Month 1 of Trump V2 has been…. “interesting”. The playbook is not to win friends, but to shock former allies into compliance with Trump’s America First agenda. The results may not be what Trump and his minions expect. There will be push back. New Alliances and Trade patterns will form - with or without America.

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.

A big question for 2025 is how resilient the US Treasury market will be to tax cuts, spending hikes and the deficit surpassing $40 bln in 2026! Trump is going to slash spending – taking tips from Argentina’s Javier Milei. Will it work – and is it suitable policy? Here in the UK, govt is taking tough decisions, but we are poised at the edge of the rabbit hole as polarisation looks set to dominate!

Europe is getting “interesting” in the Chinese sense of the word. The market to watch will be European Bonds – French OATs may just be the first to wobble. As the crisis unfolds (and it will) there may be opportunities to arbitrage the actions of the ECB to stem any crisis – watch this space.

The UK is in danger of becoming the unloved Piggy-in-the-Middle in terms of new global trade and geopolitical alliances. While China and the US place the pieces on the board, the value of Airstrip 1 is unclear. We have chosen where we now lie. We have chosen badly.

Europe is waking up to the reality of conflict, acutely aware of the need to defend itself, to invest and produce weapon systems to deter aggression in what is a vastly changed geopolitical landscape. With the right approach it may even become a driver of growth across the European economy.

Mario Draghi saved Europe in 2012. Yesterday he unveiled a new plan long on words and familiar ideas. Europe is aware it is approaching economic crisis – but prescribes the same old solution of Closer Union. It’s time for Europe to so something radical or become irrelevant.

Plus – UK win stage 1 of the America’s Cup.

The shenanigans around the second round of French voting has achieved a messy but acceptable stalemate for Macron. All he has to do now is figure out how to make the essentially ungovernable economy work without breaking French bonds, the Euro and Europe while keeping out Le Pen in 2027! Simples…  

Watch the bond markets! In bonds there is truth. The current political ructions across Europe highlight the fragility of Europe’s cobbled together bond markets. If they break, the outlook for markets will be… interesting (and not in a good way.)

Next week I will be either stuck in the queues at Heathrow, or sailing round Greece. Time to unwind and think about the state of the World. Or… maybe not ruin my break by scaring myself! Some thoughts on Global Macro.