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As investors, we are always trying to separate meaningful information from the noise in an ever-changing geopolitical landscape. This week the most significant events came from Germany, which announced plans for one of the largest fiscal regime shifts in post-war history.

It has not been an easy year for European politicians. In addition to facing a rise in popularity from what were once fringe, far-right parties, they must also now adapt to the US’s shifting approach to foreign policy.

In the October 2024 Budget, Chancellor Rachel Reeves announced significant tax increases aimed at generating £40 billion in additional tax revenue. As tax year end is just a few weeks away, we summarise the incoming tax rule changes.

Given that geopolitics has been the source of most headlines in recent weeks, central bank policy has fallen from the top spot, although remains a significant factor impacting markets. As four of the largest developed market central bank have now held their first meetings of the year, it’s important to revisit this topic.

It’s only a slight oversimplification to say that what mattered most in equity markets in 2024 was: how much you were spending on AI, how much your AI clients were buying from you and how close your CEO was to the incoming US president.

Earlier this week, a little-known Chinese artificial intelligence (AI) start-up called DeepSeek roiled markets by launching its competitor to ChatGPT. The powerful AI model was created with far less money than AI experts thought possible.

Last year, we saw how periods of high inflation increased pressure on incumbent governments around the world. However, given President Donald Trump’s America-first agenda has the capacity to exacerbate price pressures, it seems that inflation concerns will take some time to fade.

Gilts have been weak since the Labour government’s budget in October, although broadly tracked US Treasury movements. But this week, we witnessed sharp moves, with yields on ten-year gilts surpassing 4.8% for the first time in 17 years, and 30-year gilt yields exceeding 5.35% for the first time in 27 years.

2024 saw US economic growth gather steam as the Federal Reserve orchestrated a soft landing, creating an environment where earnings and corporate confidence supported equities and credit markets. Learn more about last quarter's activities in the global market.

Central banks were active this week, as both the Federal Reserve and Bank of England held their final meetings of the year, setting the stage for what is sure to be a very interesting 2025.