My Davos Week | Post-US Inauguration Macro-Credit View | Bond Market FAQ ft Gilts | Credit Cycle Indicator | 2025 Sustainability Top 10

Welcome to the latest edition of Essential Economics! We’re live from Davos this week, and I share my takeaways from the World Economic Forum’s 2025 Annual Meetings: “Trump 2.0” and AI dominated the discussions. Chief US Economist Satyam Panday and Head of US Credit Research David Tesher write that President Trump’s proposed policies could have direct, profound effects on the economy and credit conditions. Our EMEA sovereign team and UK Economist Marion Amiot released an FAQ on recent bond market moves with a focus on monetary policy, fiscal outcomes and sovereign rating implications for the U.K. Vince Conti and team released an updated Credit Cycle Indicator, which continues to signal a potential credit recovery in 2025, reflecting rising leverage and accommodative financing conditions. Finally, a team led by Lindsay Hall and Harald Lund published our Top 10 sustainability trends to watch in 2025.

My Davos Week

I spent an action-packed week in Davos, attending the World Economic Forum annual meetings. My schedule was a mix of client meetings, presentations, and interviews as well as catching up with colleagues in the WEF Chief Economists Group. The highlight was attending the program of seminars and interacting with conference participants.

Discussions were dominated by new US President Trump’s agenda and the AI revolution.

To read my Davos week blog, click here.

Post-US Inauguration Macro-Credit View

Satyam and David write that President Trump’s proposed policies—including those on trade, taxes, and immigration—could have direct, profound effects on the economy and credit conditions. The ramifications of the president's plans—even if only partially effected—will range across the spectrum of issuers we rate.

U.S. corporate borrowers, financial institutions and insurers, structured finance, and states and municipalities can all expect to see some ramifications from the new administration's approach.

To read the Credit Week article, click here.

Bond Market Developments Featuring Gilts

Since the beginning of 2025, there has been a notable rise in yields for government debt across the U.S. and European bond markets, as well as for U.K. gilts. This has come alongside a considerable steepening of the yield curve. We examine the background behind recent market moves and the relationship between monetary policy and fiscal outcomes in the U.K.

We then look at the effect of higher cost of financing on the U.K. sovereign rating.

To read the FAQ, click here.

Credit Cycle Indicator

Vince and team report that our forward-looking credit cycle indicators continue to signal a potential credit recovery in 2025, reflecting rising leverage and accommodative financing conditions. The divide between the corporate and household sectors continues. Improving earnings growth and supportive market conditions are buoying corporate credit, while household credit is still undergoing a correction.

Macroeconomic and geopolitical risks will test some markets more than others, spelling diverging recovery prospects across geographies.

To read the article, click here.

Top Sustainability Trends in 2025

In a report led by Lindsay and Harald, we surveyed sustainability, climate and energy transition leaders and analysts from across our business about the key trends that will drive strategies in 2025. The research that follows lays out the 10 trends that stood out.

We also provide links to datasets, research, and further reading and listening to learn more.

To read the report, click here.

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As always, you can find the latest research from the S&P Global Ratings Economics team here.

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