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    GLOBAL MARKETS | 3 POINT PERSPECTIVE

    3 themes powering global macro strategy in 2025

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    Contributors: Kristen Macleod
    17 Jan 2025
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    Kristen Macleod, Global Head of Macro Distribution, explores the key themes macro investors should consider across global rates, emerging markets and FX in 2025.

    1. Global Rates

    Let’s start with Global Rates. Geopolitical focus will likely pivot towards Europe where issues such as the Ukraine war, political turmoil in France and Germany, possible new US tariffs and more are driving markets sentiment. Pressure is mounting for the ECB to stimulate the economy with supportive monetary policy without adding to already mounting budget deficits.

    As such, many market participants are positioning for a steepening of the Euro Rates curve. Seasonal and technical factors are additionally pointed toward support for front-end Euro rates, while the back-end will remain under pressure due to the political and debt dynamics. Barring a longer-term agreement to the Ukraine conflict, we believe that there is further room to extend the steepening trend.

    2. Emerging Markets

    Next, let’s consider Emerging Markets, where potential tariffs pose a great risk to currencies.

    Tariffs are a shock to currencies because via a tariff, the US would artificially cheapen the dollar by making foreign goods more expensive. If Trump follows through on his proposed tariff plans, foreign countries may weaken their own currencies to counter the effects.
    In this scenario, Barclays Research expects the Chinese Renminbi to depreciate roughly 15%, while the Mexican peso could depreciate 25% from current levels.

    Clients are mixed on the risks, but most tend to view Trump’s proposals as mostly negotiating tools that will not come to fully materialize. But if our Research team’s forecast pans out, there may be considerable space for the Trump trade to run.

    3. FX

    Lastly, volatility across FX will be something to watch.

    In anticipation of these conditions, clients have started to adjust their behavior through trades expressing views of euro depreciation against the US Dollar, both in linear and options space – and there is scope for that theme to broaden across other currencies.

    Whatever materializes, our private equity and sponsor client base is positioning to ensure prompt and effective risk management by accelerating the use of deal contingents for M&A situations and net investment hedging to protect returns on assets on a currency adjusted basis.

    We’ll continue to monitor these trends as the year progresses.

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    About the expert

    Kristen Macleod

    Global Head of Macro Distribution

    Kristen Macleod is Global Head of Macro Distribution. Kristen joined Barclays in 2017, after spending 14 years at Goldman Sachs, where she worked in foreign exchange in both the New York and Tokyo offices. Since joining Barclays, she has taken on roles as the co-head of Global FX Sales, Head of US Macro Sales and eventually to her current role as Global Head of Macro Distribution in 2024. Her responsibility encompasses Rates, FX and Emerging Markets with teams across North America, Europe and APAC. Kristen is currently a member of the Global Markets Management team and has served as an ex-officio on Group Exco in 2019. In her time at Barclays, she has also been involved in various mentoring, sponsorship, diversity and recruiting initiatives. Kristen graduated from Duke University with a Bachelor of Arts in Public Policy and a minor in Economics and German.

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