Thought
leadership.

•    Hopes of a resolution to the Ukrainian conflict buoyed European equities at the beginning of the week, but Donald Trump's tariff announcements and criticism of Zelensky then caused European and Asian stocks to fall.
•    Donald Trump threatened to escalate the trade war with additional taxes on cars, semiconductors and pharmaceuticals.
•    The FOMC minutes revealed concerns that Donald Trump’s trade and migration policies might fuel inflation.

•    Persistent inflation in the US complicates the Fed's 2% target, while Trump's protectionist policies heighten trade tensions, delaying potential rate cuts.
•    In Europe, discussions surrounding the Ukrainian conflict, despite the uncertainty of outcomes, have provided short-term support to European assets.
•    Caution remains warranted for equities, and a neutral allocation is maintained for bonds, with a preference for the eurozone due to its attractive valuations and clearer ECB policy outlook.

The restrictive monetary policies introduced by central banks in 2022 considerably increased the cost of financing for companies, leading to a sharp drop in primary issues on the credit market. This contraction was particularly marked in the High Yield segment, where the volume of new issues fell by almost 80% between the peak of 2021 and 2022. The gradual recovery observed in 2023 and 2024 was mainly concentrated on refinancing transactions.

The UK and EU need 15-20 million homes, equating to c. 2000 square kilometres of mixed-use living and workspace, over the next 15 years.    

Across the EU and the UK, regenerating only a part of the 19,000 km² of underused brownfield land and 300km² of vacant or under-utilised office space can meet the region’s housing and commercial space needs.    

This regeneration requires €4 trillion of investment, creating opportunities for investors.

•    OPEC+ decided to stick with current production cuts to keep oil prices around $75. 
•    As expected, the Bank of England cut its benchmark rate by 25bp amid slowing growth and inflation.
•    In China, employment and export orders resulted in indicators coming in lower than expected with services at 51 and industry at 50.1.

Benjamin Melman, our Global CIO AM, shares his insights for the upcoming months, focusing on major asset classes, essential themes, and priority regions as we enter the new year.

Just three years after the launch of the EdR SICAV Corporate Hybrid Bonds fund, Edmond de Rothschild Asset Management has positioned itself as a pioneer in the non-financial hybrid debt market, known as "corporate hybrid", becoming a key player in this segment in Europe with over 700 million euros in assets under management.
 
We invite you to explore our team's insights on this asset class, as well as our strategic outlook for 2025.

Too many uncertainties are currently weighing on markets, amid unfavourable valuations, for us to expose our portfolios unduly to major market risks. In this regard, we have maintained our neutral view on the two main asset classes - bonds and equities - as well as our modest overexposure to Chinese equities. We kept up our equity exposure on account of the fading risk of a recession in the US, now all but removed, and of the stronger-than-expected resilience of the global economy.

•    The arrival of DeepSeek, an AI aiming to be more efficient and cost-effective than ChatGPT, created a buzz among investors.
•    The reductions in public spending and the size of the federal administration planned by Donald Trump could have negative repercussions on economic activity and the labor market.
•    The ECB has lowered its key interest rates due to the slowdown in inflation and weak growth.

DeepSeek is the new keyword you need to know today if you invest or stand in the forefront of technology!

•    Donald Trump reassured financial markets by delaying potentially inflationary measures, leading to a rise in equity markets.
•    Exchanges between Donald Trump and Xi Jinping helped mitigate the risks of a trade war, thus supporting a rebound in Chinese stocks.
•    Markets were bolstered by positive developments such as the ceasefire in Gaza, improved manufacturing PMI in Europe, and excellent fourth quarter figures in the US. 

•    Underlying inflation in the US has slowed more than expected.
•    In the United States, investors are now anticipating a rate cut in June rather than October.
•    The fall back in Treasury yields revived equity markets, with European indices doing particularly well.