FX168 Financial News Agency (North America) reported that the global market experienced extreme volatility in 2025 due to the strong impact of Trump’s return to the White House. Global equities rebounded sharply from the ‘Liberation Day’ tariff crash and rose 21% for the year. However, asset performance diverged significantly: gold recorded its best annual gain since 1979, the US dollar and crude oil weakened notably, Bitcoin retreated by 30%, while European defense stocks, South Korean equities, and even defaulted bonds surged dramatically. Analysts noted that this year’s massive dislocation was not accidental but driven by three forces—trade wars, geopolitical tensions, and debt expansion—and risks and uncertainties for 2026 may become even harder to ignore. #Insights2026#

Global Equities Stage Strong Recovery: Up 21% in a Year, but ‘Surprises and Dislocations’ Abound

Despite the short-term market crash in April following Trump’s announcement of ‘Liberation Day’ tariffs, global equities quickly recovered and rose 21% cumulatively in 2025, marking the sixth double-digit gain in the past seven years. Meanwhile, market ‘surprises’ went beyond equity rebounds as an increasing number of assets moved in ways contradictory to traditional logic, making it difficult for investors to explain using a single framework.

DoubleLine Fund Manager Bill Campbell described 2025 as ‘a year of change, a year of surprises,’ noting that this year’s major market movements were actually underpinned by the same set of macro themes: trade wars, geopolitics, and debt expansion.

He stated that if he had known beforehand that Trump would pursue trade policies so aggressively, he would not have believed that market valuations could remain at such stretched and elevated levels, reflecting a significant mispricing of risks in the market.

Gold Shines Brightest: Soaring Nearly 70%, Dollar Plunges 10%, Oil Retreats but ‘Junk Bond Frenzy’

Among traditional safe-haven assets, gold emerged as one of the standout winners of 2025, surging nearly 70% for the year, recording its best annual performance since the 1979 oil crisis. Meanwhile, the US Dollar Index fell nearly 10%, crude oil prices dropped approximately 17%, and the bond market witnessed an unexpected surge—high-yield junk bonds, the riskiest segment, rallied strongly, being regarded by some investors as ‘the most surprising winner.’

Additionally, silver and platinum posted even more exaggerated gains, soaring approximately 165% and 145% respectively, becoming the most dramatic part of the precious metals rally in 2025.

Meanwhile, the halo of the ‘Magnificent Seven’ tech giants dimmed somewhat. Although NVIDIA became the world’s first company to surpass a market value of $5 trillion in October, overall momentum in tech stocks cooled toward the end of the year. Bitcoin also reversed sharply after hitting new all-time highs—surging above $125,000 in October before retreating to near $88,000, turning negative for the year with an anticipated decline of nearly -7%.

Defense, Banking, and Emerging Markets Explode: European Defense Stocks Rise 55%, South Korean Equities Surge 70%, and Defaulted Bonds Double in Value

Trump’s statements on security policy have also created significant ripples in the capital markets. As the market anticipates that the U.S. will reduce its military protection for Europe, European countries are compelled to accelerate ‘rearmament,’ driving a year-to-date rise of approximately 55% in European defense stocks, which has become one of the most emblematic ‘Trump trades.’

At the same time, European bank stocks recorded their best annual performance since 1997. In regional markets, South Korea’s stock market surged by about 70% during the year, making it one of the strongest-performing major markets globally. More surprisingly, defaulted Venezuelan bonds yielded nearly 100% returns, highlighting the potential for extreme assets to exhibit astonishing price elasticity under shifting risk appetites and speculative capital flows.

Interest Rates, Debt, and AI Investment Convergence: Bond Market ‘Surface Calm’ Amid Rising Undercurrents

In 2025, the Federal Reserve’s three rate cuts during the year, along with Trump’s persistent pressure on the central bank, not only impacted risk assets but also profoundly altered the structure of the bond market. Trump’s so-called ‘big and beautiful’ spending plans pushed up long-term Treasury yields in the first half of the year, with the 30-year U.S. Treasury yield briefly surpassing 5.1% in May, the highest level since 2007. Although it has since retreated to around 4.8%, the spread between long-term and short-term rates widened again, and the market’s focus on ‘term premia’ rose, becoming a new source of volatility.

More intriguingly, while term premia were rising, overall volatility in the global bond market dropped to a four-year low. Meanwhile, local-currency emerging market bonds experienced their best annual performance since 2009, creating a striking ‘contradictory scenario.’

The surge in AI investment has also exacerbated debt expansion. Goldman Sachs estimates that AI ‘hyperscalers’ have invested nearly $400 billion this year, with projections indicating an increase to approximately $530 billion next year. Companies continue to take on debt to expand in order to capture AI computing power and application entry points, making AI one of the key variables in this year’s ‘debt structure changes.’

Foreign Exchange Market ‘Reshuffle’: Euro Up 14%, Swiss Franc Up 14.5%, Emerging Market Currencies May Enter a New Cycle

The weakening of the dollar propelled the euro to rise nearly 14% during the year and the Swiss franc by approximately 14.5%. At the same time, the renminbi broke through the ‘7’ mark against the dollar, while the yen remained broadly flat for the year after being hit in December. Influenced by interactions between Trump and Putin, the ruble once surged by 40%, though its trajectory remains unique due to sanctions.

Several emerging market currencies also performed strongly: the Polish zloty, Czech koruna, and Hungarian forint appreciated by 15%-20% during the year; the Mexican peso and Brazilian real achieved double-digit gains despite trade war pressures.

Jonny Goulden, head of emerging market fixed income strategy at JPMorgan, pointed out that this trend may signal the end of a 14-year bear market cycle for emerging market currencies, and is not merely a short-term fluctuation.

2026 Risk List Emerges Early: Fed Chair Nomination, Election Cycles, Geopolitical Conflicts, and AI Uncertainties

Market participants widely believe that 2026 will not begin quietly. Trump is already strategizing for the November midterm elections and is expected to soon announce a new nominee for the position of Federal Reserve Chair—a move that could become a critical juncture for central bank independence and policy credibility. Meanwhile, whether China’s economic momentum can continue will still influence global risk appetite.

On the geopolitical risk front, Israel is set to hold elections by the end of October, keeping the prospects for a Gaza ceasefire fragile; resolving the war in Ukraine remains fraught with difficulties; Hungarian Prime Minister Orban will face his toughest electoral test in April; and Colombia and Brazil are also scheduled to hold pivotal elections in May and October, respectively.

Matt King, founder of Satori Insights, warned that markets are entering 2026 at “abnormally high valuations,” while politicians may resort to stimulus measures or tax cuts to “distribute cash” in an effort to win voter support. This is increasingly challenging the limits of how much monetary easing can boost asset prices.

He pointed out that cracks are already beginning to show: term premia are rising again, Bitcoin has suddenly weakened, and gold continues its upward trajectory. These signals may foreshadow a further concentration of market risks being released in 2026.