LONDON: Most investors knew this year would be different given Donald Trump's return to power in the world's biggest economy, but few predicted how wild the ride would get, or the end results.
World stocks recovered from April's "Liberation Day" tariffs crash and have risen 21% in 2025, a sixth year of double-digit gains in the last seven, but look elsewhere and the surprises jump out.
Gold, the ultimate safe port in a storm, has surged close to 65% in its best year since the 1979 oil crisis, while the US dollar is down nearly 10%, oil is off almost 18%, yet the junkiest of junk bonds have soared in the debt markets.
The "Magnificent Seven" US tech giants seem to have lost some of their sparkle since artificial intelligence darling Nvidia became the world's first $5 trillion company in October, and bitcoin has suddenly lost a third of its value too.
DoubleLine fund manager Bill Campbell described 2025 as "the year of change and the year of surprises", with the big moves all "intertwined" in the same seismic issues – the trade war, geopolitics and debt.
"If you were to tell me a priori that Trump was going to come in and use very aggressive trade policies and sequence it the way he has, I would not have expected valuations to be as tight or lofty as they are today," Campbell said.
A 56% boom in shares of European weapons makers has been driven by Trump too, following signals he will scale back Europe's military protection forcing the region – and other NATO members – to rearm.
That also helped drive the best year for European banking shares since 1997, while there's also been a 75% leap in South Korean stocks and near-100% returns on defaulted Venezuelan bonds. Silver and platinum are up an even more dazzling 145% and 125% respectively.
A trio of US rate cuts, Trump's criticisms of the Federal Reserve and broader debt worries have all impacted bond markets.
The US president's "big, beautiful" spending plans led the 30-year Treasury yield to surge past 5.1% to its highest since 2007 in May. Though it is now back at 4.8%, the re-expanding gap to short-term rates that bankers dub "term premia" is causing jitters again.
Japan's 30-year yields are back at a record high too. The juxtaposition here is that global bond market volatility is at a four-year low, and local-currency emerging market debt has had its best year since 2009.
The dollar's decline leaves the euro up almost 14% in 2025 and the Swiss franc 14.5% higher. China's yuan has just broken through 7 per dollar, while the yen's December bashing leaves it flat for the year.
Trump's re-engagement with Russian President Vladimir Putin has helped the rouble surge 40%, although it remains heavily restricted by sanctions.
"We don't think this is just a short-term phenomenon," said Jonny Goulden, head of EM fixed income strategy research at J.P. Morgan. "We think a bear market cycle for EM currencies that has lasted for 14 years now, has turned here."
In crypto, Trump launched a memecoin and gave a presidential pardon to Binance founder Changpeng Zhao. Bitcoin hit an all-time high above $125,000 in October but then crashed below $88,000 and will end the year down over 6%.
Trump is already revving up for midterm elections in November and is expected to name his new head of the Federal Reserve shortly, which could be crucial for the central bank's independence.
Investors will be looking to see if China's economy can push on. Ending the Ukraine war remains devilishly difficult.
Satori Insights founder Matt King said markets are going into 2026 in a "remarkable" situation in terms of valuations.
"There's just this ongoing risk that we are pushing the limits of what easy money can do," King said. — Reuters
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