04.09.25 - Calm before the storm
The debt topic is moving rapidly back into the spotlight.
In the US, the tariff saga has entered a new phase: courts ruled that a large portion of tariffs imposed this year may have been illegal. If confirmed, this could force Washington to repay billions already collected – just as the government struggles with an already stretched budget and the “Big Beautiful Bill”.
In Europe, fiscal concerns are flaring up again. France’s rising debt is putting renewed pressure on its fragile credit outlook. Across the Channel, the UK budget debate is intensifying, with crucial decisions expected by the end of November.
Markets: long-dated bonds under pressure
Yields on 30-year bonds in the US, UK, Japan and Europe have surged, with Japanese bonds hitting a record high
Gold reaches new record level trading at USD 3,550/oz
Volatility Index (VIX) slightly up in the recent days
My View: Debt and tariff clouds are building on the horizon. This could be a classic “calm before the storm” setup. Unease is growing around both fiscal and monetary policy paths in several major economies.
Markets tend to ignore structural issues, until they can’t. A renewed focus on sovereign debt sustainability or the legal consequences of potential US tariff repayments could quickly shift sentiment and unleash significant turmoil across global markets.
Seasonality adds another layer: September is historically the weakest month for equities. Whether this year will follow the pattern remains to be seen, but the ingredients for volatility are clearly in place.
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