Global News Summary: 20–24 January 2025

United States (USD)

   •   Economic Growth: Trump’s inaugural address announced pro-growth measures including increased energy production and reduced regulations, alongside plans for a 25% tariff on Mexican and Canadian imports by February.

   •   Jobs: Consumer confidence dropped 5 points to -22 in January, reflecting concerns about job cuts and rising borrowing costs. Strong bank earnings buoyed stocks, with the S&P 500 gaining 1% on Friday (20 Jan).

   •   Debt Securities: Pimco forecasted the Fed would hold rates steady amid policy uncertainty. Trump called for rate cuts but Pimco and others suggested potential increases. Treasury yields fluctuated, with 10-year yields closing at 4.61% on 18 Jan.

   •   AI: OpenAI partnered with SoftBank on a $500bn AI infrastructure project. Trump rescinded Biden-era AI safety regulations, pushing for accelerated development in AI capabilities.

United Kingdom (GBP)

   •   Economic Growth: Chancellor Reeves faced pressure to address stagnation as GDP grew just 0.1% in November and the economy ended 2024 flat. Labour announced plans to join EU trade arrangements to boost growth prospects.

   •   Jobs: Payroll employment fell 0.1% MoM in November, with early estimates for December showing a further drop of 47,000 workers. Business investment shifted toward AI adoption due to rising national insurance costs.

   •   Debt Securities: Rising borrowing costs pushed the UK government’s deficit to £17.8bn in December, leaving the fiscal year shortfall at £129.9bn, exceeding forecasts.

Eurozone (EUR)

   •   Economic Growth: ECB economists projected inflation reaching the 2% target by mid-2025, allowing interest rates to return to neutral levels. German Finance Minister Joerg Kukies suggested EU-US tariff negotiations could avoid retaliation.

   •   Debt Securities: ECB members called for continued rate cuts to support growth, with rates currently at 3%. French PM Francois Bayrou announced deficit reduction plans to 5.4%, with support from the Bank of France.

   •   Jobs: German carmakers urged the EU to strike a trade deal with Trump to avoid tariffs that could hurt the region’s struggling manufacturing sector.

Japan (JPY)

   •   Inflation and Debt: December’s core consumer prices rose 3% YoY (Nov: +2.7%), driven by energy costs, adding pressure on the Bank of Japan to hike rates for a third time. Exports increased by 2.8% YoY in December, supported by chip machinery demand.

   •   Jobs: Japanese policymakers cautioned about a weaker yen’s impact on businesses and consumers, with potential interventions to stabilise the currency.

China (CNY)

   •   Economic Growth: China recorded a record trade surplus of nearly $1 trillion in 2024, though domestic demand remains weak. Chinese regulators encouraged insurers and funds to invest in stocks to boost market confidence.

   •   Inflation: Weakened RMB sparked concerns about trade tensions with the US as Trump floated 10% tariffs on Chinese goods starting February.

   •   AI: ByteDance planned $12bn in AI investments, while OpenAI faced skepticism over its $500bn Stargate project.

Artificial Intelligence (AI)

   •   Global Expansion: OpenAI and SoftBank announced an AI infrastructure project valued at $500bn. UK PM Keir Starmer positioned Britain as the “best state partner” for AI firms, with plans to build AI growth zones and increase government AI computing capacity.

Environmental, Social, and Governance (ESG)

   •   Oil and Energy: Trump pushed OPEC to lower oil prices while seeking global rate reductions. Crude oil prices remained volatile amid geopolitical and trade tensions.

   •   EU ESG Policies: France proposed scaling back EU ESG reporting requirements, citing the burdensome regulatory framework.

Inflation and Recession Risks

   •   United States: December inflation rose to 2.9% YoY (Nov: +2.7%) but core inflation eased to 3.2% YoY, reinforcing rate hold expectations. Trump’s policies, however, fueled fears of trade disruptions and inflation persistence.

   •   UK and Eurozone: UK inflation slowed to 2.5% in December, offering the Bank of England room for rate cuts. ECB projections reinforced gradual rate cuts as inflation aligns with targets.

This period highlighted significant policy shifts, geopolitical tensions, and economic interventions shaping market performance and global outlooks.