Brian Bollen's Blog

DeepSeek shows us that 2025 won't just be about Donald Trump

Treasury yields declined over the past week, after the release of the latest AI model, from Chinese firm DeepSeek, led to upheaval across the broader tech sector, writes Mark Dowding, BlueBay CIO, RBC BlueBay Asset Management, in his latest markets update. “It came as a surprise to learn that this model has achieved comparable performance to market leaders Meta and Open AI,” he adds. 

“However, it has managed to achieve these results at vastly lower levels of cost and research spend. US restrictions on Chinese imports of the latest chips are likely to prevent a competitor, such as DeepSeek, from overtaking established leaders in AI. 

“Yet, DeepSeek’s progress has come as a shock, with some in the tech space even suggesting that this could be a moment similar to when Russia launched Sputnik in the Space Race, shaking US complacency with respect to its position of dominance.

The UK's economic disaster is beginning to filter through to front line news

Morrisons is set to cut over 200 jobs from its retail people team, the Retail Gazette has reported this morning. It adds that this forms part of a significant cost-saving initiative, becoming the latest supermarket to announce such measures as it navigates the challenging economic landscape of 2025.

The move follows CEO Rami Baitiéh’s comments last month about the “avalanche of costs” businesses will face after the government’s October Budget.

Fight or flight? All that glitters is not gold. RBC Bluebay

In his latest weekly insight Mark Dowding, BlueBay CIO, RBC BlueBay Asset Management, discusses the outlook for the US, credit, UK, France, and Japan.

The inauguration of Donald Trump stole the attention at the start of this week, with the 47th President of the US wasting no time in signing a wide-ranging set of Executive Orders on arrival at the Oval Office, he begins by nothing. 
 
That said, many of these measures had been well flagged in advance and on the crucial issue of trade tariffs, there was no additional substance to drive markets, save for comments suggesting a 25% tariff on Mexican and Canadian imports come the end of next week, noting concerns around illegal migration and drug trafficking. 
 

Trump 2.0, a song of fire and ice

 
In his latest weekly insight, Mark Dowding, BlueBay CIO, RBC BlueBay Asset Management, discusses the outlook for the US, France, UK, Japan, and Romania. 

US Treasury yields declined over the past week, in the wake of a benign CPI report showing core price growth easing slightly, to 3.2% in December. Yet, taking a step back, we would observe that inflation has been broadly stable around this level for the past six months. In our view, a renewed downtrend in inflation will be needed in order for the Fed to resume policy easing in the coming months. 
 
This suggests that the Fed will be on hold during H1 this year, as we don’t have too much confidence in such a downtrend re-emerging for the time being. With the economy retaining strong momentum and with upside risks to prices in the trade, immigration and fiscal policies of the incoming Trump administration, risks on inflation remain two-way, in our eyes.  
 
Yet,

FSB develops analytical framework and toolkit to assess climate-related vulnerabilities

The Financial Stability Board (FSB) has published a report on the assessment of climate-related vulnerabilities. Building on the FSB Financial Stability Surveillance Framework and work carried out by members, the report provides an analytical framework and toolkit to assess climate-related vulnerabilities, particularly from a cross-border and cross-sectoral perspective.

The FSB notes that climate shocks trigger the typical vulnerabilities in financial stability assessments – such as credit, market and liquidity risks – but they are more complicated to analyse given their nature and uncertainties around timing and magnitude. It says the analytical framework traces how physical and transition climate risks can be transmitted and amplified within the global financial system.

Universal Investment Group appoints Jeremy Albrecht as Country Head and CEO for Universal Investment in Luxembourg

Universal Investment Group (UI), a fund services platform and Super ManCo, has announced today (January 16) the appointment of Jeremy Albrecht as its new CEO for Luxembourg.

He will be responsible for heading UI’s Luxembourg platform, which consists of both UI Luxembourg, the largest AIFM and third party ManCo in Luxembourg, and fund administrator UI efa. He will oversee total assets under administration (AuA) of approximately €400bn across UI’s Luxembourg platform.

British Business Bank agrees £150m ENABLE Build transaction with Shawbrook

The British Business Bank reports that it has agreed an ENABLE Build transaction of up to £150m with specialist bank Shawbrook to increase the amount of development finance it provides to UK smaller housebuilders.

Shawbrook has surpassed £2bn of lending to UK property developers, creating over 8,000 new homes. The guarantee is expected to further support over £300m of finance to help fund the creation of new homes across England and Wales over its lifetime. 

Global standard-setting bodies publish three final reports on margin

The Basel Committee on Banking Supervision (BCBS), the BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) today (January 15 2025) published final reports on initial and variation margin in centrally cleared and non-centrally cleared markets.

The official release states that the reports address areas of further policy work identified in the 2022 BCBS-CPMI-IOSCO Review of margining practices as part of the policy responses coordinated by the Financial Stability Board (FSB) to the March 2020 "dash for cash" market turmoil.

British Business Investments announces innovation advance facility

British Business Investments has this week announced an initial £20m funding facility to Sprk Capital Limited (Sprk), toprovide capital to smaller businesses in the UK engaged in innovation.

Sprk is a speciality lender to companies engaged in the innovation sector. Through the provision of advanced funding of UK R&D (research and development) and innovation grants, Sprk provides non-dilutive cashflow solutions to smaller businesses, enabling them to invest with confidence in their innovation projects.

Since it launched in 2021 Sprk has provided funding to innovation projects totalling over £150m. Although Sprk has a sector-agnostic lending strategy, 80% of its loans to date broadly represent the UK innovation market, with lending focused on the manufacturing, IT & communication, and the professional scientific and technical sectors.

Sprk is the first lender focused on the innovation lending sector to receive funding from British Business Investments.

Adam Kelly, managing director, British Business Investments said: “This £20m funding facility will enable Sprk to back UK smaller businesses in the innovation sector, providing them with cashflow solutions at critical points in their journey. We look forward to working with Sprk to help innovative smaller businesses across the UK to access the capital they need to scale up and become successful, high growth companies.”

Dominick Peasley, chief executive officer, Sprk Capital, said: “Today’s announcement demonstrates the commitment of British Business Investments to provide funding to SMEs that are critical to advancing UK-led innovation. The funding provided also enables us to work even closer with UK Research & Innovation through Innovate UK to provide additional capital to grant projects, accelerating UK-led innovation further.”

British Business Investments, a wholly-owned commercial subsidiary of the British Business Bank, aims to improve access to alternative finance for smaller businesses across the whole of the UK, while supporting the UK’s transition to a net zero economy. Since it was established in 2014, it has committed more than £3.8bn to providers of finance to UK smaller businesses.

 

The ICMA Quarterly Report is now available

The ICMA (International Capital Market Association) Quarterly Report for the First Quarter of 2025 is  is now available for download at www.icmagroup.org.

It includes thought leadership features on: fixed income ETFs (exchange-traded funds): growth, innovation, and impact on bond markets; the functioning of the EU securitisation framework; assessing the adequacy of macroprudential policies for NBFI; the push and pull for central clearing in the sovereign bond markets; rebuilding UK/EU relations in financial services outside the EU Single Market; and MAS Guardian Fixed Income Framework.

The report also includes international capital market practice and regulatory policy updates on primary markets, secondary markets, repo and collateral markets, sustainable finance, FinTech and digitalisation, followed by a feature on emerging capital markets in Thailand.

 

US Equity Trading Business gaining momentum

US equity trading commissions rebounded in 2024, reaching $6.2bn, according to annual research from Crisil Coalition Greenwich with hundreds of US institutional equity investors.

This follows a drop from $7.4bn in 2021 to $5.4bn in 2023. The increase is attributed to strong equity market performance, says Crisil Coalition Greenwich.

“The buy side is cautiously optimistic about the future,” says Jesse Forster, senior snalyst at Crisil Coalition Greenwich Market Structure & Technology and author of US equity market trends hold steady in 2024.

“The recent SEC reforms and the new SEC Chair's focus on cooperation between regulators and market participants have created a sense of renewed possibility.”

Lincolnshire County Council Pension Fund selects CACEIS

The Lincolnshire County Council Pension Fund has selected CACEIS and the CACEIS Pensions Centre to provide custody, accounting and performance services as part of a £3.5bn mandate.

CACEIS says its Pensions Centre will provide Lincolnshire County Council Pension Fund with leading administration capabilities, governance reporting and consolidated performance reporting solutions for all assets held, both in and out of custody.

It adds that Lincolnshire County Council Pension Fund will also have the full support of the custody team and local pensions specialists.