Key events
The probabilities of reaching a negotiated solution to the conflict between Russia and Ukraine continue to be described by Trump as increasing. Reality, however, appears consistent with what was already highlighted in last month’s monthly letter: the dynamics of the conflict continue along a path of progressive escalation, while the negotiating positions of Moscow and Kyiv remain deeply divergent, making it difficult at the moment to discern a credible path toward genuine de-escalation.
The global geopolitical context that has taken shape in the final days of December does not, moreover, appear oriented toward a phase of easing tensions.
U.S. pressure on Venezuela has intensified, while the signs of dialogue that emerged from the meeting between Trump and Zelenskyy in Florida have quickly faded, partly due to renewed tensions following an attack on a residence linked to Putin. China has meanwhile returned to flexing its muscles in the Taiwan Strait, in response to significant U.S. military supplies to Taipei and the re-emergence of diplomatic frictions with Japan.
Finally, in the Middle East, the verbal support expressed by the United States for the Israeli government has strengthened Netanyahu’s position, who has declared his readiness to resume military action both in Gaza and against Iran.
Taken together, these developments contribute to an international framework characterized by high fragmentation and a rising level of uncertainty, where regional tensions tend to overlap rather than subside, fueling a structurally unstable geopolitical context. Looking ahead, the outlook for 2025 offers, from a geopolitical perspective, only one relatively positive element: the cessation of military operations in Gaza.
On the trade relations front, conversely, the peak of tensions reached in early April with the announcement of U.S. customs duties has been followed by a gradual trend toward de-escalation. This remains fragile, however—not least because the U.S. Supreme Court has yet to rule on the tariffs—and is heavily conditioned by the evolution of the international political landscape.
“One thing that has not changed much at all and which, if anything, may have actually worsened is uncertainty. And uncertainty is not a comfortable position. So I think we all suffer from that degree of lack of comfort. And we are all attentive to uncertainty: how it pans out, whether it’s uncertainty related to geopolitics, whether it’s uncertainty related to the movement of trade from countries with overcapacity in particular, what happens at the borders of Europe. So there are lots of factors that are in play and that will evolve over the course of 2026 that are generating uncertainty” C. Lagarde (President of the ECB) on the occasion of the press conference following the final meeting of the Governing Council for 2025 (December 18).
All the major central banks met during the month of December, and the outcomes of their respective meetings offered no particular surprises to the markets. Regarding the Federal Reserve, Chair Powell confirmed his role as a cohesive force at the helm of a committee increasingly characterized by divergent positions—a reflection of a macroeconomic context in which the path toward monetary policy normalization appears far from linear.
Added to this is the persistence of indirect effects from the shutdown period, which continue to affect the regularity and readability of macroeconomic data releases, making it more complex to interpret the current economic situation. On the European front, communications from the European Central Bank come within a particularly delicate context; indeed, the quote provided above leaves no room for doubt.
Prospects
The new year opens with characteristics very similar to the one just concluded, confirming a complex context in which the message from central banks remains marked by caution and data dependency. Indeed, the balance between growth, inflation, and financial conditions continues to require great attention, limiting visibility regarding future monetary policy decisions.
Against this backdrop, the change in leadership at the Federal Reserve also comes into play: in the past, the inauguration of a new chair has been accompanied by initial statements capable of generating volatility and temporarily unsettling financial markets.
On the geopolitical front, ongoing tensions do not currently seem to be significantly reflected in financial market performance; however, an environment characterized by numerous hotspots of instability implies the risk of sudden events with potentially violent impacts, as already observed in April 2025 (Liberation Day).
We take this opportunity to extend our best wishes for a peaceful New Year, with a sincere thought for those going through difficult times, in the hope that the coming months bring strength and new perspectives.