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As 2024 draws to a close, the world economy is enjoying a moment of relative stability. Post-pandemic inflationary pressures have eased. Central banks, after aggressively tightening, are cautiously lowering interest rates, reducing the spectre of a policy-induced recession. Cross-asset volatility is subsiding, and key measures of financial stress remain reassuringly low. But this sense of calm conceals areas of vulnerability. Government deficits have widened alarmingly and sovereign bond markets are reflecting growing unease over borrowing levels. New technologies are redrawing the investment landscape, creating a new set of winners and losers. Financial asset valuations, particularly in the United States, remain...

Donald Trump’s second stint in the White House could generate positive global economic spillovers as tax cuts, deregulation, and fiscal stimulus deliver faster growth. But his isolationist instincts could also stoke inflation, depress cross-border trade, and add to international political upheaval.  A full-scale escalation in trade hostilities seems unlikely, and isn’t our base case: US consumers won’t welcome sharp price increases, many congressional Republicans are ideologically opposed to trade barriers, and markets themselves should restrain policy extremes.  But if the former president nonetheless follows through on campaign promises to impose 60% tariffs on Chinese goods and 10% duties on all...