Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
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Head of Fixed Income Strategy
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Five things to watch in what could be a wild 2025
Søren Otto Simonsen
Senior Investment Editor
In this year’s final episode of the Saxo Market call, John J. Hardy, chief macro strategist, and Ole S. Hansen, head of commodity strategy, discussed what’s in store for 2025 – a year that’s already shaping up to become interesting. As Hardy concluded: “Stay flexible. Don’t assume you have the answers. The big questions are what matter most, and 2025 will bring plenty of them”.
Here are five overall themes, they discussed.
For Europe, Hansen highlighted Germany’s critical need to adapt: “They’ve lost cheap Russian energy and are facing pressure from China in key industries like autos. They must invest to rebuild its economic model. The potential is there—political will is the question.” he explained.
China remains a wildcard: “They’re trying to export their way out of domestic troubles, but that will clash with Trump’s trade policies.” Hardy said.
Electrification will continue to drive metals demand, especially for copper and aluminium: “As AI and tech require more power, the need for these metals will grow,” Hansen noted.
He also flagged food markets as vulnerable: “Volatile weather is a major risk. Look at cocoa and coffee this year—this theme isn’t going away.”
Hansen added that Germany and Europe have the potential to turn things around if they embrace change: “The resources are there—it’s about political will.”
Here are five overall themes, they discussed.
1. Markets at a pivot point
Hardy flagged increasing market divergence as a key concern: “AI and tech stocks are booming, while broader indices like the Dow and S&P 500 are showing caution. When sectors diverge like this, it’s often a sign that volatility is building,” he said, noting that investors should be aware of sharp shifts as markets enter 2025 on uneven ground.2. Politics will dominate
Hardy sees Trump’s return as a game-changer for global trade: “Tariffs aimed at bringing manufacturing back to the US could trigger inflation,” he said and noted that Trump’s focus on reducing inflation presents a contradiction that may disrupt markets at the same time.For Europe, Hansen highlighted Germany’s critical need to adapt: “They’ve lost cheap Russian energy and are facing pressure from China in key industries like autos. They must invest to rebuild its economic model. The potential is there—political will is the question.” he explained.
China remains a wildcard: “They’re trying to export their way out of domestic troubles, but that will clash with Trump’s trade policies.” Hardy said.
3. Commodities in focus
Hansen sees commodities as a potential bright spot in 2025, driven by inflation fears and supply constraints: “Tangible assets like gold are attractive when inflation and debt loom large,” he said.Electrification will continue to drive metals demand, especially for copper and aluminium: “As AI and tech require more power, the need for these metals will grow,” Hansen noted.
He also flagged food markets as vulnerable: “Volatile weather is a major risk. Look at cocoa and coffee this year—this theme isn’t going away.”
4. Inflation and growth concerns
Hardy highlighted contradictions in US fiscal policy: “Trump wants growth, tax cuts, and deficit reduction—but something’s got to give,” he said. Tariffs and labour restrictions could also drive inflation: “If immigration is curbed, labour costs could soar, adding more pressure,” he said.5. Opportunities amid uncertainty
Despite the risks, Hardy remains optimistic: “We’re entering a new era. Old economic models are breaking, but that creates opportunities. It’s going to be fascinating to see how countries adapt,” he said.Hansen added that Germany and Europe have the potential to turn things around if they embrace change: “The resources are there—it’s about political will.”
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