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France: Political Instability That Does Not Threaten the Dynamics of European Markets

France: Political Instability Raises Concerns, but Market Impact Remains Contained

French Prime Minister François Bayrou gambled everything on a single move—a vote of confidence—and lost. According to experts, France is entering a new political crisis, beginning with the challenge of addressing a €44 billion fiscal adjustment. Although this scenario had already been anticipated by some investors, the coming days will be crucial to assess the country’s ability to stabilize its political outlook and reassure markets regarding its fiscal trajectory.

“The preferred alternative for President Macron is now the swift appointment of a new prime minister, who will attempt to reach an agreement in the tense budget negotiations. Early elections remain a possibility if this fails. In any case, current developments reflect a challenge with limited room for an easy solution: fragile governments in a fragmented political landscape. Thus, uncertainty remains high, although we do not expect bond markets to derail from here,” comments Dario Messi, Head of Fixed Income Research at Julius Baer.

Experts agree that the chaos in French politics does add more volatility. Peter Goves, Head of Developed Market Sovereign Research at MFS Investment Management, sees it likely that spreads will remain wide, with episodes of short covering; however, political instability is undoubtedly here to stay. “Macron will likely rush to appoint a new prime minister as a first reaction, before considering calling new parliamentary elections. The situation is highly fluid, and how events unfold will likely dictate the market tone in the coming days. So far, the market reaction has been relatively contained, but we take into account the strikes scheduled for Wednesday and the imminent risk of a potential downgrade. Meanwhile, France still needs to pass a budget,” says Goves.

Contained Impact

According to Raphaël Thuin, Head of Capital Markets Strategies at Tikehau Capital, for now, the economic impact is uneven. “The CAC 40 companies, mostly multinationals, exporters, and with low levels of debt, appear relatively protected from political turbulence and rising interest rates. Their limited exposure to public procurement reduces their sensitivity to budget swings. Furthermore, the excess of private savings in France continues to finance part of the deficits, which mitigates external vulnerabilities,” he points out.

However, he acknowledges that two areas of concern are emerging: “In the short term, corporate taxation could become a critical issue, as several parties are considering specific reforms. In the long term, political instability and chronic deficits could gradually erode investor confidence, private investment, and the country’s attractiveness. This evolution could ultimately weigh on consumption and economic growth.”

Michael Browne, Global Investment Strategist at the Franklin Templeton Institute, notes that France has the backing of the EU, the ECB, and the euro—and it’s not going anywhere. “Its financial system is solid. It’s true that it’s the only country in Europe where spreads have widened against Germany, but only to 80 basis points. There will be no currency or funding crisis. So, whoever takes office won’t matter. Nothing is expected of them—just to weather the situation until 2027 and hope that economic improvement in Europe, driven by German Chancellor Mertz, generates enough growth to offset the risk of going two years without a new budget. The bond market remains calm, while equities have suffered more from weakness in luxury goods sales than from political turmoil. An operational government is, clearly, a luxury France will not be allowed; and when it finally gets one in 2027, markets will be ready with their verdict,” argues Browne.

France’s Risk Premium

In a context of persistent deficits and rising interest rates, Thuin considers that the issue of France’s risk premium remains key. “Although it varies by asset class, it currently seems to offer limited compensation when taking political and fiscal tensions into account. The main transmission channel of risk continues to be interest rates, in an international environment marked by a general increase in financing costs,” he explains.

According to the Julius Baer expert, political risk is already reflected in asset prices. “Before the confidence vote, the spread between 10-year government bonds of Germany and France once again approached 80 basis points, having already remained elevated for some time compared to other eurozone countries. Although primary deficits are considered unsustainable, we believe France’s current capacity to handle its debt remains relatively high, given that the country benefited for a long period from exceptionally low financing costs. In other words, early elections (or, in the worst-case scenario, Macron’s resignation) could lead to a further widening of spreads, but we expect the impact to be limited in magnitude and do not anticipate bond markets to derail from here,” he notes.

“The risk of a new dissolution of the National Assembly seems the highest to us, which would lead to a widening of the spread between French and German 10-year yields. In that case, tensions on peripheral country spreads should be more limited, not justifying ECB intervention. In the extreme scenario of President Emmanuel Macron’s resignation, the French spread would exceed 100 basis points, justifying ECB intervention to limit contagion,” says Aline Goupil-Raguénès, Developed Markets Strategist at Ostrum AM (Natixis IM), when discussing possible scenarios.

France’s Political Deadlock Deepens Fiscal Concerns, but ECB Intervention Remains Unlikely—for Now

This dynamic is part of a global trend, where inflation and growing doubts about the sustainability of public deficits are putting upward pressure on interest rates. Asset management experts acknowledge that France is not an isolated case, but its political instability could worsen its position compared to more stable partners.

“The ECB could intervene only in the case of significant tensions on interest rates that pose a risk to financial stability or to the transmission of monetary policy—which is currently not the case. It could also intervene in the event of the president’s resignation to contain spread tensions among peripheral countries triggered by contagion effects. It could activate the TPI. Announced in July 2022 and never used, its goal is ‘to counter disorderly market dynamics that pose a serious threat to the transmission of monetary policy within the eurozone,’” adds the strategist from Ostrum AM.

Possible Scenarios

Looking ahead, France faces three possible options: the appointment of a new prime minister, the dissolution of the National Assembly and the calling of new elections, or the resignation of its president, Emmanuel Macron. According to Goupil-Raguénès, the most likely scenario is the dissolution of the National Assembly, given the inability to find a new prime minister capable of broadening the government’s support in Parliament.

“New legislative elections would have to be held within 20 to 40 days of the dissolution. The outcome would likely result once again in a deeply divided National Assembly, with a probable increase in seats won by the far right, according to recent polls, though without a majority. The risk of social unrest—already present with protests planned for September 10 and 18—would be heightened. Uncertainty would rise along with the risk of an insufficient fiscal adjustment, which could keep the deficit elevated and lead to an increase in the public debt-to-GDP ratio. The risk of confrontation with Brussels would grow,” she adds.

According to the multi-asset team at Edmond de Rothschild AM, regardless of the outcome of the current political crisis, the likelihood of a meaningful reform of public finances will remain low—“to the point that financial markets themselves appear resigned and may settle for a scenario in which the budget deficit simply doesn’t deteriorate further.”

However, they note that while the situation is not catastrophic, it is worrisome, as France stands apart from the rest of the eurozone with the highest budget deficit and public debt on an upward trajectory (113% in 2024 and 117% forecast for 2025). “This deterioration in fiscal balances is mainly due to the decline in tax revenues, resulting from tax cuts granted to households (-1.6 percentage points since 2017) and companies (-0.8 points), which has not been offset by a reduction in public spending (which returned to 2017 levels after the pandemic peak). Although many parties agree on the need to cut public spending—which currently represents 57% of GDP (compared to an average of 50% in the eurozone)—it remains difficult to form a majority to adopt measures that would bring the primary deficit below the debt-stabilizing level,” they explain. They add that the status quo is likely to remain unless pressure from the European Commission—and especially from financial markets—increases, in which case tougher decisions will have to be made, likely after new legislative or presidential elections.

Finally, Alex Everett, Senior Investment Director at Aberdeen Investments, notes that while the political situation unfolds, the urgent financial need is to pass a prudent budget that reduces the deficit, no matter how unlikely that seems. “At this point, even a small reduction would be better than nothing. Confidence in the French economy is already low, and the longer this situation drags on, the bigger the problem becomes. It’s clear that France’s political gridlock won’t be resolved this year, and perhaps not even until the presidential elections in 2027. This will likely keep French government bond spreads—known as OATs (Obligations assimilables du Trésor)—elevated, at least around current levels, over the coming months. We continue to favor short positions in OATs versus their peers,” concludes Everett.

A Journey Through the Patagonian Flavors of Chile and Argentina: What Does the Cuisine of the End of the World Taste Like?

| By Amaya Uriarte | 0 Comentarios

To the sea, to the rock, to the glacier: that is what the cuisine of the end of the world tastes like. The company Cruceros Australis recently celebrated its 35th anniversary by bringing to Madrid the flavors of its cuisine, based on seafood found only in the southernmost waters of the planet through which it sails: the Strait of Magellan, the Beagle Channel, and Cape Horn.

The company offered a tasting in Madrid to showcase that its voyages also represent a full gastronomic experience. “To our journey through the most untouched and unknown part of Patagonia and Tierra del Fuego, we add a flavor experience thanks to the carefully crafted onboard cuisine and the pairing with fine wines,” said Frederic Guillemard, Australis’ manager for Europe and Asia.

As with the tasting, the cuisine offered on their cruises is prepared using locally sourced ingredients from the Chilean and Argentine Patagonian region.

“This also marks the celebration of our company’s 35 years navigating this protected route, which is accessible only via our two ships, the Ventus Australis and the Stella Australis, as it cannot be reached by land or air,” he added.

Present at the event, from Chile, was renowned Peruvian chef Emilio Peschiera, who has been advising Australis for over a decade.

The menu presented—just like on the cruise—is based on “the region’s most representative products, such as king crab, glacier scallops (large scallops), Magellanic grouper, and the region’s iconic lamb, in a carefully curated selection of the dishes served during the voyage.”

The expert highlighted that the places of origin of ingredients such as austral hake or deep-sea grouper—“which is caught at 2,000 meters, or the famous smoked salmon (sourced from some of the most pristine waters in the world), smoked with native woods like lenga”—give them a unique and unfamiliar flavor, suited to the most discerning palates.

Pairing is also a key part of this gastronomic experience. The offering includes “fine Chilean wines that enhance these flavors, such as a crystalline Sauvignon Blanc to accompany the scallops, followed by Pinot Noir paired with king crab chupe, and a red wine made from Carménère (the legendary 19th-century European varietal that survived in Chile, now the world’s largest producer) to accompany the Magellanic lamb.”

The menu consisted of two starters: octopus carpaccio with black olive sauce and crispy sweet potato threads, and a tiradito of glacier scallops with citrus sauce, mango, and chalaquita, paired with a Casa Silva Sauvignon Blanc, Cool Coast, Paredones, Chile.

Among the main courses were Magellanic king crab chupe, and a Magellanic sea duo featuring grilled conger eel over crispy a lo macho rice and oven-roasted deep-sea Magellanic grouper with olive oil and golden garlic over a potato biscuit, paired with Viña Villard Pinot Noir, Gran Reserva, Le Pinot Noir.

Next, a Magellanic lamb medallion was served over carrot purée with yogurt, paired with a Von Siebenthal Carménère, Gran Reserva.

A standout feature of these dishes is that they are prepared using regional recipes, such as the king crab pie or the lamb, which is stewed and gelled before being served as a medallion.

As for the desserts, the tasting featured a unique and typical flavor: rhubarb, a sweet-and-sour plant native to Patagonia. Specifically, a rhubarb crumble with vanilla ice cream was served.

A Commitment to Ecotourism

The fact that the entire offering is produced using regional ingredients aligns with Australis’ commitment to ecotourism—“which in this case is accompanied by bold and unique flavors,” added the Australis manager—making the journey not only an experience through the beauty of the landscapes visited, “but also one in which the tasting of our food and wines is a fundamental part of the voyage.”

The journeys last five days and four nights, departing from either Punta Arenas (Chile) or Ushuaia (Argentina).

Each day includes zodiac landings to explore native forests found only in these remote regions—accessible through treks of varying difficulty—or to observe penguins, flora and fauna, and glaciers, as well as to navigate the Patagonian channels all the way to Cape Horn, crossing the Strait of Magellan. A true voyage to the end of the world… accompanied by its cuisine.

Goldman Sachs Will Invest Up to $1 Billion in T. Rowe Price

| By Amaya Uriarte | 0 Comentarios

Goldman Sachs and T. Rowe Price announced a strategic collaboration aimed at offering a range of diversified solutions in public and private markets, designed for the needs of retirement and wealth investors.

Goldman Sachs intends to invest, through a series of purchases in the open market, up to $1 billion in common shares of T. Rowe Price, with the intention of owning up to 3.5%, which would make it the firm’s fifth largest shareholder, according to a joint statement issued by both companies.

“This investment and collaboration represent our conviction in a shared legacy of success in delivering results to investors,” said David Solomon, chairman and CEO of Goldman Sachs.

“With Goldman Sachs’ decades of leadership in innovating across public and private markets, and T. Rowe Price’s expertise in active investing, clients can confidently invest in new opportunities for retirement savings and wealth creation,” he added.

Rob Sharps, CEO of T. Rowe Price, stated: “As retirement leaders, we have a proven track record of leveraging our expertise to drive solutions that help our clients prepare, save, and live confidently in retirement.”

“We are excited to collaborate with Goldman Sachs, leveraging our broad capabilities in public and private markets to offer clients the opportunity to unlock the potential of private capital as part of their retirement and wealth management strategies,” he added.

The collaboration will leverage the strengths of both firms, including their investment expertise, solution-oriented approach, and deep understanding of the needs of intermediaries and their clients. The core focus will be on providing a range of wealth and retirement offerings that incorporate access to private markets for individuals, financial advisors, plan sponsors, and plan participants, the companies stated in the release.

Major financial firms like Goldman Sachs, BlackRock, and Morgan Stanley are betting heavily on alternative assets—an area dominated by private equity firms—to capitalize on their growth potential and attract new clients.

“Goldman didn’t buy a friend, it bought a fast track to 401(k) distribution, since two-thirds of T. Rowe’s assets come from retirement accounts,” Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, told Reuters.

“We believe that Goldman brings a broad range of capabilities in private markets and wealth management to this relationship, which will enable the two companies to design a very wide range of solutions that can meet client demand as it evolves,” wrote analysts at Evercore ISI in a note.

Key Points

Target-date strategies:

The firms will offer new joint and co-branded target-date strategies that will leverage T. Rowe Price’s expertise in the Retirement Blend series, while expanding plan participants’ access to private markets by incorporating investment capabilities from Goldman Sachs, T. Rowe Price, and OHA. Goldman Sachs will act as the external provider of private market strategies for the target-date series. These solutions are expected to launch in mid-2026.

Model portfolios:

Joint and co-branded model portfolios will be introduced, leveraging the strengths of both organizations. These will include separately managed accounts (SMAs), direct indexing, ETFs, mutual funds, and private market vehicles, tailored to the needs of advisors serving mass affluent and high-net-worth (HNW) clients.

Multi-asset offerings:

T. Rowe Price and Goldman Sachs will also collaborate on multi-asset offerings. They are currently considering two strategies: one that will provide access to asset classes such as private equity, private credit, and private infrastructure in a diversified portfolio through a single vehicle, and another that will integrate investment in both public and private U.S. equities into a single offering.

Personalized advisory solutions and advisor-managed accounts:

The firms are collaborating on the development of an innovative, scalable advisory platform for advisors and other RIAs to offer managed retirement accounts both within and outside of plans. This includes the integration of retirement planning and advisory services from both firms into T. Rowe Price’s recordkeeping and individual investor platforms.

Outlook and Perspectives for China: Moderate Optimism in Equities and in the Country’s Transformation

| By Amaya Uriarte | 0 Comentarios

Ahorro hogares españoles 2024 — Pixabay CC0 Public Domain

China Mid-Year Economic Review and Outlook: Moderate Optimism in Equities and the Nation’s Transformation

After passing the halfway point of the year, it is time to assess China’s economic situation. The country’s GDP grew by 5.3% in the first half of the year compared to the same period in 2024, aligning with the government’s target. The deficit stood at 4% of GDP—its highest in thirty years—seemingly confirming the government’s intention to support the economic cycle through decisive industrial policies.

Beijing also announced a record trade surplus of around $586 billion, with exports growing 5.8% year-on-year in June, exceeding analysts’ estimates. Despite tariffs currently standing at 55%, China’s trade surplus with the United States rose to $114.77 billion by June, up from $98.94 billion a year earlier, once again surpassing market expectations. “This is a clear indicator of the resilience of Chinese companies: decoupling is a long-term process, and in many technology sectors, global dependence on China remains structural,” says Carlo Gioja, Portfolio Manager and Head of Business Development in Asia at Plenisfer Investments—part of Generali Investments—in his mid-year review of the Chinese economy.

However, to truly understand the country’s trajectory and the scope of its ongoing transformation, Gioja sees it as “crucial” to look beyond the numbers, as “this is where a new Chinese paradigm emerges.” More than ever, he argues, understanding China’s transformation requires “observing its contradictions simultaneously”: the real estate crisis and the growth of high technology; apparent consumer weakness and the rise of innovative business models; geopolitical tensions and the disruptive strength of key industrial sectors; and finally, local government fiscal crises alongside innovation-driven growth ambitions.

In this context, the expert sees selective opportunities in the country’s equity markets. He notes that the Chinese government has strengthened its commitment to support the domestic stock market by requiring major institutional investors to increase their allocation to onshore listed equities—those on the Shanghai and Shenzhen exchanges, denominated in RMB and traditionally reserved for local investors and a small group of institutions—by 10% annually over three years. Insurance companies are also required to allocate 30% of new premiums for this purpose.

“The government and the Party in China continue to adopt certain elements of a planned economy, but at the same time, they support market competition and believe in innovation as a lever for increasing productivity,” Gioja states. He believes the success of this approach largely depends on Beijing’s ability to manage the balance between central control and local initiative.

Even with U.S. tariffs, many sectors in which China holds a cost and scale advantage—batteries, electronic components, machinery, footwear, solar panels—remain competitive despite higher barriers to entry.

Despite this, “international capital remains predominantly speculative: even after the ‘DeepSeek effect’ earlier this year, long-term investors have yet to return in force.” The Plenisfer expert notes that a market dominated by speculative participants tends to be more volatile and less efficient in pricing the potential of top companies. Therefore, he believes current valuations in some cases offer good opportunities for future gains.

“China may seem like a multifaceted enigma, difficult to grasp at a glance. However, it is precisely in the complexity of its manufacturing, technological, and cultural ecosystems that selective opportunities lie for the patient and well-informed investor,” he concludes.

Nicholas Yeo, Head of China Equities at Aberdeen Investments, is somewhat more optimistic. He continues to see an improving environment for his fundamental approach in China’s equity markets, which gives him confidence for the remainder of the year.

Yeo also notes that the onshore equity market “is playing an increasingly important role in Chinese society” and that reforms and policy support for the markets are ongoing. “The market is an important mechanism to channel capital into innovation-related sectors,” he says, adding that he continues to see a growing number of opportunities in the A-share space.

In this landscape, he maintains a positive bias following the policy shift at the end of last year: external pressure could lead to a stronger focus on domestic stimulus, which is key to economic recovery. “Recent policies such as the fight against ‘involution’ suggest that authorities are taking steps to protect the economy,” he states.

“There is abundant liquidity in the system, with bank deposits equivalent to the market capitalization of China’s A-share market. With low interest rates, retail investors will seek higher-yielding assets, and the stock market is the primary destination for this money given the current state of the real estate sector,” Yeo asserts.

Thus, he believes the Chinese A-share market is “on the verge of sustained performance,” supported by a potentially weakening U.S. dollar and attractive valuations—not only compared to the U.S. market but also to other emerging markets. “Despite reaching new highs, the valuation of the Chinese A-share market remains below its five-year average,” he adds.

Meanwhile, Vivek Bhutoria, Emerging Markets Equity Portfolio Manager at Federated Hermes Limited, advocates for putting U.S.–China trade tensions into context: exports to the United States account for less than 3% of China’s GDP, and consumer goods and electronics make up the majority of those exports. “Nevertheless, punitive tariffs are likely to negatively impact Chinese exports. However, they will also increase costs for U.S. importers—and potentially for consumers,” he argues.

If tariffs persist, leading emerging market countries and regions—particularly China, India, and Southeast Asia—are expected to continue growing at an annual rate of 4% to 6%, compared to a global GDP growth of 50 to 100 basis points, supported by structural reforms and fiscal stimulus. “China retains the fiscal capacity to stimulate growth and absorb excess capacity resulting from reduced exports if U.S. tariffs are punitive,” Bhutoria explains.

The expert acknowledges that his view on China has always been long-term, noting, “The lack of investor interest in China in recent years has presented us with attractive entry points to invest in high-quality companies trading at significant discounts to their intrinsic value.” At this point, he believes the market has “overpriced” the risks associated with Chinese equities and that even if President Donald Trump imposes punitive tariffs, “China has the capacity to grow into prosperity,” which is why he remains positive on the country.

Europe Stumbles on Sustainability: Complex Regulation and Limited Industry Support

| By Amaya Uriarte | 0 Comentarios

Padres latinos gastos y objetivos financieros — Photo courtesy

A recent study by MainStreet Partners, a firm specialized in sustainable investment and part of Allfunds, warns that the European Union is facing serious difficulties in turning its ambitious green agenda into a real competitive advantage.

The report identifies overlapping regulations, administrative burden, and lack of support for key sectors such as electric vehicles as the main barriers. According to Daniele Cat Berro, the firm’s Managing Director, these obstacles are weakening Europe’s role in the ecological transition and undermining its ability to lead in global sustainability.

In the industrial sphere, the company highlights setbacks compared to the Asian market. Despite the EU’s goals to reduce emissions from new cars by 55% by 2030 and eliminate combustion engines by 2035, more than 20% of electric vehicles sold in Europe in 2023 were of Chinese origin. In addition, the battery value chain is increasingly controlled by non-European players, while local industrial projects suffer from delays and limited funding.

“The transition to electric vehicles is strategic, but without a strong industrial base, it risks triggering deindustrialization in regions dependent on the automotive sector. Stronger support for local production is necessary,” said Cat Berro.

In the financial sphere, MainStreet Partners points out that the sustainable investment regulatory framework has reached a level of complexity that hampers market confidence. The combination of SFDR, CSRD, and CSDDD has resulted in high costs and compliance challenges, especially for small and medium-sized enterprises.

As a consequence, Europe recorded net capital outflows in ESG products for the first time in the first quarter of 2025, according to Morningstar data. The European Commission responded by introducing the Omnibus Directive, which includes postponements and adjustments to reporting obligations, but MainStreet warns that the measure is insufficient without a clear and agile execution strategy.

The firm has also expressed concern over the new regulation on ESG rating providers, which in practice will favor large global operators, most of them non-European. This, they note, jeopardizes the continent’s strategic autonomy in an emerging sector.

“The commitment to climate goals must be maintained, but with an approach that prioritizes regulatory clarity, industrial capacity, and international competitiveness,” Cat Berro concluded.

The Persistent Tailwinds for Gold: Central Banks, Geopolitical Risk, and the Economic Situation in the United States

| By Amaya Uriarte | 0 Comentarios

Gold’s Relentless Climb: Central Banks, Geopolitical Risk, and U.S. Economic Conditions Fuel Bullish Outlook

Gold continues its upward trajectory. It was one of the best-performing assets in portfolios last year, and this year follows the same trend—with new record highs included. All signs point to this momentum continuing. Historically, the second half of the year tends to favor gold prices. Since 1971, average returns during this part of the year have outperformed those of the first half, reinforcing the bullish outlook described by analysts and underpinned by fundamental drivers.

Chris Mahoney, Investment Manager for Gold and Silver at Jupiter AM, is clear in his outlook for the precious metal: “One of the determining factors will undoubtedly be the activity of central banks.” He explains that official purchases tend to intensify in the second half of the year and cites a recent survey by the World Gold Council, which reveals that 43% of monetary authorities intend to increase their reserves in the coming months.

While he does not rule out a moderate correction—especially considering that gold hasn’t seen a drop of more than 10% in over two years—he believes the structural support remains solid.

Another factor Mahoney sees as increasingly influential on gold prices is the U.S. economic cycle. “There are growing signs that the U.S. economy is in a late-cycle phase, which could lead the Federal Reserve to ease monetary policy sooner than expected. If this expectation materializes, it would act as an additional catalyst for gold,” he says.

At the same time, geopolitical tensions remain a key driver. The recent trade truce between the U.S. and China could deteriorate, with negative effects on the global economy and additional pressure on interest rate policy. According to the Jupiter AM expert, “a resurgence of tensions would likely favor gold as a safe-haven asset.”

He also highlights the political context in the U.S.: Fed Chairman Jerome Powell‘s term ends in less than a year, and President Donald Trump—a vocal advocate of low interest rates—has expressed his intention to nominate a successor aligned with that view. Therefore, “any announcement in this regard could significantly shift expectations around rates and inflation, which are fundamental drivers of gold performance,” Mahoney concludes.

Bank of America shares a similar view. The firm recalls that gold reached an all-time high after Independence Day but later gave up those gains. To continue rising, the precious metal needed “a new trigger,” and the U.S. budget could be that bullish driver—“especially if deficits increase.”

The macroeconomic context encourages greater diversification of reserves; central banks should allocate 30% of their reserves to gold. Retail investors are also buying gold, and ongoing macro uncertainty and rising global debt levels remain supportive factors.

In short, the conditions that have driven gold’s recent strength appear likely to persist, according to Bank of America: the structural U.S. deficit; inflationary pressures from deglobalization; perceived threats to the independence of the U.S. central bank; and global geopolitical tensions and uncertainty. That is why the firm has raised its long-term price target for gold by 25% to $2,500 (real).

Ian Samson, Multi-Asset Fund Manager at Fidelity International, also maintains a positive view on gold. He believes bull markets for gold “can last for years” as it continues to provide diversification even when bonds do not, retains its privileged status as a “safe haven,” offers protection against inflation and loose economic policies, and benefits from structural trends.

Samson acknowledges that, given a macro base of economic slowdown in the U.S. or even a potential stagflationary environment in the coming months, he remains positive on gold’s prospects. He argues that the Federal Reserve is ready to cut interest rates despite inflation lingering around 3%, and that tariffs will likely keep prices elevated.

Additionally, the impact of tariff policy and a slowing labor market will also trigger a weak growth environment, in the expert’s view. This combination should support gold, which competes head-to-head with a weakening dollar as a safe haven and store of value. “We’ve never seen this scale of uncertainty and change surrounding tariff policy, and the effects are still unfolding. Furthermore, the size of the U.S. budget deficit raises concerns about monetary debasement, which further strengthens the long-term case for gold.”

Meanwhile, the structural case for investing in the precious metal remains strong, and numerous countries—including China, India, and Turkey—are structurally increasing their gold reserves in an effort to diversify away from the dollar, as gold offers diversification without the credit risk inherent in foreign currency reserves.

Moreover, gold supply remains highly constrained, meaning even a small increase in portfolio allocation could move the needle: “For example, if foreign investors were to decide to move a portion of the $57 trillion they currently hold in U.S. assets, gold would be a more than likely destination.”

For now, Samson says he is “comfortable” maintaining gold in his multi-asset portfolios through a combination of passive instruments that directly track gold prices and a selection of gold mining stocks.

Questions About the Fed’s Renewal and More Trump Influence on Monetary Policy: The Possible Effects of Cook’s Removal

| By Amaya Uriarte | 0 Comentarios

Fed renewal Trump influence monetary policy — Pixabay CC0 Public Domain

The intentions of U.S. President Donald Trump to influence the Federal Reserve have recently taken another turn with the controversial removal of Fed Governor Lisa Cook, who has already taken the case to court. This pressure from Trump has not gone unnoticed by experts, who, generally speaking, believe that the consequences of this unprecedented situation are unpredictable.

For example, Clément Inbona, fund manager at La Financière de l’Échiquier, is clear that President Trump wants to have the Federal Reserve “in his grasp.” The expert explains that the objectives of this governmental interference stem from Trump’s desire to influence the institution in order to lower interest rates and potentially reduce the cost of U.S. government borrowing—“widely in deficit and heavily indebted—even at the risk of facing dire consequences.”

At this point, Inbona turns to history to detail the consequences of such actions: the Turkish example “is eloquent,” he states, recalling that the country’s president, Recep Tayyip Erdogan, brought the Turkish central bank under his control in 2019 with immediate economic effects: rampant inflation and a large-scale depreciation of the Turkish lira, which amplified the rising cost of imports. “These consequences could loom over the U.S. economy if the Fed were taken over by MAGA America.”

The La Financière de l’Échiquier manager recalls that the Fed’s independence is the result of a progressive achievement. Initiated in 1935 with the separation from the Treasury, it was consolidated in 1951 with the end of public debt monetization—a tool widely used during World War II to finance the war effort and, later, reconstruction. “However, independence does not mean completely escaping government pressure, as shown by Presidents Johnson and Nixon in the 1960s and 1970s,” he notes.

Still, Inbona believes that, in any case, “Trump’s efforts to get the Fed in his grasp matter little,” as the renewal schedule of the institution’s members “works in his favor”: in 2026 he will appoint a new chair, “which will increase his influence” over the institution.

At Edmond de Rothschild Asset Management, they share this perspective. The removal of Governor Cook is interpreted by the firm as an intensification of Trump’s efforts “to take control of the Fed,” a decision that investors understand as a greater likelihood of a more accommodative monetary stance. This environment, they argue, partly explains the drop in interest rates. In addition, the dollar fell again, especially against the euro, due to rising concerns over the Fed’s credibility, according to Edmond de Rothschild AM.

For Tiffany Wilding, economist at Pimco, Trump’s unprecedented decision regarding Cook “eclipsed” Powell’s message in Jackson Hole about a possible rate cut in September. “This event could have consequences for the perception of the Fed’s independence, although the potential impact on Fed policy (and interest rates) is far from clear,” Wilding states.

The expert argues that “this issue goes far beyond Cook” and believes that the accusations “carry political overtones, given the public pressure campaign that Trump has been conducting for a year to push for lower interest rates.” At this point, she explains that although Cook’s replacement would not directly change the voting majority of the Federal Open Market Committee (FOMC), her position is important because it could shift the voting majority of the Board of Governors on issues such as the appointment of Federal Reserve Bank presidents.

“Each regional Reserve Bank board nominates a president for a five-year term, but the final approval lies with the Fed’s Board of Governors. The Board renews the appointment of all presidents at the end of February every five years (in years ending in ‘1’ or ‘6’) in what is usually a procedural vote,” Wilding explains, noting that when the next vote is held in February 2026, “a Board majority favorable to Trump could, at least in theory, veto or reshape the leadership of the regional banks for the next five years.”

She also notes that five regional Reserve Bank presidents are voting members of the FOMC, with one-year rotating terms—except for the New York Fed president, whose position is permanent—“so politically driven changes to their list could affect policy decisions over time.”

There is no precedent for any of this, she notes, but the expert recalls that some legal scholars argue that “a majority of four members of the Fed’s Board of Governors could remove regional bank presidents outside the normal five-year reappointment cycle, though they would have to justify the reason for dismissal.” In short, this would enter “uncharted territory.”

Cook has already taken the case to court. And now, several scenarios are possible. If she does not obtain a court order against the president’s decision, the position could remain vacant while the case proceeds through the courts. But if the court confirms Cook’s dismissal for cause, Senate confirmation of those appointed to the vacant governor positions remains uncertain, despite the Republican majority.

“Key Republican senators have quietly expressed their refusal to appoint a partisan Fed chair, and we could extrapolate this to the Fed board in general,” says the Pimco expert, who believes the renewed attention on the Fed could make it harder for the Senate and the Senate Banking Committee to confirm a Fed nominee who appears too political, too partisan, or too moderate. “Any confirmation process could be difficult and lengthy, potentially leading to a prolonged period of vacancies on the Fed’s Board of Governors,” she concludes.

There is also uncertainty, according to Wilding, about what individual Board governors would do—even if appointed by Trump and confirmed by the Senate—when faced with the reappointment of regional bank presidents. According to Bloomberg, based on a Freedom of Information Act request, current Fed governors Christopher Waller and Michelle Bowman abstained from voting on the 2022 appointment of Austan Goolsbee as president of the Chicago Fed (which was still approved by a majority). However, abstention “has far fewer consequences than overturning decades of precedent and voting to remove a sitting bank president.”

Poland Leads Global Gold Purchases in 2025 and Strengthens Its Position as Top Accumulator

| By Amaya Uriarte | 0 Comentarios

Friendvesting riesgo geopolítico — Canva

The price of gold began to rebound last year, in a context where both central banks and investors sought safe-haven assets amid rising geopolitical tensions and economic uncertainty. While many took advantage of the situation to buy, others opted to sell, capitalizing on high prices. The BestBrokers report, based on data from the World Gold Council for the first quarter of 2025, reveals that Poland maintained its leadership as the world’s top buyer by acquiring 48.6 tonnes of gold between January and March 2025.

According to the report, this figure represents nearly half of its total purchases in 2024, which amounted to 89.5 tonnes. The Polish central bank, Narodowy Bank Polski (NBP), has significantly accelerated its accumulation of reserves, most likely motivated by its geographic proximity to the conflict between Russia and Ukraine. At the end of the first quarter, Poland held a total of 496.8 tonnes of gold, valued at $53.1 billion based on the May 9 price, which stood at $3,324.55 per ounce.

The document also highlights Azerbaijan, which in March added 18.7 tonnes of gold to the State Oil Fund (SOFAZ), after having made no purchases in the previous two months. As a result, its reserves reached 165.3 tonnes, representing 25.8% of its assets. China, for its part, bought 12.8 tonnes during the first quarter of the year, a lower figure than the 15.3 tonnes acquired in the last quarter of 2024. Although it could surpass the 44.2 tonnes accumulated last year if it maintains this pace, its purchases still fall far short of the record 224.9 tonnes reached in 2023.

Kazakhstan, which led gold sales in 2024, changed its strategy in 2025 and resumed accumulation with 6.4 tonnes purchased in the first quarter. In contrast, Uzbekistan led the sales with a net divestment of 14.9 tonnes, after buying 8.1 tonnes in January and selling 11.8 in February and 11.2 in March. It was followed by the Kyrgyz Republic and Russia, with sales of 3.8 and 3.1 tonnes, respectively.

Meanwhile, the United States remains the country with the largest national gold reserve, with 8,133.46 tonnes in the form of bars and coins. However, Switzerland stands out for having the highest per capita gold holdings: 115.19 grams per person, equivalent to 3.70 troy ounces or 37 small 0.1-ounce coins.

If Poland maintains its current pace, it could double its 2024 purchases, further strengthening its position as the world’s leading gold buyer. In contrast, Turkey has fallen to sixth place in the 2025 ranking after adding only 4.1 tonnes in the first quarter, representing a decrease of 15.5 tonnes compared to the previous quarter. India shows a similar trend, with just 3.4 tonnes purchased between January and March, a drop of 19.1 tonnes from the end of 2024, placing it in seventh position.

In addition to Poland, Azerbaijan, China, and Kazakhstan, other countries that increased their reserves in the first quarter of 2025 were the Czech Republic (5.1 tonnes), Turkey (4.1), India (3.4), Qatar (2.9), Egypt (1.4), and Serbia (0.9).

As for sellers, the landscape has shifted significantly compared to 2024. Countries such as the Philippines, Kazakhstan, and Singapore, which led sales last year, are no longer on the current list. In their place, Uzbekistan tops the sales, followed by the Kyrgyz Republic, Russia, Mongolia, and Germany, the latter two with more moderate divestments of approximately 200 kilograms each.

The Consequences of the French Confidence Vote: Volatility and Debt Rating Review

| By Amaya Uriarte | 0 Comentarios

eToro acuerdo Nasdaq mercados nórdicos — Pixabay CC0 Public Domain

The French Prime Minister, François Bayrou, has called for a vote of confidence on his fiscal plans, which include €44 billion in budget cuts. The vote is scheduled for September 8, and Bayrou has stated that he will resign if it does not pass. Since this announcement, the main French opposition parties have been quick to declare that they will not support the prime minister’s proposals.

Markets have also reacted to Bayrou’s plans. Notably, the spread between German and French 10-year bonds surged to nearly 80 basis points. Although still below the highs recorded at the end of 2024, it is worth noting that the spread is now higher than that of Spain or Greece. In other words, France pays more than those countries on newly issued debt.

The consequences will extend to other areas. For example, John Taylor, Head of European Fixed Income at AllianceBernstein, expects credit rating agencies to update their ratings on France in the coming months, starting with Fitch on September 12. “There is a high probability that at least one agency will downgrade France’s rating to a single A in the coming months,” the expert predicts, noting that September usually sees an increase in sovereign supply, “which has historically had a negative seasonal impact on European spreads.”

Some agencies have already shared their views on the matter. One such case is Scope Ratings, which states clearly: “political obstacles hinder fiscal consolidation.” The firm points out that political gridlock “undermines” the projected reduction of the budget deficit to 5.4% in 2025 and 4.6% in 2026, from 5.8% of GDP in 2024. Instead, their base case is that France’s budget deficit will only decline to 5.6% of GDP in 2025 and 5.3% in 2026.

The agency also notes that net interest payments are expected to rise to approximately 4% of government revenue in 2025 from 3.6% in 2024, in line with Belgium (AA-/Negative, 3.8%) but still below Spain (A/Stable, 5.2%) and the United Kingdom (AA/Stable, 6.6%). Similarly, yields on 10-year French government bonds have risen moderately but steadily to 3.5%, converging with those of Spain and Italy (BBB+/Stable).

While this is not their base case, Scope Ratings believes that a favorable outcome in the vote of confidence would be a significant step forward and would support short-term budgetary commitments. However, they warn that political uncertainty ahead of the municipal elections in March 2026 and the presidential elections in April–May 2027 “remains a key credit challenge.”

Therefore, they conclude that France’s medium-term fiscal outlook “remains constrained by a fragmented political landscape, growing polarization, and an electoral calendar that hampers political consensus on economic and fiscal reforms.”

Credit ratings, along with quantitative tightening and the additional bond supply the market must absorb, “could contribute to increased volatility in the coming weeks,” according to Taylor.

The AllianceBernstein expert acknowledges that the firm had already anticipated this political development as “inevitable,” given the difficult budget negotiations France must conduct with a fragmented parliament. As a result, they have maintained an underweight position in French sovereign debt in their global and European accounts, “as the market seemed to have underestimated this risk.” However, he believes the risk will remain isolated to French sovereign and agency debt, thus reiterating his overweight position on the euro.

Meanwhile, Mitch Reznick, Head of Fixed Income for London at Federated Hermes Limited, says the market is reacting to concerns that one of the widest budget deficits in Europe may not be reversed; the prospect of a wave of strikes and protests; and general economic disruption. “Under these conditions, it’s very difficult to imagine that French risk assets can outperform in the short term,” he argues, while explaining that the rise in French bond yields “could open some interesting medium- to long-term investment opportunities for strong credit profiles.”

The political situation in France has forced Schroders strategists to rethink their strategy. This is revealed by Thomas Gabbey, Global Fixed Income Manager at the firm. “We expect political tension to return in the second half of 2025, as we anticipate that the 2026 budget negotiations will spark inter-party disagreements and lead to new elections.” With this in mind, Gabbey began underweighting French sovereign bonds in portfolios starting in June and increased that underweighting in early August, “as we did not believe the market was sufficiently pricing in the political or fiscal risk of French bonds.”

One of the key themes Gabbey admits to having worked with this year has been signs of European recovery, driven mainly by the manufacturing sector and supported by a sharp shift in German fiscal policy toward increased infrastructure spending. “Renewed political uncertainty in France could derail this European growth rebound, and it’s something we’ll continue to monitor for any sign of impact on business confidence,” the expert explains.

Julius Baer points out that, as has occurred in the past, France’s debt affordability remains relatively high, “given that the country has benefited from a very long period of very low financing costs and a long average debt maturity.” A situation which, in the firm’s view, “should limit the potential for a massive sell-off of French government bonds.” Nevertheless, Julius Baer experts do not foresee a quick resolution to the current political dilemma and therefore believe that “the additional spread on French public debt is not going to disappear so easily either.”

Meanwhile, at Bank of America, they see opportunities in this situation: given the political risk premium, they consider it attractive to hold CAC volatility and protective puts on certain French stocks, “based on a proxy hedging analysis, in case concerns over a government collapse intensify.” In fact, they see room not only for CAC volatility to continue rising relative to the German DAX, but also for the spread itself to widen further “if history is any guide.”

The Trend of “Friendvesting” Gains Traction Amid Structural Geopolitical Risk

| By Amaya Uriarte | 0 Comentarios

Global defined contribution pension plans — Pixabay CC0 Public Domain

Geopolitical Factors Like Military Conflicts, Sanctions, and Long-Term Shifts Such as Trade Barriers Are Increasingly Influencing Investment Decisions, according to findings from the report “Friendvesting: The New Architecture of Investment in a Fractured World”, developed by Economist Impact and sponsored by Xtrackers from DWS.

The document reveals that equity and fixed income, in particular, react quickly to political events, forcing fund managers and investors to rethink old assumptions about risk and return. In this context, the report’s authors propose friendvesting—investing alongside geopolitical allies with shared economic and strategic interests—as a core strategy for institutional investors in 2025.

What Is the “Friendvesting Era”?

“Institutional investors no longer treat geopolitical conflict as background noise. The war in Ukraine and the Middle East, tensions in the Taiwan Strait, and tariff threats from Washington have turned geopolitics into a central variable in portfolio construction. The firm’s survey of 300 global investors shows a shift: from viewing geopolitics as episodic to treating it as structural—redefining the destination of capital flows, their allocation, and management. The emerging pattern is friendvesting: aligning capital with jurisdictions where geopolitics is less intrusive and avoiding—or at least protecting against—any rising risks,” the report states.

Friendvesting begins with geography: two-thirds of investors state that it is the main factor influencing the geopolitics of their portfolios. For real assets (ports, pipelines, or real estate), location is crucial. But in most cases, investors are less concerned about where an asset is recorded than about its exposure to geopolitical risks that move across geographic borders. In equities, the question isn’t whether a company is listed in Boston or Beijing, but whether it depends on suppliers, clients, or operations in volatile jurisdictions. The new geography of capital is defined less by proximity than by dependency.

Asset Classes and the Shape of Risk

If geography defines the boundaries of friendvesting, asset allocation gives it shape. Different assets carry geopolitical risk in different ways. Some transmit it openly; others conceal it until problems emerge. Bonds depend on legal enforceability; stocks reveal operational entanglements; and real assets are vulnerable due to their physical immobility. For investors, the task is to understand how each asset absorbs and transmits geopolitical tension. This is made more difficult by the unreliability of traditional risk metrics when international conflicts arise.

According to the report, geopolitical risks are unevenly distributed across sectors. Some industries lie closer to dividing lines and are vulnerable to sanctions and regulatory barriers. The study prioritizes technology, energy, and defense. However, the specific boundaries of exposure vary by country. Investors ask what each sector represents—how it is perceived, politicized, and potentially weaponized.

The Bureaucratization of the Unpredictable

Quantifying geopolitical risk remains difficult, which is why nearly half of investors cite forecasting uncertainty as their main challenge. Sanctions and tariffs are hard to model, and wars break out without warning. Institutional responses vary: some firms create cross-functional risk committees; others outsource to consulting firms staffed by former diplomats. Hybrid investment models—combining passive exposures with dynamic hedging—are gaining ground, offering both stability and responsiveness.