Outlook 2025: Between normalisation and (geo)political risks

2024 was the year when interest rates headed south and a number of democracies headed to the polls.How many of Trump’s pledges will come about? Customs tariffs and halting the flow of illegal migrants are potentially inflationary, probably unfavourable to household purchasing power and economic growth in the United States, and bound to be negative for global trade and growth.Will there be an uncoupling of the Eurozone and the United States? A nagging question at macroeconomic level but also of importance for interest rates and equities notably.How will China react to this latest battle in the trade war? Will it seek alternative markets for its exports, ratchet up government expenditure, let the CNH weaken, delve into its stock of Treasuries, put an embargo on rare earths, move against Taiwan?Will Europe have the means to stand as one in repelling the onslaught of the American and Chinese giants? Particularly given the political difficulties facing certain countries.More elections are on the way: in Germany for sure, in France probably, in Spain possibly, but also in India and Belarus.Can there be a lasting peace in Ukraine and the Middle East? What might be the impacts? Oil, gas, etc.Will the energy transition slow down as emissions peak in China (-3% in H1), as twice as much was spent on renewables than on fossil fuels in 2024, as energy sovereignty and price competitiveness call for an acceleration, and as the planet heats up like never before (2024 will be the hottest year in more than 125,000 years...)?As for the markets, there are an infinite number of questions as always at this time of the year:►   Will equities finally beat a retreat or will earnings be able to keep pace?►   US dollar vs. RoW? Euro at parity? (answer: no). What of emerging currencies?►   Bitcoin: the sky is the limit?►   Generative AI, turning hype into a return on investment?►   Will 2025 signal the end of the monetary easing cycle for many central banks, but at what terminal rate levels? (2% for the ECB and 3.5% for the Fed in our view).►   A new era for swap spreads?►   What term premiums over the long term?