Market developments
Equities: The German stock market experienced a significant surge this week, driven by the announcement of extraordinary spending plans by the incoming German government. The DAX, Germany’s benchmark stock index, rose by ~2%. President Trump’s tariff policies have been marked by reversals, faulty rollouts, and confusion, causing uncertainty for U.S. trading partners and businesses. The lack of clarity has made it challenging for U.S. companies to make decisions and contributed to a decline in consumer confidence and equities.
Fixed Income: The announcement of Germany’s extraordinary spending plans also had a significant impact on German Bund yields. The yield on the 10-year bonds rose by ~30bps after the announcement. The dramatic rise reflects the market’s expectations of higher government borrowing and spending, as well as a potential shift in the country’s traditionally conservative fiscal policies.
Commodities: Oil prices fell nearly 4% for the week, marking a seventh straight weekly decline given the concerns over global energy demand and supply outlook. We saw a minor uptick on Friday after report of a potential truce in Ukraine that could lead to a resumption of Russian exports.