Trump immediately shot back with a sweeping Global Tariff of 10% (apparently allowed) and plans for other tariffs that only last for 150 days, also apparently allowed. No word of repaying the $200bn raised so far, but he has been reminded that he can’t just do what he feels like, although he is unlikely to take any notice.

US markets initially paid no attention. However, now that we have a confirmed future Fed Chair replacement, speculation abounds as to just how much of a dove Warsh will prove to be and how much influence he will have on the rest of the FOMC. We have seen concerted attempts by some voting members to reduce expectations of rapid interest cuts. 

Private credit is showing some pain and in particular BDC’s (vehicles to attract retail assets into private credit), the fabled cockroaches might be coming out of the shadows. The asset class has always made much of underlying liquidity characteristics and this is proving to be an illusion for some. A retail focussed fund from Blue Owl sold loans to 3 of America’s biggest pension funds, as well as its own insurance asset manager, to fund redemptions.
The rotation of investment out of the US into Europe appears to be gathering pace. Recent European PMI’s were encouraging signalling Q1 growth and their own rotation out of services into manufacturing. Unsubstantiated rumours that the ECB president Christine Lagarde might leave before her term have been seen as potentially jeopardising her authority.

UK plc has had a good start to 2026. PMI’s were strong and public finances appear better than expected as January’s surplus benefitted from higher tax receipts across the board. Retail sales were also much stronger than forecast potentially reducing room to manoeuvre for the Bank (which recently held rates on a 5-4 vote) despite inflation falling back.

The biggest story for Sterling was in the primary market. Google (better rated than Gilts) established a curve of 5 issues totalling £5.2bn attracting a book of more than £30bn. The most astonishing enthusiasm was for their Century tranche, which priced  £1bn at 6.125% and more than £6bn of investor money was prepared to lend them money for this period. They also raised 2bn in CHF and the rest in USD to make $32Bn borrowed in total. There is more to come, and JPMorgan have raised their GBP issuance forecast from £40bn to £70bn. Spreads in Sterling have widened a little as supply has hit but all in yields remain highly attractive.

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note that the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.