Turim Insights

Market volatility, the trade tariffs implemented by the Trump administration, and the impact of Germany’s fiscal policy announcements were among the key topics discussed in this month’s Turim Insights Webinar.

In the United States, the government has introduced a series of import tariffs since the beginning of the year, targeting China, Canada, and Mexico, as well as specific sectors such as steel and aluminum. Further measures are expected soon, including so-called “reciprocal tariffs” (still undefined) and additional sector-specific actions (such as on the automotive industry, pharmaceuticals, and electronic components). While these measures have inflationary implications, concerns about economic activity have been more prominent – driving interest rates lower and weakening equity market performance, particularly among the Magnificent 7 stocks.

In Europe, the announcement of a broad fiscal expansion package in Germany – focused on infrastructure and defense investments over the next 10 years – had a strong impact on markets. The news triggered a rally in German equities and the euro, and led to a significant rise in long-term interest rates. If approved, this package would represent Germany’s largest fiscal stimulus effort in decades, potentially transforming the region’s medium- and long-term outlook. In this context, the European Central Bank (ECB) may need to reconsider the pace of interest rate cuts in the Eurozone.

In Brazil, Q4 2024 GDP grew by only 0.2% compared to the previous quarter – falling short of expectations, despite robust annual growth of 3.4%. From a demand-side perspective, the GDP composition reinforces the narrative of deceleration, as a decline in domestic absorption was only partially offset by an increase in inventories. Nonetheless, most forecasts – such as the Focus Report median – still suggest that the slowdown this year will be gradual. In this context, markets seem to anticipate the end of the monetary tightening cycle, which is reflected in further compression of the yield curve.

This month’s webinar featured insights from Fernando Verboonen, CIO at Turim, Pedro Hokama, Partner and Head of Liquid Assets, and Thiago Campos, Economist at Turim.