Although the year is still young, a series of notable events has already unfolded: the arrest of the former Venezuelan leader, U.S. threats of a possible annexation of Greenland, and – as a political pressure tactic – renewed tariff threats from Washington toward Europe, which the U.S. quickly backed away from. At the same time, the U.S. is deliberately opening Venezuela’s oil sector to new production projects, with licenses that almost exclusively benefit American companies. Other players remain excluded, and despite political pressure, major oil firms continue to hesitate due to a lack of guarantees.
In the eurozone, the picture has recently become more positive: fourth‑quarter growth surprised on the upside at 0.3%, exceeding expectations. Germany recorded its first positive GDP growth since 2022 and is gaining further momentum thanks to substantial public investment. In Spain, the unemployment rate fell below 10% for the first time since the 2008 real‑estate crisis, underscoring the remarkable strength of one of Europe’s currently best‑performing economies. According to the IMF, Spain was once again one of the fastest‑growing major industrial nations in 2025 – supported by services, tourism, cheap energy, and EU funds. European trade prospects are also improving: the EU’s new agreement with India eliminates tariffs on up to EUR 4 bn worth of EU exports. In the future, 96.6% of EU goods will face significantly reduced or zero tariffs – while more than 99% of Indian exports will receive preferential access to the EU market. The agreement aims to boost trade and investment, further open India’s market, and ease the burden on European companies struggling with U.S. tariffs. In the U.S., former Fed governor Kevin Warsh has been nominated as the new Chair of the Federal Reserve. Pending Senate approval, he is set to replace Jerome Powell in May. Despite his criticism of the Fed’s bloated balance sheet, Warsh is considered a serious candidate, even if some of his positions could collide with Trump’s preference for low interest rates.
Despite numerous geopolitical tensions, equity markets reached new record highs in the first weeks of 2026. Recent movements show that investors barely react to short‑term provocations – such as U.S. threats toward Greenland – and quickly buy back any dips. Markets appear accustomed to Trump’s repeated reversals, but the apparent calm is misleading: beneath the surface, geopolitical risks have risen noticeably. The environment remains particularly challenging for non‑U.S. investors, whether due to the persistently weak dollar or increasingly extreme political scenarios that are now openly being considered. Against this backdrop, many emerging market stock exchanges have posted double‑digit gains, driven by stronger currencies, higher commodity prices, and a shift in AI enthusiasm toward Asian chipmakers. Emerging markets benefit from the fact that their central banks acted early and credibly against inflation in recent years and now offer high real interest rates. At the same time, capital is flowing back into emerging‑market equities, while U.S. positions are being reduced. Europe is also experiencing a strong market environment: the region recorded the strongest start to an IPO year since at least 1995. Five IPOs in January already account for roughly a quarter of the total issuance volume of 2025. The pipeline is considered well‑filled, supported by higher valuations and several potential major candidates in defence, technology, logistics, and private equity. Meanwhile, several large AI companies in the U.S. and Hong Kong are working on possible mega‑listings, further boosting the global IPO market.
Spreads on U.S. blue‑chip corporate bonds over U.S. Treasuries have fallen to their lowest level since 1998, as investors increasingly buy corporate debt despite political turbulence. The premium now stands at just 0.73 percentage points – a sign of exceptional demand for high‑quality corporate bonds. It remains unclear whether the unusually low spreads are primarily due to high demand for corporate bonds or to U.S. Treasuries being perceived as riskier. In our view, a combination of both factors is plausible. Japanese government bonds gained over the month, particularly longer maturities – with 40‑year JGBs at times trading above 4.25%. This makes JGBs appear attractive, as unusually high yields and stable demand may indicate an overshoot in the previous sell‑off and corresponding recovery potential. The rally in precious metals came to an abrupt halt on the last trading day of the month: gold fell by as much as 8%, and other metals also dropped sharply after the nomination of Kevin Warsh as the new Fed Chair strengthened the dollar and fuelled expectations of tighter inflation control. Despite the setback, January was exceptional: gold posted its strongest monthly increase in over 40 years, driven by global risks and the search for safe‑haven assets. The Swiss franc again served as such a haven, appreciating against most currencies.
Markets appear to interpret the potential nomination of Kevin Warsh as a sign that the U.S. president is aware of the consequences of excessive political influence on monetary policy. We view this as fundamentally positive. At the same time, this development is prompting a revaluation of those asset classes that had previously benefited from concerns over the independence of the world’s most important central bank. Periods like these once again highlight the value of broad and robust diversification, which we consistently implement in our portfolios. Thanks to our hedging strategies, we view potential market volatility and possible corrections with composure and remain cautiously optimistic.