Off to a good start to the year!
Happy New Year!
We are off to a strong start this year, as the market appears to have called the bluff on tariffs from the Trump administration. We continue to believe it will be challenging for Trump to impose large-scale tariffs, given the business-oriented nature of his administration. Several key advisors have significant vested interests in containing the trade war, which further supports this view.
The USD likely peaked during the first days of the year, creating room for improving sentiment in European indices and some commodities as the strong dollar stabilizes. However, policy volatility continues to spill over into fixed income markets, where term premia (compensation for long-term risk) remain elevated.
We have adjusted the portfolio to favor trades that would benefit from a contained trade war and a subsequent weakening of the USD. At the same time, we are capitalizing on the ongoing meltdown in China, which continues to present opportunities.
Best wishes for 2025 on behalf of the portfolio management team,
Andreas Steno, Chief Investment Officer of Asgard-Steno Global Macro
