Markets and strategies
Macro - The main events of 2025 and those that should mark 2026
Like last year, we conducted a review of 2025 and outlook for 2026 by taking into account the most important past and future macro-financial elements.
Published on 5 January 2026
The macro-financial elements that marked 2025
- In many respects, the year 2025 was marked by the return of Donald Trump to the White House. In particular, the trade war initiated on multiple fronts (increases in specific "country" and "sector" tariffs), followed by the announcement of exemptions and the conclusion of trade agreements, produced a V-shaped year for growth prospects and equity markets. At the worst point of 2025 (April 8), the S&P 500 was down 12.2%, but it ended the year up 16.4% (the 9th best year of the 21st century). The rebound of AI-related stocks contributed significantly to this, illustrating the fact that "micro" developments now have "macro" impacts.
- Global trade resisted the trade war, with two remarkable facts: 1) China exported much less to the United States but much more to the rest of the world, its trade surplus reaching 1% of global GDP (which is considerable), and 2) trade flows related to the "Artificial Intelligence" cycle contributed significantly more to global trade growth than in previous years. Nevertheless, the interpretation of growth figures was very disrupted everywhere by the jolts in foreign trade.
- The global economy performed better than expected. In the United States, significant investments in computer hardware and software (within the framework of the deployment of Artificial Intelligence) allowed growth to withstand the shock of the trade war. In the eurozone, growth also defied the most pessimistic forecasts, with mixed performances (weakness in Germany but strength in Spain). On the other hand, the real estate crisis continued to weigh on Chinese growth: domestic demand experienced — outside the COVID period — its weakest increase since the late 1980s.
- The increase in tariffs led the Fed to pause for 9 months in its rate-cutting cycle, due to its possible upward impact on US inflation. This displeased Donald Trump greatly, who sharply criticized the Fed and undertook various maneuvers to pressure it, such as inspecting the institution's work or attempting to dismiss Board member Lisa Cook. The absence of a real acceleration in inflation and the continued deterioration of the labor market led the Fed to cut key interest rates three times by 25 basis points at the end of 2025. For its part, the ECB lowered its deposit rate by one point in the first half and left it at 2% in the second half.
- Unusually, European long-term rates rose over the year while US long-term rates fell. This had only happened twice in the past 20 years. This can notably be seen as the impact of the ECB's full-scale quantitative tightening (QT) while the Fed's QT was gradually slowed and then stopped. The rise in German rates allowed Italian and Spanish sovereign spreads to return to their lowest level in 15 years.
- Gold had its best year since 1979 with an increase of 64.7%. Silver, platinum, and palladium also posted spectacular performances over the year. Several structural supports lie behind this rise: fears regarding public debt trajectories and the independence of central banks, persistent geopolitical uncertainties, and a trend toward dedollarization due to the trade war. The overall cycle of key rate cuts provided strong cyclical support. It is noted that gold has often been among the best-performing assets over the past 10 years. Meanwhile, the dollar lost about 10% in effective terms in 2025, and the EUR/USD parity moved from 1.04 to 1.17. Bitcoin lost value in 2025.
- European and American credit indices had a good year, whether Investment Grade or High Yield.Initially, the trade war caused spreads to widen, but the easing phase initiated from mid-April, as well as the resilience of the economy, allowed spreads to contract for the rest of the year.
The macro-financial elements that are expected to mark 2026 and their possible consequences
- In the United States, the prospect of the midterm elections on November 4 will dominate political news in 2026. The fact that Donald Trump is struggling in the polls, that the Republicans currently hold only a very slim majority in the House of Representatives, and that 18 of the last 20 midterm elections have resulted in seat losses in this chamber for the president should encourage the latter to try to win over his electorate again. The only other major economy holding general elections in 2026 is Brazil (October).
- The reshaping of the FOMC will be decisive for the interest rate environment in 2026. Donald Trump is expected to announce his choice for the Fed chairmanship fairly quickly in 2026. Two other important dates for the composition of the FOMC are: January 21, when the Supreme Court will hold a hearing on the possible dismissal of Lisa Cook, and May 15, when Jerome Powell will hand over to the new Fed chair, with the question: will Powell remain on the Board as a simple governor or will he decide to resign, which would allow Donald Trump to appoint someone in his place? A possible confirmation of Lisa Cook’s dismissal would radically change the situation for the Fed.
- Global growth is expected to remain weak in 2026, due to the aging population in developed countries and China, the high level of public debt, the real estate crisis in China, and the overall high uncertainty.
- A possible ceasefire between Ukraine and Russia in 2026 could bring more optimism about the European economic outlook, notably due to a possible drop in energy prices. On the other hand, this would not call into question the increase in defense investments by European governments. Furthermore, infrastructure spending in Germany is expected to have a positive impact in 2026.
- The yield curve is expected to continue steepening, due to the ongoing (at different paces) cycle of rate cuts, the size of public debt, and the significant amounts of securities being returned to the market by certain central banks such as the ECB or the BoE.
- The impact of AI on the labor market is expected to become even more central for central banks. Throughout 2025, many companies announced job cuts or hiring freezes due to productivity gains from AI. This has gradually become a concern for central banks and could ultimately lead them to ease their monetary policy.
- Questions about the investment cycle related to AI will continue. Of the three risks identified today, namely financing, monetization, and physical limits, the order of concern in our view is as follows: physical limits followed by monetization, then bond financing. The issue of electricity supply should be even more in focus, especially in the United States. We remain confident in the development of the technological cycle related to AI, but stock market progress is not expected to be linear. Incidentally, this investment cycle has become very important for the American economy in general and for the stock market in particular, given the predominant weight of tech in the major American indices.