The protagonists of 2024 pave the way for 20252024 was the year that marked the beginning of monetary easing. A large part of the movements in financial assets unfolded as a result of adjustments in investors’ monetary policy expectations. There were even some episodes of sudden shifts in market expectations which, just like central banks, adjusted according to the flow of macroeconomic data. The other key event was Donald Trump’s electoral victory, to which investors reacted with expectations of higher inflation and some doubts regarding global economic growth. The financial markets hit other milestones: the Bank of Japan put an end to the era of negative rates, geopolitical tensions intensified in the Middle East, expectations of the benefits of artificial intelligence (AI) boosted tech firms’ dominance in equity markets, the S&P 500 recorded two consecutive years of gains exceeding 20% (for the first time in over 25 years), Bitcoin hit 100,000 dollars, and France’s financial assets underwent a revaluation (the French risk premium practically doubled and consolidated at levels above that of Spain). Following all these events, 2024 closed with gains in equities and with the dollar as the most strengthened currency, but with a significant increase in sovereign rates in the anticipation of higher inflation in the US, the unknowns surrounding the future of global geopolitics and the uncertainty about exactly how much more monetary policy will be eased.The ECB and the Fed converge in direction, but diverge in speedIn December, both the ECB and the Fed lowered interest rates by 25 bps, leaving the depo rate at 3.00% and the fed funds rate in the 4.25%-4.50% range. In both cases, 100 bps below the peaks of 2023. The ECB’s tone pointed to further cuts in the coming months, supported by greater confidence that inflation will finally fall to the 2% target in 2025, as well as by expectations that the revival of economic activity will be slower. Thus, the markets are anticipating another 25-bp reduction in January, while also hinting at further cuts in the first half of the year, leaving the depo rate between 1.75% and 2.00% throughout the second half of 2025. The Fed’s tone, in contrast, was much more cautious, based on higher inflation expectations for the next two years and lower risks of a slowdown in the labour market. In the dot plot, FOMC members projected only two rate cuts in 2025, compared to the four indicated in the September update the financial markets are fully anticipating a single cut by mid-2025 (placing the fed funds rate in the 4.00%-4.25% range), with a probability slightly above 50% of a second cut by the end of the year.Sharp rise in sovereign yieldsThe sovereign debt markets made a hawkish reading of the Fed’s message and treasury yields rose by more than 15 bps in the medium- and long-term benchmarks between the day of the meeting and the end ofthe month. Despite the fact that the Fed has lowered rates by 10