The irresistible force of Trump has hit the immovable rock of Economic and Market Reality. The inconsistencies of Trump’s tariff policies - the centre-plank of his economic understanding - have been exposed as bogus. It begs the question – What Next? Which is why markets are braced for even more dislocation.

US Treasury Secretary Scott Bessent has the most difficult job in the world. How do you explain to a cabinet of financial imbeciles the USA is on course for a stock market crash, recession, inflation and a possible collapse in the US Treasury Market? It’s high risk - Trump is a “shoot-the-messenger” kind of guy.

The yield on Sovereign Bonds is the “risk-free” rate from which relative risk in any economy is priced. There is a crisis across all developed nations in the quantum of debt they now face servicing in a global economy where risks are rising and there is a significant threat of stagflation. It’s time for nations to get aggressive about Liability Management of their outstanding debt.

When future economic historians try to figure out the pivotal moment in the Decline and Fail of the American Century, its likely last week will figure in their thinking. Trump’s actions will have profound implications for bond and tech markets – and the time to start building these consequences into portfolios is NOW!

Trump has been the dominant influence on markets thus far in 2025. That won’t last forever as inevitable Trump fatigue will set in, and the consequences of his actions become clear. That’s likely to expose a very different mood – and one that may trigger a correction to reflect the new realities.

The German elections highlight the dangers of coalition politics – swimming in a sea of treacle to agree policy choices as the likelihood of bad compromises rises. Even as Trump and Ukraine roil and destabilises the European Union, Germany is set for the distinct possibility nothing much changes. It is not strong and stable leadership at a time when it is desperately needed.

The bond bear market looks set to deepen as rising energy prices threaten to keep inflation sticky. The way bonds impact the economy is more complex than most understand – it’s not  just interest rates, but how inflation, and growth limit policy choices.

Hard Hats to the Ready. Is Elon Musk trying to bring down the UK government by undermining sterling and the Gilts market through lies and disinformation on X? Might sound like conspiracy theory – but that’s what it feels like in the market.

UK Chancellor Rachel Reeves is being blamed for the Gilt Bear market. Harsh and unfair – it’s a global thing. Investors fear sticky inflation as much as rising debt quantums, tax cuts and spending plans. A global bond bear market brings consequences – be aware of them.

Politics was an overarching theme in 2024 – and, regrettably, will remain so in 2025 as global investors figure out likely policy action by central banks and the growth outlook for 2025. “This time it’s different” (TTID) and FOMO remain the most malign forces acting on asset prices, but is a new full blown European Sov Debt Crisis also on the cards?