

According to the latest report prepared by IFC and Amundi, global GSS bond issuance reached an all-time high of more than $1 trillion in 2024 in gross terms, 3% more than the previous year. However, the share of this asset class over total fixed income issuances declined to 2.2% in 2024, compared to 2.5% the previous year. These figures remain well above the 0.6% levels of 2018.

The report data show that, in emerging markets, GSS bond sales fell by 14% year-on-year. “Much of this decline is explained by lower issuance from China, as local investors opted for conventional bonds in the domestic market,” it explains in its conclusions. Additionally, it indicates that another factor behind the market’s retreat was a 23% contraction in global fixed income issuance in emerging markets outside China, amid weaker economic growth in Asia and Europe.

Despite this, the conclusions state that GSS bond penetration exceeded 5% in emerging markets excluding China, a record and ahead of the rates observed in the Asian giant and in developed markets.

Regarding pricing, the so-called green premium or greenium (a yield discount for GSS bond issuers) was cut by more than half, down to an estimated 1.2 basis points in 2024 from 2.5 bps in 2023, according to Amundi calculations. “In emerging markets, meanwhile, the greenium effectively disappeared in 2024, as supply caught up with demand for this type of asset,” they note.

Growth Drivers
At the time of drafting this report (April 2025), the global economy is facing high levels of uncertainty, making short-term forecasts for GSS bond issuance in emerging markets difficult. That said, the underlying market factors are clear, such as a likely rebound in new issuance to refinance around $330 billion in bonds approaching maturity over the next three years.

On the other hand, there are three factors that will likely limit new GSS bond sales: weaker global economic growth, recent regulatory changes in Europe, and a declining investor sentiment regarding environmental, social, and governance issues.

According to the report, over the longer term, the outlook for GSS bonds in emerging markets remains solid. “It is likely that in the coming years annual investments in clean energy that provide greater efficiency and supply security will double. This growth will likely be supported by an increasingly competitive renewable energy sector and by the ambitious commitments of multilateral institutions,” the report explains.

Increasing Diversification
Global cumulative GSS bond issuance between 2018 and 2024 reached approximately $5.1 trillion. During this period, issuers from emerging markets contributed around $800 billion or 16%. According to the report, “a key driver behind this growth is the energy transition from carbon-based generation to alternative, cleaner energy forms or technologies.”

In fact, clean energy investments in emerging markets have surged more than 70% since 2018, and China alone has experienced a 170% increase. Investor appetite has also intensified notably: sustainable funds reached $3.6 trillion in assets under management in 2024—up from $1.4 trillion in 2018—and fixed income allocations within investment portfolios have increased to 22%. Additionally, multilateral institutions channeled $238 billion in climate financing to emerging markets between 2016 and 2022, according to the OECD.

“The GSS bond market is undergoing significant diversification. Although green bonds have long dominated emerging markets’ GSS bond issuance, there is a growing shift toward sustainability bonds. This trend is pronounced among multilateral institutions and, more broadly, among issuers outside China who seek the flexibility of sustainability bonds to finance both environmental and social projects,” explained Yerlan Syzdykov, Global Head of Emerging Markets at Amundi.

The report observes that, since the end of the COVID-19 pandemic, demand for healthcare financing has subsequently contracted, leading to a stabilization in social bond sales. “This asset class represented 6% of total GSS bond issuance in emerging markets between 2022 and 2024. In contrast, sustainability-linked bonds experienced a sharp decline. This may reflect increasing criticism of their design flaws and weak penalty structures that do not effectively incentivize issuers to meet the sustainability targets set out in the terms of the assets,” the document concludes.

Memory of a Quarter Century: How Long It Has Taken Markets to Recover From Each Financial Crisis

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Creand Wealth Management, an entity specialized in private banking, addresses how financial markets have behaved after those periods of crisis, with the aim of analyzing how long they took to recover and observing the impact of those crises on the development of stock markets in the medium and long term.

The Dot-Com Bubble (1999–2000)
The dot-com bubble crisis refers to the period between the end of the 20th century and the beginning of the 21st, where companies whose business was based on technological advances experienced very rapid growth, which led to problems derived from the lack of knowledge about those new business models and a miscalculation regarding expectations of profit generation.

This crisis gave rise to the massive bankruptcy of tech companies and a reduction of jobs related to the sector, with a drop of more than 82% in the Nasdaq-100, the U.S. stock index that includes the 100 most important technology companies, during the period between March 27, 2000, and October 9, 2002. The index took 15 years to recover, although the growth experienced since 2015 has allowed it to increase its stock market value by 405% over the last decade.

The Global Financial Crisis (2007–2008)
This was the most serious financial crisis since the Great Depression of 1929, caused by a situation where excess credit and laxity in granting mortgages to people with low credit profiles (subprime) converged. Mortgage debts multiplied, causing a wave of foreclosures that ultimately pushed systemic entities into bankruptcy, such as the case of Lehman Brothers in September 2008. This situation led to a global crisis of confidence and a freeze in credit granted to both companies and individuals.

This crisis caused a sustained drop in financial markets globally, which lasted until 2010. If we take the MSCI World index as a reference, a broad global equity index that represents the performance of mid- and large-cap equity, markets took almost six years (February 2013) to reach the highs prior to the crisis.

The European Sovereign Debt Crisis and the Euro Crisis (2010–2012)
The increase in public and private debt levels worldwide, to stimulate growth and rescue entities after the great financial crisis, fostered a breeding ground that led to a sovereign debt crisis, a banking system crisis, and an economic system crisis in the European Union. This scenario triggered a wave of downgrades in the credit ratings of several European states’ government debt.

The impact was especially significant in countries like Spain, Italy, Portugal, and Greece, whose chronic deficit levels worsened due to a lack of control. The loss of confidence in these markets caused a sell-off of debt from countries with higher exposure to risk and an increase in the risk premium that led to a generalized loss of confidence.

If we take as a reference the evolution of the main indices of Spain and Italy, the two most important economies in the eurozone that suffered the impact of the debt crisis, we observe that in Spain, the Ibex has not returned to the levels of 11,900 points until January 2025, despite already coming from a downward trend due to the 2007 crisis, when it had reached its all-time highs, standing at 15,945 points in November 2007.

In the case of Italy, its benchmark index, the FTSE MIB, suffered a 72% drop from May 18, 2007, to March 9, 2009. After a slight recovery during that year, it took almost nine years to recover the levels reached in September 2009 (23,900), in April 2018.

The Market Drop Due to the COVID-19 Pandemic (2020)
The global pandemic caused by COVID-19 is another example of a black swan for markets. It unexpectedly affected the entire planet at the beginning of 2020, and caused lockdowns and closures never before seen worldwide. Taking the MSCI World as a reference, in just two months, markets fell 34%, from February to March 2020, as a result of nervousness and the paralysis of economic activity. In fact, two of the five largest stock market crashes in history occurred almost consecutively during the first days of the health crisis, on 03/12/20 (-9.9%) and 03/16/20 (-9.9%).

Despite that nearly 20% drop between January and March 2020, the recovery was also very fast. Markets had already recovered pre-pandemic levels by December of that same year and, from that moment on, stock markets have experienced robust growth, driven by the momentum of large technology companies.

The Impact of Global Inflation and Restrictive Monetary Policies (2021–2025)
After the COVID-19 pandemic, the global economy faced a scenario of rising energy prices, never-before-seen fiscal stimulus, and a supply chain crisis that caused a significant increase in global inflation. The rise in prices, along with restrictive monetary policies by major central banks, posed some challenges for the economy: minimizing the rising cost of credit and the drop in investment and consumption, market volatility, and the risk of economic stagnation.

Nonetheless, the impact was limited in the markets. According to the MSCI World, from the historical high reached in December 2021 up to that moment—when markets were riding a bullish trend driven by the progressive return to post-COVID-19 normalcy—stock markets took 26 months to recover (February 2024), and from that moment, they have experienced sustained growth.

The Return of Donald Trump to the U.S. Presidency (2025)
The growth potential of the markets in recent years, mainly under the momentum of technology companies, has been halted following the arrival of Donald Trump to the presidency of the U.S., in his second term. His aggressive tariff policy has caused declines greater than 10% in financial markets globally. The MSCI World fell 11.29% and recovered the levels prior to the announcement (3,668 points) on May 1, 2025. In particular, markets suffered major declines after the so-called Liberation Day, last April 2, when Trump announced his massive tariff package. However, it is still too early to see the short- and medium-term impact and how the stock markets will recover.

Patience, Discipline, and Diversification
In a financial environment that is in constant change and evolution, black swans—those unpredictable surprises that can drastically alter markets—will always be present. From economic crises to global pandemics, events that seem distant and unlikely can happen at any moment and affect the stability of assets and challenge traditional strategies. However, history teaches a fundamental lesson: patience and discipline, along with proper diversification, are the keys to surviving and thriving in times of uncertainty.

Remaining invested during sharp downturns, far from being a risky strategy, is actually one of the most prudent decisions an investor can make. Juan Litrán, analyst at Creand Family Office, explains that “market corrections, no matter how painful they may seem in the short term, have historically been the breeding ground for long-term opportunities. Black swans, though challenging, also bring with them a market recalibration that, for those who stay true to their diversified investment strategies, offers significant returns once the volatility is overcome.”

On the other hand, diversification, far from being just a technique to mitigate risks, becomes a lifeline in the face of global uncertainty. According to Litrán, “by spreading risk across different asset classes, sectors, and geographies, investors not only protect their portfolio against the unexpected, but also position themselves to capture growth when the market recovers.”

Thus, what today seems like a black swan, with the passage of time, can be perceived as an opportunity. “That is why it is essential that investors do not get carried away by emotions or panic that distance them from their long-term goal. Investing requires vision, discipline, and above all, a well-diversified strategy that withstands the test of time, even in the most turbulent moments,” adds Litrán.

The American Continent Led Wealth Creation in 2024

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The global wealth landscape continued to evolve in a year marked by shifts in the economic environment. According to the 2025 edition of the UBS Global Wealth Report, global wealth increased by 4.6% in a dynamic rebound after registering 4.2% growth in 2023, thus maintaining an upward trend.

The report’s findings indicate that the pace of growth was quite uneven, with North America contributing the most, while the American continent as a whole accounted for the majority of the increase: over 11%. “The stability of the U.S. dollar and the dynamism of financial markets contributed decisively to this growth,” the document notes.

In contrast, the Asia-Pacific (APAC) region and the one comprising Europe, the Middle East, and Africa (EMEA) lagged behind, with growth rates below 3% and 0.5%, respectively.

Key Trends
Focusing on geographic trends, the report notes that adults in North America were, on average, the wealthiest in 2024 (USD 593,347), followed by those in Oceania (USD 496,696) and Western Europe (USD 287,688), while Eastern Europe recorded the fastest growth in average wealth per adult, with an increase of over 12%.

However, measured in U.S. dollars and in real terms, more than half of the 56 markets in the sample not only did not contribute to global growth last year, but actually saw a decline in average wealth per adult. Despite this, Switzerland once again topped the list of average wealth per adult among individual markets, followed by the United States, the Hong Kong Special Administrative Region, and Luxembourg. Notably, Denmark, South Korea, Sweden, Ireland, Poland, and Croatia recorded the largest increases in average wealth, all with double-digit growth rates (in local currency).

Another striking finding from the report is that the number of dollar millionaires increased by 1.2% in 2024, representing a rise of more than 684,000 people compared to the previous year. Once again, the United States stood out by adding more than 379,000 new millionaires—over 1,000 per day. “The United States, mainland China, and France recorded the highest number of dollar millionaires, and the U.S. alone accounted for nearly 40% of the global total,” the findings state.

According to UBS, over the past 25 years there has been a notable and steady increase in wealth worldwide, both in total and across each of the major regions. In fact, total wealth has grown at a compound annual growth rate of 3.4% since 2000. “In the current decade, the wealth bracket below USD 10,000 is no longer the largest segment in the sample, as it has been surpassed by the next bracket, between USD 10,000 and USD 100,000,” they note.

Over the next five years, the report’s forecasts for average wealth per adult point to continued growth, led by the United States, as well as China and its area of influence (Greater China), Latin America, and Oceania.

From the Classic 60/40 Portfolio to the 40/30/30 Strategy: It Is the Moment for Alternatives

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For decades, the famous 60/40 portfolio, which allocates investments with 60% in stocks and 40% in bonds, was considered the standard model of diversification for conservative and moderate investors. But times have changed, and with them, the fundamentals that supported this strategy. A recent report published by Candriam questions the current effectiveness of this traditional model in the face of an economic landscape marked by volatile inflation, persistently high interest rates, and growing geopolitical tensions. In addition, it highlights the relevance of including alternative assets in portfolios.

Although stocks performed well in 2023 and 2024, driven by moderating inflation, future expectations are more modest. Interest rates continue to constrain equity valuations, while bonds continue to offer reduced returns and less protective capacity. The consequence: the breakdown of the balance that made the 60/40 model a reliable option to face adverse scenarios.

The study underscores that despite its strong historical performance over the past two and a half decades, the risk profile of the 60/40 has generated serious concerns. A nominally allocated portfolio in this proportion has shown a correlation close to 1 with the equity market, which in practice makes it a reflection of stock behavior. This means that in times of crisis, such as in 2008 or during the market collapse due to the pandemic in 2020, the 60/40 did not offer the protection many expected. For most investors, losses exceeding 30% are not acceptable, which raises the urgency to review the model and seek additional, more resilient sources of diversification.

The document, signed by Johann Mauchand, Pieter-Jan Inghelbrecht, and Steeve Brument, proposes a new formula to restore diversification and improve the risk-return profile of portfolios: the 40/30/30 strategy, which includes alternative assets as a third key component.

Increasing Portfolio Resilience: The 40/30/30 Approach
For Candriam, the answer lies in diversifying beyond traditional instruments. The proposal: to replace 30% of a 60/40 portfolio with alternative assets, using the Credit Suisse Hedge Fund Index as a reference. The result, according to the historical analysis, is compelling: higher returns, lower volatility, and better downside protection.

The new 40/30/30 portfolio, composed of 40% stocks, 30% bonds, and 30% alternatives, showed a 40% improvement in its Sharpe ratio, a metric that assesses risk-adjusted returns. Even using a passive index-based allocation, the benefits were significant.

Charting a New Direction
Candriam’s study warns about a crucial aspect that many investors overlook: not all alternative assets are the same, nor do they behave in the same way under different market conditions.

Using broad indices as a reference is useful as a starting point, but it also highlights a structural challenge: the universe of hedge funds and alternative strategies is immensely diverse, and their performance can vary significantly. The difference between properly selecting which type of alternative to include in a portfolio—or not—can have a decisive impact on the final outcome.

To address this problem, Candriam proposes a functional allocation framework designed to go beyond the simple grouping of assets under the “alternatives” label. Instead of treating these strategies as a homogeneous block, the firm suggests classifying them according to the functional role they play within a portfolio, dividing them into three broad categories: downside protection, generation of uncorrelated returns, or capture of upside potential.

This segmentation enables the construction of more resilient and efficient portfolios, adjusting them dynamically according to the economic environment. The key, according to Candriam, lies in an active and centralized allocation that responds to market changes in real time.

Implications for Asset Allocation
Candriam concludes that adopting this more flexible and functional approach can improve results in three essential dimensions: higher returns, lower risk, and better-controlled drawdowns. To achieve this, it recommends two simple but powerful actions: selecting alternative assets that fulfill one of the three defined roles and dynamically rebalancing the portfolio according to the macroeconomic context.

The conclusion of the report is clear: the 60/40 model is not dead, but it does need a thorough revision. In an increasingly uncertain environment, the strategic inclusion of alternative assets could be the key to building truly diversified portfolios prepared for the future.

Vanguard Reduces Fees on Its Range of Fixed Income ETFs Available to European Investors

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Vanguard has announced the reduction of fees on seven of its fixed income exchange-traded funds (ETFs) available to European investors, effective July 1, 2025. According to the firm, this measure reinforces Vanguard’s commitment to making fixed income investing more accessible, especially in a context where bonds are playing an increasingly important role in investors’ portfolios.

“The bond market is currently twice the size of the equity market, but it remains opaque and costly. Investors deserve something better. At Vanguard, we believe that in investing, you get what you don’t pay for. Costs matter. By reducing fees, we are helping to make fixed income more accessible and transparent. We estimate that these changes will represent approximately 3.5 million dollars in annual savings for investors. We have already expanded, and will continue to expand, our fixed income offering throughout this year,” said Jon Cleborne, Head of Vanguard for Europe.

The following ETFs will have their fees reduced starting July 1.

Vanguard Positions Itself in Fixed Income
Vanguard is the second largest asset manager in the world, with 10.5 trillion dollars in assets under management globally as of May 31, 2025. Its fixed income group, led by Sara Devereux, manages more than 2.47 trillion dollars globally, combining deep expertise to deliver precise index tracking, prudent risk management, and competitive performance.

Earlier this year, Vanguard expanded its range of European fixed income products with the launch of the Vanguard EUR Eurozone Government 1–3 Year Bond UCITS ETF, Vanguard EUR Corporate 1–3 Year Bond UCITS ETF, Vanguard Global Government Bond UCITS ETF, and Vanguard U.K. Short-Term Gilt Index Fund.

Following these changes, the weighted average asset fee of Vanguard’s European range of index and actively managed fixed income funds will be 0.11%. Currently, Vanguard offers 355 fixed income index products in Europe, and on average, its range of fixed income ETFs is the most cost-effective in the European market. Across its entire product offering in Europe, the weighted average asset fee will now be 0.14%.