Bruno Lettich, global head of rates trading, Standard Chartered and Thomas Kikis and global co-head, corporate sales and head of markets, US and Americas, Standard Chartered
The coming change in US administration will see a front-loaded agenda of policy change in 2025. The reaction function of policy makers will be tested, with multi-lateral negotiations to be expected between the US and its trading partners – with uncertain results and even incongruent outcomes relative to current expectations. Adding to this, varying enthusiasm by central bankers and Treasury officials to lean on monetary and fiscal policy levers to stabilise growth, will see policy divergence and more importantly, policy miscalculation as the central theme over 2025.
The likely outcome will be increasing volatility in the FX, equity, local currency, and commodity markets which are impacted by these divergences. What this will likely precipitate is global central banks needing to cut more than they had initially perceived necessary, to provide some tailwinds to de-stabilising growth dynamics, and steepening rate curves to incentivise duration buyers – ironically keeping implied rate volatility suppressed in the process.
The increasing degree of competing narratives will leave no room for complacency for global clients in their risk management activity. The silver lining is that market uncertainty can often create opportunities in other geographies, leading organisations to consider where else to focus their investments and time. The potential unleashing of investment appetite with lower rates, or resolution of geopolitical conflict and trade issues may lead to significant business opportunity.
Vincent Chailley, chief investment officer, H2O AM Group
The United States economy was turbocharged by a highly supportive monetary policy up until 2022, followed by a massive fiscal boost in 2023 and 2024 which has been the main driver of US exceptionalism. Consequently, the new Trump administration will inherit a financial and economic landscape with much less leverage potential than in 2017, which followed a period of fiscal restraint.
Within this context, key growth drivers — such as government spending, post-Covid savings, immigration, real salary growth — are now beginning to fade. At the same time, elevated valuations are reducing the resilience of US assets, leaving it increasingly vulnerable to shocks.
US exceptionalism could be facing a return to reality, driven by fiscal constraints, assets underperformance driven by too concentrated positions and the delayed effects of supply-side measures.
The US dollar, interest rates, and equities cannot all rise concurrently. At least one should yield, depending on the policy priorities of the Trump administration. Risks of policy missteps and heightened uncertainty are amplifying market sensitivity.
For 2025, the growing uncertainty surrounding the current largely positive consensus market scenario suggests a need to shift from a conviction-based investment style to a strategy that prioritises robust portfolio construction.
Kaisha Schnoll, assistant vice president, STP Investment Services
In 2025, emerging markets are poised to play an increasingly significant role in global trading. As the world shifts toward digital and automated trading systems, emerging markets will benefit from enhanced access to international capital, driven by technological advancements and the growing integration of global financial systems. This evolution offers new investment opportunities, particularly in sectors such as technology, energy, and infrastructure.
However, the rise of emerging markets trading brings its own set of challenges. Regulatory environments are often less developed, which may pose risks for international investors. Additionally, volatility in local currencies, political instability, and liquidity constraints could dampen investor confidence. Emerging markets may also face challenges in adopting the fast-paced, high-tech trading strategies common in developed markets, making infrastructure upgrades and regulatory reforms crucial.
Despite these risks, the potential for high returns continues to attract investors, particularly in regions like Asia, Latin America, and Africa. As countries improve governance, market transparency, and financial sector development, the attractiveness of emerging markets will continue to grow. By 2025, the focus will be on balancing growth with risk management, making emerging markets a key area of interest for global traders and investors alike.
Jennifer Keser, head of market structure and regulation, Europe and Asia, Tradeweb
We are leaving behind a year that saw no shortage of major political shifts globally, with a new Labour Government in the UK, Republican Donald Trump winning the US presidential election, the collapse in government in both France and Germany, and an institutional changeover in the European parliamentary elections. One thing for sure is that instability is everywhere, even in the democratic and developed markets that are usually considered to be most ‘solid’. The regulatory impact of these changeovers in government and how they will drive the regulatory agenda in key markets around the world will undoubtedly be front-of-mind for market participants.
EU capital markets have faced criticism in recent years for being fragmentated and underutilised and there is a growing urgency from markets to ‘upscale’ Europe’s competitiveness. Efficient and resilient fixed income markets are integral for investors, so it is crucial that there is a clear focus next year on improving market harmonisation, consolidation and resiliency. With the implementation of the review of Mifid II/R, the shortening of trade settlement cycles to T+1 in Europe and the UK, and the ongoing discussions around a bond and equity consolidated tape provider, both the public and private sector have their work cut out for them.