Monthly letter May 2025

Key events

May was a month marked by the contradictions of our time. The tone of the trade conflict eased, encouraging a more constructive dialogue.

Conversely, on the military front, hope gave way to anxiety. Fighting intensified in Ukraine, and the situation in the Gaza Strip became simply heartbreaking.

From the perspective of the trade war, triggered by the U.S. decision to impose new tariffs, there emerged a clear shared interest in focusing on dialogue in an effort to ease tensions that had become increasingly unsustainable. As often happens in politics, conciliatory tones alternated with moments of less constructive friction.

Nevertheless, there was a perceived common will to find an acceptable solution for all parties involved.

On the military front, hopes for constructive dialogue proved to be virtually nonexistent. In the two main theaters of conflict—Ukraine and the Gaza Strip—there has been an intensification of operations that is deeply concerning.

The levels of violence reached are now unacceptable for the affected civilian populations, and there are no signs of initiatives capable of reversing this dramatic trend. Nor can any concrete expectations in this regard be held in the short term.

“I would like to take this opportunity to express sincere thanks to the Swiss government for its strong support and warm hospitality as the host of this round of talks.”
S. Bessent, Segretario di Stato USA, a margine dei colloqui sino-statunitensi di Ginevra (11-12 maggio).

Macroeconomic developments offered encouraging signals on both sides of the Atlantic.

The emergence of trade tensions had fueled fears of a new surge in inflation and a slowdown in growth — creating the most challenging scenario for central banks: the need to support the economy amid rising inflation. However, macroeconomic data released in recent weeks painted a very different picture.

The room for maneuver by monetary authorities does not currently appear to be compromised by inflationary pressures, and the heightened uncertainty surrounding trade policies has not resulted in the anticipated economic slowdown.

At the beginning of the month, the Federal Reserve held its regular meeting, which was more expected for its forward guidance than for any policy decisions (as expected, there were no changes to interest rates).

The focus was therefore on the committee’s outlook on future developments. Both the official statement and the press conference held by Chairman Jerome Powell managed to reassure the markets: the message conveyed was one of caution and institutional independence.

The existing risks were acknowledged, yet the Fed reiterated its readiness to act—without, however, conveying a sense of urgency.

The current scenario indeed allows for a watchful stance, without any imminent signs of a monetary emergency.
In Europe, the release of economic data slightly above expectations helped bolster confidence in financial markets, supporting a constructive trend.

Prospects

Macroeconomic prospects appear set to continue providing supportive conditions, allowing central banks to maintain the positive stance observed in recent weeks.

It’s worth noting that all major monetary institutions are scheduled to hold their regular meetings during the month of June.

The date of July 9 marks the deadline set by Donald Trump to reach agreements aimed at avoiding the imposition of heavy tariffs. In this context, political negotiations are expected to continue over the coming weeks, likely sustaining a certain level of tension in financial markets.

Lastly, it’s important to remember that the summer period is approaching—a time typically characterized by lower trading volumes and, as a result, increased market volatility.