A Year with President Trump

Published: February 2026

One Year On: Trump, TACO and the Repricing of Global Risk 

A year into Donald Trump’s second presidency, it feels increasingly clear that this isn’t simply a continuation of his first term.  What markets are grappling with today is something more structural: a breakdown in long-standing norms, a shift in how power is exercised, and a growing sense that international rules are no longer being bent at the margins but openly ignored. 

The early focus was predictable.  Tariffs returned almost immediately, reviving a familiar playbook of threats, retaliation and brinkmanship.  At first, investors largely shrugged this off.  Having lived through “Trump 1.0”, markets were conditioned to expect noise, followed by negotiation, followed by something less extreme than initially advertised. 

But as 2025 progressed, and as we moved into 2026, the nature of the risk began to change.  What felt like disruption began to look more like destabilisation. 

From Trade Policy to Power Politics 

What has unsettled markets more recently is not tariffs alone, but the logic underpinning them.  The rhetoric around Greenland, framed not in economic terms but in language of strategic entitlement, has marked a shift.  It suggests a world where power and entitlement, rather than rules or alliances, justify action.  That matters enormously for markets. 

When the US openly asserts that it “needs” territory, it provides implicit validation for other leaders to do the same.  Vladimir Putin doesn’t need to stretch the analogy very far to argue that Crimea or the Donbas are essential to Russia’s security, any more than Greenland is to America’s.  For investors, this isn’t an abstract geopolitical debate, it’s the erosion of a framework that’s underpinned global capital flows for decades. 

Markets React, But Not Evenly 

To be clear, 2025 was a strong year for risk assets overall.  Global equities delivered positive returns, volatility remained contained for much of the year, and corporate earnings were resilient.  Yet beneath the headline numbers, leadership began to shift. 

US equities recovered from periodic drawdowns but lagged other regions.  UK equities, long discounted and overlooked, performed strongly.  European markets benefitted from fiscal support, higher defence spending and capital returning closer to home.  Emerging markets also outpaced the US, supported by improving domestic fundamentals and a less dominant dollar. 

This relative underperformance matters.  For years, global portfolios have been anchored around US exceptionalism: not just superior growth, but institutional strength, policy continuity and leadership within a rules-based system.  That assumption is no longer being taken for granted. 

Bonds, Currencies and the Quiet Repricing of Uncertainty 

Bond markets have been even more revealing.  Despite the Federal Reserve cutting rates towards the end of 2025, US Treasury yields have risen again at the start of this year.  Ordinarily, rate cuts would ease yields, but this time they haven’t.  Instead, yields have moved higher as investors demand greater compensation for uncertainty: fiscal, political and geopolitical. 

Japan added another layer. Rising Japanese government bond yields, driven by concerns over government spending plans and policy credibility, fed into global rate volatility.  Authorities intervened in the yen recently, lifting it to a two-month high against the dollar, showing that even markets long associated with stability are under strain. 

Add brief jitters triggered by US “rate checks” in the middle of January, and it becomes clear that this is not a bond market at ease, but one quietly repricing risk. 

Gold and the Search for Anchors 

Against this backdrop, gold continued its relentless advance, breaching $5,000 per troy ounce, with silver and platinum also reaching new highs just a few weeks into the year. This strength can’t be attributed to any single factor, but President Trump’s rhetoric has played a role, just as rising yields in Japan, currency volatility and broader concerns around fiscal discipline have. 

The common thread is trust. Gold’s appeal lies in its independence from political systems and institutional credibility. Its strength isn’t a rejection of growth or risk assets; it’s insurance against a world in which long-standing assumptions can be challenged overnight. 

That equities can rally while gold made new highs wasn’t a contradiction: it was a defining feature of a market adapting to the erosion of long-established anchors. 

January’s Extremes: Pressure, Posturing and Pull-Back 

The opening weeks of 2026 crystallised many of these themes.  In quick succession, markets were forced to absorb a series of events that would once have been unthinkable. 

Internationally, the Greenland episode escalated into something resembling a territorial dispute before being walked back.  NATO allies were openly criticised.  Tariff threats towards Europe resurfaced, then softened. At the same time, the US carried out a dramatic operation in Venezuela that resulted in the capture of President Nicolás Maduro, while a US carrier strike group was deployed towards the Middle East amid renewed pressure on Iran.  The spectre of confrontation has lifted oil prices to five-month highs, reflecting the market’s sensitivity to even the potential for disruption in the Gulf’s strategic energy infrastructure. 

Individually, each episode raised eyebrows.  Taken together, they pointed to a willingness to push boundaries, diplomatic, military and institutional, to see what holds. 

Markets initially wobbled, then rallied.  Perhaps the most striking feature is not that markets reacted negatively, but that they adapted quickly, absorbing escalation as noise while quietly repricing risk beneath the surface. 

Art of the Deal? Or the End of Restraint? 

In recent weeks, markets appear to have received confirmation of what many had hoped for.  The more aggressive rhetoric around Greenland that rocked markets briefly has been walked back.  Tariff threats towards Europe softened. The US reaffirmed its commitment to NATO.  

In short, TACO (Trump Always Chickens Out) played out once again. 

Risk assets responded quickly. Equities rallied on his U-turn, volatility eased, and investors leaned back into the assumption that confrontation would ultimately give way to pragmatism.  The most immediate tail risks were removed. Yet what followed was telling. 

Relief Rallies, not a Restoration of Norms 

Even as equities rose, gold pushed to new highs.  The US dollar weakened against a basket of key trading partners, including sterling and the euro.  These aren’t the signals of a market suddenly convinced that stability has returned. 

Instead, they reflect selectivity. Investors are prepared to take risk tactically but are reluctant to unwind hedges.  Relief has been priced in, but reassurance hasn’t. 

Markets have focused on the avoidance of escalation, not on a restoration of the norms that made escalation unthinkable in the first place. 

A Familiar Pattern in a Changed World 

One year into Donald Trump’s second presidency, investors appear to be holding two ideas at once. They believe that disaster will likely be avoided, but they no longer assume that rules, alliances and institutions will reliably constrain behaviour.  That distinction matters. 

US markets remain deep, liquid and central to global portfolios.  But confidence in US leadership within a rules-based system has been diluted.  Capital doesn’t flee overnight, it diversifies quietly, rationally and persistently in response to repeated challenges to established norms. 

That process is already visible across relative equity performance, bond market behaviour, currency moves and sustained demand for precious metals. 

When Norms Erode, Risk Gets Repriced 

Markets can absorb higher rates, slower growth and even geopolitical conflict, provided there’s confidence in the framework holding things together.  What unsettles investors most isn’t volatility; it’s uncertainty about the rules of the game. 

The past year hasn’t brought crisis or collapse. Instead, it’s marked a transition.  TACO may continue to prevent the worst outcomes, but it doesn’t rebuild trust or re-anchor expectations.  Each episode leaves a residue of doubt, and over time that doubt reshapes portfolios. 

In that sense, the defining feature of President Trump’s second term so far isn’t disruption, but a repricing of risk, of leadership, and of assumptions that once felt unshakeable.  Markets may still be climbing, but they are doing so with one eye on the exit. 

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Disclaimer  

Opinions constitute our judgment as of this date and are subject to change without warning.  The value of investments and the income from them can go down as well as up, and you may not recover the amount of your original investment.  Past performance is not a reliable indicator of future performance.  

The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.  

The information contained within this blog is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing.  Levels, bases and reliefs from taxation may be subject to change.