All quiet

The geopolitical start of 2020 was at times turbulent with developments in Iran. However, it has become clear once again that no party wants to risk the beginning of an escalation spiral. This was particularly striking and also surprising in the case of Iran. However, the way in which the provocation and subsequent de-escalation was provoked and then de-escalated follows a certain pattern that has been observed again and again in recent years.

Political issues are likely to continue to dominate in 2020. Above all, the election of the president in the USA in November. There are many reasons for Trump’s re-election. The smouldering impeachment procedure could still prevent him from re-election. But this would require much more evidence and incriminating material against Trump. Otherwise, the US President should be able to rely on his majority in the Senate. Apart from the brexite, there are no major political events in the pipeline for Europe, but with the large number of weak governments, new elections can always be held.

The central banks, on the other hand, seem to be preparing for a rather quiet year. Growth is stabilising around the potential level and the inflation trend is unremarkable. If this does not change significantly, one should hardly expect a sustained trend in key interest rates. Especially as there are no real tensions on the financial markets. Although asset markets are highly valued, mainly due to low interest rates, a major correction is also unlikely in the current environment.

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