In February 2025, global financial markets faced a challenging environment marked by several key developments. The U.S. Federal Reserve maintained interest rates at 4.50% for the second consecutive month, following a series of rate cuts that began in September 2024. This decision reflects the Fed's cautious approach amid mixed economic signals, including slower growth projections and persistent inflationary pressures

Share markets gained during January. US President Donald Trump signed a flurry of (economic and non-economic) Executive Orders following his inauguration, unwinding some actions previously undertaken by President Joe Biden. Los Angeles suffered an outbreak of wildfires that caused widespread property destruction (quite apart from the tragic loss of life). Israel and Hamas began implementation of the first stage of a negotiated ceasefire agreement, with Israel exchanging prisoners for hostages held by Hamas.

Share markets finished the calendar year weaker and bond yields were volatile during the month. Rebel forces ousted Syrian dictator Bashar Al Assad amid ongoing unrest in the Middle East, outgoing US President Joe Biden signed legislation to avert a US Government shutdown and the US Federal Reserve cut interest rates by 0.25%, taking its target range to between 4.25% and 4.50%. Investors were surprised by a shift in the Fed's outlook for interest rates which indicated a slower pace of cuts in 2025 due to elevated inflation expectations. The RBA held the cash rate steady during the month following a sluggish September-quarter GDP print and strong Australian unemployment print.

Share markets saw strong gains in November as bond yields declined. A "clean sweep" electoral victory for Donald Trump surprised markets, driving a rally in many risk assets from equities to Bitcoin. Late in the month, a US-brokered ceasefire deal was struck between Israel and Hezbollah amid cautious optimism regarding the longevity and terms of the deal.

Share markets declined in October as bond yields rose sharply, signalling a rising probability of a Trump election victory and ensuing policy that may result in trade wars, elevated inflation and increased deficits and debt (bond issuance). Israeli troops made an incursion into Lebanon as the battle with Hezbollah intensified while Iran and Israel engaged in missile strikes against each other. The Bank of Canada cut interest rates by 50bp to 3.75% while the RBA held rates steady. Australia's CPI inflation for the year to the end of September came in at just 2.8% while the September employment growth report was surprisingly strong, indicating that a RBA rate cut may still be some months away.

Share markets posted gains in September despite the ongoing war in Gaza and a significant escalation in the conflict between Israel and Hezbollah in Lebanon.

Share markets posted mixed results in August. Japan's modest increase in its official cash rate during July coincided with a "flash crash" in the Nikkei, possibly reflecting investor fears of a major unwind in the "carry trade".