This has been an interesting week of announcements from the major developed market central banks. First off was Jerome Powell, Chair of the US Federal Reserve (Fed). He played quite a good hand – “Recession odds, while higher, aren’t alarming. Inflation, while still sticky, isn’t worth fretting over. And trade policy? It’ll become clear when it becomes clear.” In short, Fed Chair Powell said there’s no reason to do anything with the current path of monetary policy other than wait and see, insinuating maybe it wasn’t going to be that bad after all. But if it is, we will use all of our powers to support markets.

For battered US equity investors, the message was a relief. The S&P 500 Index climbed 1.1%, the biggest Fed-decision day gain since July 2024, while the Nasdaq 100 Index jumped 1.3%, even if the optimism has cooled off a bit since then.

Even bond investors — who often have the opposite reaction to Fed messaging than equity investors — were encouraged by Powell’s stay-the-course tone. They bid up prices, meaning it was the first time in eight months both equities and bonds rose in tandem after a Fed decision.

The Fed are therefore still considering further easing, as and when required, as they feel they still need to get ahead of any potential liquidity concerns that may arise later down the road if growth takes a hit from tariffs and unemployment rises. The market still expects two further rate cuts in 2025. For now, Powell is keeping the Fed powder dry, just in case, and this strikes me as a sensible policy.

As we build up in the UK to next weeks mini budget, sorry, Spring Statement, we hear today that the Telegraph has reported that next week’s figures to be released by the Office of Budget Responsibility (OBR) will cut UK growth expectations for 2025 from 2% to 1%, dealing a blow to Rachel Reeves as she works out how to cut further expenditure, likely focussing on the public sector.

Ahead of the chancellor’s announcement, the Bank of England also kept rates on hold yesterday, while leaving the door open to further reductions this year as it grapples with both global trade tensions and continuing price pressures in the UK. The central bank’s Monetary Policy Committee voted eight to one to leave its benchmark rate unchanged as it reiterated plans to pursue a “gradual and careful” approach to more cuts.

Once more, Donald Trump was back to his old tricks (there, I said his name, but I am pleased I at least managed to leave it to the end of this week’s email to start talking about the President). This week he raised the possibility of the US taking control of Ukraine’s nuclear power plants, as part of his push to end Russia’s invasion of Ukraine. The president told his Ukrainian counterpart Zelensky on Wednesday that US expertise could help manage the plants, with American ownership providing “the best protection” for the country’s energy infrastructure. Ukrainian President Zelensky later clarified that their discussion focused solely on a facility currently under Russian control: the Zaporizhzhia nuclear power plant, Europe’s largest. Three years after Russian troops seized the facility, raising fears of a Chernobyl-style disaster in Ukraine, Trump’s proposal has returned it to the spotlight as a potential pillar of a peace deal — one that also seeks to recoup the billions of dollars in US military aid.

The Trump administration could seek to use the plant to help power the extraction of rare and critical minerals that Ukraine holds and Trump wishes to be shared with the US. That deal was meant to be signed earlier this month when Zelenskyy and Trump met in the White House, but the signing ceremony was called off when the two leaders clashed so horribly in the Oval Office. The US President’s latest proposal for Ukraine to transfer control of its power plants mirrors the earlier minerals deal. Trump officials have suggested that US stakes in crucial assets in the country could serve as a form of protection. But Kyiv remains wary as this falls short of the security guarantees it is seeking from the US, and it feels a little bit like they might be being taken advantage of. Heaven forbid.

As usual, there is a great deal going on in investment markets, which is hopefully the opposite of announcements from Rachel Reeves next week that we expect to avoid comment on any further tax changes. US equities are down 10% from their highs earlier in the year and whilst we are pleased with our underweight US, overweight Europe positioning, the investment team stand ready to take advantage of the opportunities that further volatility will offer. Let us keep a close eye on this for you, and please do have a good weekend.