Trump Hits Switzerland with 39% Tariffs

The highlight of Switzerland’s summer calendar is the national holiday (Switzerland’s birthday), which fell last Friday, 1st of August, but all of Switzerland, including the government, woke up to the headlines that President Donald Trump had hit the country with punitive tariffs of 39%. The tariffs cover all Swiss imports to the United States and in 2024, according to data released by the United Nations COMTRADE data base totalled USD 72.88 Billion, leaving America with a trade deficit of USD 38 Billion, (though other figures suggest it’s as high as USD 47.4 Billion,) the 13th largest of any nation with the USA. This has obviously caught the eye of President Trump who has made it clear that he wishes to eradicate trade imbalances with all of America’s trading partners.

This has come as a huge shock for both the politicians and the business elite as only a few weeks ago the government was exuding confidence regarding its tariff negotiations with the United States. Indeed, back in May, Switzerland hosted the United States and China in the hope of preventing a trade war which gave Switzerland’s President Karin Keller-Suter the opportunity to meet with Scott Bessent, the United States Trade Secretary. It appeared that the meeting was successful having been told that Switzerland was second in the queue after Great Britain to strike a trade deal with the U.S. at potentially a 10% tariff, much lower than the 31% as unveiled by President Trump back in April’s “liberation day”.

Therefore, the 39% has come at a complete shock and politicians are divided as to the negotiation tactics, with some saying the government were too obsequious, and others saying they were too tough, while many just said the negotiation tactics were not up to scratch. However, the trade deficit according to officials is the sticking point, and basically the Swiss sell more to the U.S. than it buys, and the population of just 9 million quite frankly just do not like U.S. goods such as their cheese, chocolates, and cars. However, the Swiss have tried to compensate for the trade deficit by reducing their own tariffs on imported U.S. industrial goods to zero, and many of the Swiss companies have multibillion dollar investments in U.S. plants. Data suggests that Swiss investment in the U.S has created circa 400,000 jobs, furthermore Trump has ignored service industries which would bring the deficit down to USD 22 Billion, but sadly President Trump is just fixated on trade imbalances.

Analysts point to one problem which is where on earth did the 39% come from, which makes it appear that President Trump is just arbitrarily picking out numbers from thin air. There appears to be little wiggle room in negotiations, but Switzerland could import LNG (Liquified Natural Gas) from the U.S. plus they can also point out they are committed to investments in the United States totalling USD 105 Billion. In Q1 two thirds of the trade deficit was due to shipments of gold bullion, this was due to the price of gold not due to any added value by the Swiss refineries. Experts point out that gold is not manufactured in Switzerland but reprocessed into bars and one offer to Trump could be a one off tariff of 50% on gold.

This Thursday, 7th August is deadline day for tariffs and experts point out that the Swiss government will be moving heaven and earth to get an extension. Indeed, officials from the Swiss State Secretariat for Economic affairs have already contacted their counterparts in the United States to try and negotiate a way forward, plus the President of Switzerland herself is flying to Washington (without an invitation) to meet face-to-face with Trump in the hope of avoiding the increase in tariffs. Trump is known for flip flopping at the last minute so the President of Switzerland can only hope they can extend the current deadline and get a reprieve, otherwise the damage to their economy could be quite serious. Experts point out that the key to the current tariff impasse would be that instead of dealing with Trump’s negotiators is instead to win over the man himself.

Overview of the New Trade Agreement Between the European Union and the United States

On Sunday 27th July, and after weeks of tense behind the scenes negotiations, the President of the European Union, Ursula von de Leyen, shook hands with United States President, Donald Trump, concluding a trade pact a week before the upcoming deadline as set by the White House. The trade deal was announced by the two leaders at Donald Trump’s golf course, Turnberry, located in Ayrshire, West Scotland. Those close to the negotiations said the “framework deal” was finally stuck, and ultimately it took a face-to-face meeting between the two leaders to reach an agreement. However, a number of EU member countries have already voiced their disapproval and in some cases outright hostility to the agreement.

The White House administration has lauded the agreement as a big win for Donald Trump, advising that based on last year’s trade figures the US governments will be better off by circa USD 90 Billion. Furthermore, included in the agreement is the EU’s promise to purchase arms and energy products from the United States which analysts estimate to be in the region of hundreds of billions of US Dollars. Elsewhere, carmakers in the EU will only face a 15% surcharge on imports into America, whereas the global tariff introduced in April is 25%. Indeed, the Eurozone agreement to a 15% tariff on most exports (steel will remain at 50%) to the United States has prevented a trade war which would have probably dealt a hammer blow to the global economy.

Not all European leaders were happy with the agreement with initial words coming from Benjamin Haddad, France’s Junior Minister for Foreign Affairs, who called the agreement “unbalanced”, Hanneke Boerma, the Dutch Minister for Foreign Trade, said the deal was “not ideal” and urged further negotiations with the United States, and the French Prime Minister Francois Bayou said it was “tantamount to a submission”. On Wednesday 30th July France’s President, Emmanuel Macron, said the deal is “not the end of it”. He went on to say that “the European Union had not been feared enough in negotiations with the United States towards a trade deal”, pledging to be firm in follow-up talks. Meanwhile, Friedrich Merz, the German Chancellor, said the agreement would “substantially damage the nation’s finances”, France’s far right leader, Marine Le Pen, said the agreement was a “political, economic and moral fiasco”, whilst the Hungarian leader, Viktor Orban, announced that “Trump had eaten von de Leyen for breakfast”.

A number of experts have already said that this is a bad deal for the European Union. In fact, when Great Britain announced a 10% tariff agreement with the United States, the statement that came out of Brussels was “we will never accept such humiliating terms”. Analysts now suggest that the hit to the EU’s economy would be 0.4 percentage points by the end of 2026 and the average tariffs on imports from the Union are set to rise from 1.5% (when Trump was elected) to circa 16%. Meanwhile, experts are suggesting that the EU is now a pushover and will have a weakened hand in future negotiations, and recently the Sino/EU trade negotiations came to nought partly as in part the Chinese would not make any concessions to a European Union that lacks leverage.

However, von der Leyen said the deal avoided the near-term catastrophe of an all-out trade war and had nullified any near-term uncertainty. Sadly, some experts and economists have said there is a perception that the European Union cannot defend their own interests which will undermine their position as a key geopolitical player which is the key to their wish for the Euro to play a bigger global role. Indeed, the president of the European Central Bank, Christine Lagarde, recently advocated a greater international role for the Euro, specifically its active function as an international reserve currency. Experts suggest that since the US/EU trade agreement such words may well fall on deaf ears. The US/EU trade agreement is not a done deal, just look at all the negative comments and outright hostility being shown by some member countries towards this agreement, and it suggests some very choppy seas are just around the corner.

The Federal Reserve Keeps Interest Rates on Hold

On Wednesday, 30th July and for the fifth straight time, the Federal Reserve’s FOMC (Federal Open Market Committee) kept interest rates steady at 4.25% – 4.50%. The committee voted 9 – 2 to keep interest rates on hold with the two dissenting voices belonging to Governor Christopher Waller and Governor Michelle Bowman. Both governors are appointees of President Donald Trump and experts point out that such dissension from political appointees has not occurred for over 30 years which is a sign of both political pressure and economic uncertainty being felt by the Federal Reserve. Chairman Powell indicated he was not concerned with the dissenting voices but he did say “On the dissents, what you want from everybody and also from a dissenter is a clear explanation of what you are thinking and what arguments you are making”. 

Officials from the Federal Reserve downgraded their view of the economy saying “recent indicators suggest that growth of economic activity moderated in the first half of the year” as opposed to previous statements where growth was characterised as expanding at a solid pace. Interestingly, analysts have pointed out that today’s interest rate decisions were made without key data, and the Chairman of the Federal Reserve Powell has pointed out that decisions are currently data driven. This key data is the Commerce Department’s Personal Income and Outlays report, (due out 31st July), which provides essential data on household spending and income, and the Personal Consumption Expenditures price index which is the Federal Reserves favoured inflation gauge.  

Following the FOMC meeting, Chairman Powell said the central bank has confidence in the economy of the United States and that it is strong enough to hold interest rates steady as it determines how the tariff policy of President Trump ultimately plays out and their effect on the economy. He went on to say “Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen. A reasonable base case is that the effects on inflation could be short lived, reflecting a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent and that is a risk to be assessed and managed”.  

Despite political pressure and personal insults from President Trump to Chairman Jerome Powell the Federal Reserve held interest rates steady. Despite many experts predicting a rate cut at the next meeting of the FOMC (16th – 17th September), the financial markets pared back bets expectations for a rate cut, whilst interest rate futures indicated a 50/50 chance of a rate cut in September down from 60%. Data released showed that GDP had increased on an annualised basis by 3% in Q2 after Q1 showed a shrinking of 0.5%, experts put the swing down to companies front-loading of imports to avoid tariffs. Consumer spending advanced at its slowest pace over Q1 and Q2 since the pandemic.  

Chairman Powell has made it clear that there is still room to hold rates, something that will no doubt send President Trump into a fit of rage. Data released since the FOMC’s last meeting on 17th – 18th June has given officials little reason to shift from their “wait and see” policy stance, which has been in effect since Donald Trump’s elevation to the White House. Whilst there will be a cornucopia of data between now and the September meeting of the FOMC, experts point out that the Jackson Hole Economic Symposium (in Kansas City) is being held between 21st – 23rd August. The Federal Reserve Bank of Kansas City hosts central bankers, policymakers, academics and economists from around the world, and Chairman Powell has been known to indicate forthcoming policy shifts, so perhaps financial markets and President Trump will get a peek into future Federal Reserve policy. 

The ECB Leaves Interest Rates Unchanged

Today the ECB (European Central Bank) held interest rates steady with the key deposit rate* holding at 2%. To date, the ECB has cut interest rates eight times since June 2024 and President Christine Lagarde advised that the economy was now in a good place and growth is in line with projections or perhaps a little better. The president went on to say that having left interest rates unchanged that the ECB was now in a “wait and see mode” with the ECB shunning calls to reduce the cost of borrowing.

*Key Deposit Rate – The European Central Bank’s (ECB) key deposit rate is currently 2.00%. This rate is the interest banks receive when they deposit money with the central bank overnight. The ECB also sets other key interest rates, including the main refinancing rate (2.15%) and the marginal lending facility rate (2.40%). These rates are used to influence borrowing costs and economic activity in the Eurozone.

President Lagarde as advised above confirmed that the economy is growing in line with expectations however, she reminded the markets of the risks with the economy tilted towards the downside and said,” higher actual and expected tariffs, the strong euro and persistent geopolitical uncertainty are making firms more hesitant to invest”. She went on to say that “Wage increases are coming down and as growth has been developing in a relatively favourable way means we are now confident that the inflation shock of the last few years is behind us and our job is to look at what’s coming”.

The Vice President of the ECB Luis de Guindos, (previously Spain’s Minister of Economy, Industry and Competitiveness 2011 – 2018) warned growth will be almost

flat in Q2 and Q3 due to businesses front-loading to sidestep higher levies. Analysts and traders in the financial markets are betting that there will be one more rate cut before the end of the year with recent data released suggesting that a number of economists favour a rate cut at the next meeting on 11th/12th September. However, an executive member of the board Isabel Schnabel confirmed that the eurozone’s 20 nation economy is resilient and advised that the bar of another rate cut is very high. 

Despite the comments Schnabel financial market experts advise that the decision to hold rates could be breather before steeper cuts than currently predicted in order to prevent the eurozone’s economy from stalling and to block a period of deflation*. Indeed, the threat of deflation is in the air due to disinflation* being rampant across the eurozone, plus intensifying Chinese competition and the ongoing threat of tariffs from President Donald Trump and his administration. As President Lagarde mused, we certainly will have to “wait and see”.

*Difference Between Disinflation and Deflation – Disinflation refers to a decrease in the rate of inflation, meaning prices are still rising, but at a slower pace. Deflation, on the other hand, is a sustained decrease in the general price level of goods and services, meaning prices are actually falling.

Collateralised Fund Obligations are Emerging as a Popular Route to Raise Finance

Collateralised Fund Obligations or CFOs have been around for nearly 25 years, they are a close relative of CDOs (Collateralised Debt Obligations) and are a vehicle for securitising real or alternative assets, including interest in real estate and infrastructure debt and equity, hedge funds, private credit funds, private equity funds. CFOs are basically a form of structured financing especially for diversified private equity or hedge fund portfolios, where several tranches of debt are layered ahead of equity holders. Essentially CFO’s slice and dice private portfolios into bonds, quite often with senior credit ratings from the likes of Standard & Poor,s, Fitch, and Moody’s, and issuers are able to borrow cheaply from an illiquid asset.

Experts suggest that typically CFOs bond issues are worth between 50% and 75% of the value of the holdings in the underlying funds and one of the reasons why the obligation have taken off is that private firms have been looking at ways to source more liquidity. Moreover, dealmaking has been at a low point exacerbated by President Trumps’ tariffs and the turmoil it has created thereby disrupting normal business models. Experts within the rating arena suggest that this market will continue to grow as the rating companies are having more and more CFO’s passing across their desks.

CFOs have become of particular interest to insurance companies and thanks to the NAIC (The National Association of Insurance Commissioners’) the industry regulator, who have allowed industry participants to increase purchases of CFO’s. On 1st January this year the new rules took effect which cleared up any worries or doubts about capital treatment for securities and accordingly has allowed private capital firms to tap into the deep liquidity of the insurance market. The President of the NAIC recently said “Many of these (CFOs) are carefully designed, they are cashflow tested instruments to help insurers to meet their obligations in ways that some low yield public markets can’t”.  

From a risk perspective the structure of CFOs have built-in safeguards which will include a “first-loss equity portion” which in the event of a decline in value or default will take the first hit. Furthermore, CFOs unlike vehicles such as CLOs (Collateralised Loan Obligations) who have single issuer risk, (financial troubles for one big borrower can trickle down throughout the market), CFOs have no such similar risk.

Currently there is no available data as to the size of the CFO market but experts suggest the market is relatively small however, in March of this year one bond rating agency advised that since 2018 it had assigned ratings to USD 37.7 Billion worth of CFOs with the bulk of these issues coming since 2022. It is important to point out that CFOs are different to CDOs (Collateralised Debt Obligations) which were mainly responsible for the Global Financial Crisis 2007 – 2009, where subprime mortgages were repackaged, however, with CFOs many of the underlying companies are private equity backed with millions in earnings.

Overview for Gold Q3 and Q4 2025

In Q1 and Q2 gold investment demand for the metal was strong with gold rising at a record setting pace of 26% (in US Dollars terms), this was mainly a result of global geoeconomics uncertainty, rangebound rates and a weaker dollar. Indeed, the US Dollar has had its worst start to the year since 1973 and with US Treasuries underperforming, (inflows faltered in April) due to heightened uncertainty in the U.S.A, inflows into gold ETFs* from all regions in the first half of the year was very strong. By the close of business 30th June 2025 total AUM (Assets Under Management) for global ETFs totalled USD 383 Billion up 41%. Total holdings rose by USD 38 Billion equivalent to 3,616t which is the highest month end figure since August 2022.

*ETF or Exchange Traded Fund – allow investors to hold a multiple of underlying assets in this case gold. It is a type of investment fund that allows investors to gain exposure to the price of gold without physically owning the metal. It is essentially a mutual fund that buys and holds gold bullion and investors can buy and sell shares in the fund on a stock exchange.

Second Half of 2025

Analysts in the gold arena suggest that the consolidation of gold in the last few months and with technical indicators showing a pause within the current uptrend that has helped ease overbought conditions has set the stage for a potentially renewed upside. Furthermore, analysts suggest that continued global uncertainty, plus uncertainty with White House policies, (especially tariffs) together with falling interest rates will hopefully maintain investor appetite especially for OTC and ETF transactions. On the central bank front analysts suggest that appetite will remain strong, remaining well above the pre-2022 average of 500 – 600t but staying below previous records.

However, those within the gold arena warn that gold prices are probably going to continue to be elevated, possibly curbing consumer demand and encouraging recycling, thus putting a negative effect on a stronger gold performance. This neatly leads on to the flip side for gold where experts suggest gold could finish the year in a positive aspect but lose between 12% – 17%. Such figures are offered to the background of demonstrable and sustainable geoeconomic and geopolitical conflict therefore reducing the need for hedges such as gold as part of investment strategies, thus encouraging investors to take on more risk. The reduction in risk would according to experts lead to the aforementioned pullback (which is equivalent to the trade risk premium*) would be triggered by a stronger dollar and rising yields would reduce overall investment demand thus leading to outflows from ETFs.

*Trade Risk Premium – The trade risk premium for gold refers to the additional return investors expect to receive for holding gold above the risk-free rate as compensation for the inherent risks associated with investing in gold. These risks can include price volatility, potential lack of liquidity in specific markets, and the possibility of negative correlation with other assets during times of market stress. Essentially, it is the premium investors demand to hold gold instead of safer, risk-free assets such as treasuries or other safe government bonds.

Conclusion

Experts conclude that there are two scenarios regarding the future of gold in Q3 and Q4 of this year. 1. Should global financial and economic conditions continue to deteriorate further, thus applying more negative pressure on geoeconomic tensions which could further aggravate pressure on stagflation, flight to safe haven gold could potentially push the metal 10% – 15% higher. 2. The other scenario according to experts is that if there is across the board major resolutions in current conflicts such as Russia and Ukraine, Israel and Gaza plus Iran (seems fairly unlikely), then gold could well give back the gains made in Q1 and Q2 by as much as 12% – 17%. Given all the factors, analysts within the gold arena suggest that the way forward for the metal will remain dependent on monetary policy, trade tensions (tariffs), inflation and stagflation dynamics, and policy forthcoming from the White House.

Bitcoin Surges Past USD 120,000 Creating New Record

On Monday of this week, Bitcoin blew past the USD 120,000 mark creating a record price and hitting a high of USD 123,205 (up 3.4%) before pairing early gains to trade around the USD 121,600 mark. On the back of this rise, and clinging to the shirt tails of Bitcoin Ether, the second largest crypto token, advanced beyond the USD 3,000 barrier whilst a number of other smaller coins such as Uniswap and XRP also joined the bandwagon. Experts suggest that investor demand has been fuelled by crypto week (14th – 18th July), a term coined by the House of Representatives. Indeed, the House will consider the Clarity Act*, the Anti-CBCD Surveillance State Act**, the Senate’s Genius Act***, as part of Congress’ effort to make America the crypto capital of the world.

*Clarity Act – The Digital Asset Market Clarity Act aka the Clarity Act, is a proposed US law designed to establish a comprehensive regulatory framework for digital assets, specifically clarifying the roles of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) in overseeing these assets.

**Anti CBCD Surveillance State Act – This act prohibits unelected bureaucrats in Washington D.C. from issuing a CBDC (Central Bank Digital Currency), that undermines Americans’ right to financial privacy.

***Genius Act – This act refers to the Guiding and Establishing National Innovation for U.S. Stablecoins Act (a stable coin is a digital currency pegged one-to-one against a hard fiat currency, mainly the US Dollar) and is a piece of legislation aimed at regulating stable coins. The act establishes a comprehensive framework for stable coin issuance, custody, and use, including rules for issuers, custodians and digital asset service providers.

Analysts suggest that investor confidence is at a high and will probably stay there for a while especially as congress are considering the abovementioned bills. Post the election of Donald Trump for a second term in the White House, Bitcoin enjoyed a surge but then fell back trading either side of USD 100,000 for a number of months. The policies emanating from the White House did indeed have a negative effect on investor optimism regarding the President’s pro-crypto agenda, however, other U.S. assets that carry risks such as equities have now rebounded to just about their original highs, giving Bitcoin has once the impetus to move upwards.

Interestingly, institutional investors have also jumped on the Bitcoin bandwagon as confidence in the cryptocurrency has dramatically improved because despite the flip-flop chaotic trade policy of the current U.S. administration, Bitcoin has been steadily moving north. Since doubling in 2024 Bitcoin is up circa 30% since January 1st of this year, and last week investors piled into combined US Bitcoin ETFs with inflows of USD 2.7 Billion, furthermore the current rally has also been helped by crypto trades by the bears who all unwound their short positions last Friday. Data released showed those traders who were short of Bitcoin and had to unwind their trades, saw their positions wiped out to the tune of USD 1 Billion.

There are many in the Democratic party who oppose the introduction of the aforementioned bills to Congress, and Senator Elizabeth Warren last week made vocal her concerns regarding the package of bills, stating it could amount to an “Industry Handout”. She also noted that if passed into law, these bills could inject traditional cryptocurrency volatility into mainstream financial markets. Once upon a time, President Trump described Bitcoin as a “Scam”, but a complete U-turn showed him to be the biggest backer of the crypto world. His family are heavily invested in crypto world such as Bitcoin, Stable Coin crypto mining and sensationally the two meme coins $Trump and $Melania. He has promised to make America the crypto centre of the world, and it appears he will be living up to that promise.

Major Banks Have Ditched the Net Zero Banking Alliance

The NZBA (Net Zero Banking Alliance) was convened in April 2021 by the UN (United Nations) Environment Programme finance initiative and led by banks whose mission statement was to support efforts to align lending, investment, and capital market activities with achieving net-zero greenhouse gas emissions by 2050. Founding luminaries of the banking world were Citigroup, Bank of America, HSBC Group, and NatWest Group and 39 other leading global financial institutions.

However, the NZBA is under pressure, as back in January this year a number of U.S. banks left the group and most recently HSBC Group has followed suit. The general feeling is that the American banks resigned from the NZBA* as they were under pressure from the then President Elect Donald Trump as he was pushing for higher production of oil and gas thus spurring a backlash against the Net Zero climate bodies. A number of pro net-zero activists have accused the banks of pandering to the political pendulum, and their current efforts are to avoid criticism from the then in-coming Trump administration.

*American Banks No Longer with the NZBA – Citigroup, Bank of America, Morgan Stanley, Wells Fargo, Goldman Sachs, and JP Morgan all resigned before 1st December 2024.

Earlier this month, HSBC was the first British Bank to leave the NZBA, with the move perhaps a potential trigger for other British banks to follow suit. At the launch of the NZBA, the then CEO of HSBC Group Noel Quinn said it was “Vital to establish a robust and transparent framework for monitoring progress towards net-zero carbon emissions. We want to set that standard for the banking industry. Industry – wide collaboration is essential in achieving that goal”. Interestingly, HSBC’s new CEO, George Elhedery, confirmed back in late October 2024 that their Chief Sustainability officer Celine Herweijer had been removed from the bank’s top internal decision-making process, the “executive committee”. She subsequently resigned from HSBC shortly after being dropped from the executive committee.

Some experts have voiced little surprise that HSBC has resigned from the NZBA, citing not only have the top 6 US banks resigned but removing Celine Herweijer from her post on the executive committee may suggest that HSBC was taking a different path regarding climate control. CEO George Elhedery was quick to point out it was all part of a restructuring process and reaffirmed HSBC’s commitment to supporting net-zero. In January 2024, HSBC unveiled its first “net-zero transition plan” detailing its strategies to achieve its climate targets by 2050 (downgraded from 2030) plus its investment decisions it aims to undertake to facilitate decarbonisation across various sectors of finance. A number of senior voices in the net-zero world took issue with HSBC accusing the bank of profits at any cost.

Following their net-zero transition plan, the new Chief Sustainability Officer (not on the new Operating Committee) Julian Wentzel said back in February of this year that the bank would take a “more measured approach” to lending to the fossil fuel industry, giving way to concerns to the net-zero world that the bank would row back on its promises.

On HSBC’s website, it is written that targets for cutting emissions linked to their loan book “would continue to be informed by the latest scientific evidence and credible industry-specific pathways, which again bank detractors say is bank-speak for rowing back on its promises. Meanwhile in America, Republican politicians have instructed some banks to testify before the relevant policymakers who have accused them of unfairly penalising fossil fuel producers with their memberships of the NZBA and other similar groups. Experts point to the obvious political pressure put on banks to leave these organisations.

Elsewhere in the net-zero world and almost a decade on from the Paris Climate Agreement (under Trump the USA has withdrawn for the second time) the world’s largest companies who despite on-going promises and climate manifestos are still struggling to meet net-zero goals. A study produced by a well-known body suggests that only 16% of companies are actually on target to meet their 2050 net-zero goals and a well-respected senior voice in the climate control industry has said “to reach 2050 net-zero goals all of us need to move faster, together, to reinvent sustainable value chains using deep collaboration and transformative technologies”.

According to recently released data, global financing of fossil fuel companies has increased in 2024 (an increase of USD 162 Billion to USD 869 Billion) for the first time since 2021 with banks who have left the NZBA among the biggest funders. So where does this leave the NZBA in its efforts to get banks to increase financing for green projects? Obviously, the organisation is sad it has lost the previously mentioned banks but they still today have over 120 members and currently represents about 41% of banking assets.

Whilst some members have increased their fossil fuel financing some have made cuts to their financing with Santander making the largest single reduction in expansion finance (USD 2.2 Billion) and ING came top in terms of overall divestment slashing its annual fossil fuel financing by USD 3.2 Billion compared with their figure for 2023. Experts in the net-zero world say the NZBA is here to stay with many large banks still on the membership roll. Indeed, on April 15th this year in Geneva membership voted overwhelmingly in favour of backing plans to strengthen the support it provides to its members, marking a new phase for the Alliance’s work which is in line with the goals of the Paris Agreement.

In the Crypto World Are Stablecoins About To Become Mainstream?

In the cryptocurrency arena, a stablecoin is a digital asset where the value is pegged to a fiat currency such as the US Dollar, the Euro, or the sterling pound. They can also be linked to other assets such as gold and other precious commodities. However, the preferred medium is as previously mentioned, a hard fiat currency thereby keeping its value on a daily basis and not being subject to volatility as can be seen in many other digital cryptocurrencies. Indeed, the stablecoin is being backed by White House and in particular by President Donald Trump and is gaining traction in a number of boardrooms across America. Interestingly a stablecoin launched by Donald Trump’s World Liberty Financial crypto venture, is being used by an Abu Dhabi investment firm for its USD 2 Billion investment into crypto exchange Binance.

Today there are rumours circulating that Bank of America, Uber, Amazon, and Walmart, are thinking about issuing their own stablecoins, whilst PayPal have already issued their own stablecoin PYUSD, which currently has an average daily turnover of circa USD 13.8 Million, (data from CoinMarketCap). Elsewhere, other banks and payment companies such as Mastercard and Visa are starting partnerships and investments to become part of the growing stablecoin mania and as far back as early December 2023, AXA Investment managers announced it had completed its first market transaction using stablecoins. So, what is the driving force propelling stablecoins towards the mainstream?

Proponents of stablecoins suggest that moving the processing of payments outside the global arena, (currently dominated by banks, Visa and Mastercard) may well make such processing cheaper, and the use of stablecoins will allow businesses and their clients/customers to bypass fees* charged by the payment networks. Furthermore, such proponents also suggest that companies/institutions that create their own stablecoins will help protect consumers while at the same time ensuring that the coins are easily redeemable. Regulators have already said that stablecoins must be backed on a one-to-one basis by liquid assets such as treasuries in America, or Gilts in the UK, or gold, or cash.

*Fees – Whenever a customer uses a bank card, it is subject to a transaction charge known as an interchange fee which covers processing costs as well as giving protection against fraud and other risks. The rates for fees are set by the payment networks and can vary from country to country, and data shows that the banks get the lion’s share of the fees which in 2023 for America alone totalled USD 224 Billion.

Donald Trump and his administration are very much in favour of stablecoins and in order to ensure everything moves forward in a proper manner they have created the “Genius Act”. The details of this act are currently being finalised and it will create a regulatory framework whilst at the same time giving the go ahead for banks to enter the stablecoin market. However, stablecoins do have their detractors and among them are central banks who say the coins are a poor substitute for money and whilst they are backed by assets recognised by regulators and the financial markets, they currently still need to be converted into fiat cash.

for utilisation in many day-to-day transactions. Stablecoins therefore fail as a useable currency as according to central banks the coins fail a crucial test generally referred to as the “Singleness of Money”*.

*Singleness of Money – The BIS (Bank for International Settlements) the BOE (Bank of England) and other central banks and regulators in major capitals of the world have recently expressed doubts over stablecoins as they may undermine the “Singleness of Money”. They define singleness as the principle that all different forms of money must have the same value at all times and be interchangeable at par without cost. Furthermore, the central banks and regulators have pointed out that stablecoins which currently circulate outside of the traditional payment systems trade on secondary markets as bearer instruments, can experience disparities from their pegged value and deviate in purchasing power from their pegged currency.

Other detractors suggest that the payment systems already in place are competitive, highly sophisticated with anti-fraud measures already built into the systems. Furthermore, credit card users are very protective of the “perks” or rewards they get with using their cards such as airmiles, with some experts suggesting that card users will be loath to lose their rewards. Be that as it may, analysts suggest that stablecoins will find their place in society and the financial markets especially in the United States which includes the backing of the President, Donald Trump.

Emerging Markets Debt Could Potentially Hit Record Sales in 2025

Experts in emerging market debt advise that global issuance volumes in this sector year-on-year were up 20% for Q1 and Q2 for 2025, with issuances growing particularly quickly from the corporate sector. The boom in debt sales have defied missile attacks, an oil market with gyrating prices, and US policy, and tariffs putting a strain on global trade, resulting in a major increase in demand for local bonds who are having their best Q1 and Q2 in 18 years. White House policy has seen the greenback fall circa 11% this year, which has led to a fall in investor confidence resulting in an index of emerging market local debt to return in excess of 12% in the first half of 2025.

Regarding the fall in the value of the US Dollar, experts suggest that this has sent fund managers, asset managers, and the rest of the money managers to look elsewhere for better returns, and as a result, the markets have seen a surge in demand for fixed-income assets in emerging market currencies. Data released shows that hard currency bonds are only up 5.4% in the first half of this year as opposed to 12% as mentioned above in the emerging market arena, all this against the backdrop of the US Dollar having its worst performance since 1970 and falling against 19 of 23 of the most traded emerging market currencies.

Figures released by EFPR data (formerly known as Emerging Portfolio Fund Research) show circa USDD 21 Billion (an unprecedented amount) flowing into EM-debt funds, with some Latin American bonds returning some considerable gains. For example, some Brazilian government bonds have returned in excess of 29% whilst local bonds from Mexico (known as Mbonos) have generated a gain of 22%. Elsewhere, experts suggest that Ghana (Africa’s top gold producer) will, due to short-term borrowing costs falling to their lowest level in three years, resume domestic bond sales later this year.

The following is a part overview of data released regarding the total return year-to-date on emerging market bonds, Brazil Notas de Tesouro Nacional Serie F – 20.2%, Brazil Letras do Tesouro Nacional – 26.0%, Mexican Bonos – 21.7%, Poland Bonds – 19.9%, Hungary Bonds – 19.1%, Czech Republic Bonds 17.8%, Mexican Cetes – 17.4%, Nigeria Bonds – 15.8%, Egypt Bonds 15.0%, Romania Bonds – 14.9%, Taiwan Bonds – 13.8%, South African Bonds – 13.2% and Colombian TES – 12.8%.

Since the beginning of the year, data released shows emerging markets companies and governments having sold USD 331 Billion in debt in hard currencies such as the greenback and the Euro. However, not all future roads to emerging markets fixed income products are paved with gold, as tariff increases may yet put a dent in some country’s ability to issue new bonds. Donald Trump will be reviving tariff targets in the second week of this month, indeed, yesterday the White house announced that letters had been sent to 14 countries informing them new tariffs will be enforced on 1st August this year. The president also has stressed that he will put an additional 10% tariff on any country aligning themselves with “the Anti-American policies of BRICS*”, confirming “There will be no exceptions to this policy”.

*BRICS – Is an intergovernmental agency and is an acronym for Brazil, Russia, India, China, (all joined 2009) followed by South Africa in 2010 as the original participants. Today, membership has grown to include Iran, Egypt, Ethiopia, and the United Arab Emirates and Saudi Arabia, with Thailand, and Malaysia on the cusp of joining. Russia sees BRICS as continuing its fight against western sanctions and China through BRICS is increasing its influence throughout Africa and wants to be the voice of the “Global South”. A number of commentators feel as the years progress, BRICS will become an economic and geopolitical powerhouse and will represent a direct threat to the G7 group of nations. Currently this group represents 44% of the world’s crude oil production and the combined economies are worth in excess of USD28.5 Trillion equivalent to 28% of the global economy.

It is believed by experts that the capture of the “Global South” encompasses all of Africa and South America, and BRICS seemed determined to have their own currency and move away from the US Dollar. President Trump views this as a direct threat to the USA and western Europe and will probably follow through on his threats to BRIC aligned countries. However, as President Trump alienates many of America’s traditional allies, BRICS are positioning themselves to replace the United States in the ground that Trump has ceded. The second half of 2025 will be interesting and over the next few months the markets will see if the increase in fixed-income volumes from emerging markets runs out of steam or goes on to new record highs.