ZE Global Financial Markets Review for the year ending 2025. and 2026 Market Outlook
– By Chinedu Okoye
Executive Summary:
• The ZE 2025 Outlook rejected a synchronized global recovery, arguing that policy asymmetries, demand fragility, and asset-class divergence would define market outcomes.
• China’s weak consumer demand and household leverage proved central, feeding into industrial losses by November 2025 and confirming that policy easing could cushion, but not revive, organic demand.
• Crude oil remained demand-constrained, with OPEC discipline and geopolitical risks insufficient to sustain breakouts amid weak refinery utilization and soft Chinese demand.
• Precious metals outperformed materially, driven by structural, non-cyclical demand such as central-bank diversification and geopolitical hedging, with silver outperforming gold on industrial demand.
• Equities stayed relatively stable, with performance driven by cash flows and balance-sheet strength rather than valuation expansion.
• EM sovereigns and crypto validated the dispersion thesis, as EM carry trades outperformed uneven DM bonds, and crypto delivered upside with elevated volatility.
Introduction:
In the ZE 2025 Financial Markets Outlook, analytical projections for the year 2025 were made, with reviews done at the end of the first second and third quarters. We now present a 2025 Financial Markets Review matching reality with our then predicted outcomes.
The outlook focused on four asset classes and select indicators or assets within them, it covered, Equities, Fixed Income, Commodities and Crypto. The data shows that equity faired in line with expectation, as did commodities on aggregate though there was a big miss on Oil, and an overshoot of precious metals over compensated for that.
Crypto largely delivered expected behavior and EM sovereigns gained more relatively to DMs. Fixed Income however was mixed with EM performing as expected, and DM not quite providing the price appreciation (or yield reduction) expected. Below we make a review and give a 2026 Financial Markets Outlook.
1.0 Global Financial Markets Review for Year end 2025:
1.10 Commodities: Mixed
Commodities on our watchlist as at the time of the article ‘Global Macroeconomic and Financial Markets Outlook (Per Asset Class) 2025’ –where we showcased ZE expectations for the year 2025 – outperformed on aggregate, with the $75/pb crude price.for H12025 missed, whilst Silver and Gold overshot, to $75 and $4,500+ (as at December 27th, 2025), way beyond the original $3,600, and $45 targets, and the later revised $55-$60 and $4,200 targets, for Gold and silver spot respectively).
Holding with the expectations that the yellow metal and silver hits their initial and then revised intended target left ZE positions in the green with silver outperforming by a mile posting a triple digit percentage return, outpacing Gold as we posited but by a much more larger margin even on a month-on-month basis.
Silvers momentum kicked as industrial demand spiked which then saw trader and investor bullish sentiment rise, Gold however has been less volatile and more stable, and beat returns on a Year-on-year and year to date basis.
On the other hand, Crude oil experience an above 16% loss in USD value with Brent shedding 16.77 and WTI dropping by -17.73%. with weak demand going by IEA figures for both refinery utilization - which has been below 100% and Chinese industrial demand - and evidence of a supply glut even in the midst of ongoing geopolitical crisis is oil rich regions and states. Though target was largely missed, consumer patterns determined prices, per the outlook.
1.20 Equities: Accurate
Though more volatile than expected at some point in April – owing to the trade tensions – was more stable than most, as predicted, posting healthy consistent returns on an annual and year-to-date basis. (see chart below)
From the above chart, all equity Indexes posted positive year-on-year and month-on-month growth, with Nigerian All Share Index outpacing all on the watchlist.
Another themes noticed when you glance through the charts for all Indexes above save for Brazil (BOVESPA) and Nigeria (NGX ASI), all experienced a down turn in April before the market adjusted as tarrif fears were eased and negotiations reached or close. Barring that unforseen trade policy equity markets where fairy stable and resilient.
This falls in line with ZE expectations on the asset class pre-2025. (See paper on reference: https://www.zeroequilibrium.com/?m=1). With the CBOE VIX down -24.82% to 13.60, US and world equities have fairly stable, an outcome in line with ZE expectations and outlook prior to the start of the year.
(S&P 500 VIX Year-on-year %∆)
1.30 Fixed Income: Fairly Accurate
On the prediction for the entire sovereign bonds, those of Developed Market countries seemed to fall with the exception of US and UK. Hence the Outlook was wrong on the tge price appreciation potential for DM sovereigns, but however, spot on with regards EM sovereigns.
The price appreciation expectation for DM sovereigns were concentrated in US Treasuries, as JGB yields and Core Euro-Zone Bond yields (Bunds, FR10YR, BTPs; Gilts;
10 years were chosen as the sweet spot with allocations made to lesser duarations (2Yrs and 5Yra for USTs and Gilts).
UK 10 year Gilts are marginal down, outperforming Core Euro-Zone and Japan, coming second to US Treasuries which dipped from near 5% in January (4.80%), to 4.132% as the Market close on Friday December 26th and ay the time of this post (which is used as a data reference point for the article). European sovereigns; France, Germany, and Italy posted positive yield gains (which moves inverse to prices).
However Emerging Market Sovereigns performed on aggregate and individually (for strong EM), performed as expected, fueled by EM-carry trades, and bind investors looking to lock-in higher yields in low risk EM assets of which EM Sovereigns can be classified under and is a big part of.
Frontier Markets did fairly well as the Nigerian 10 Yr yields dipped -2,116 basis points to 16.08%
EM proxies (VWOB) therefore rose as yields fell, as investors locked in high single digit to low double digit yield, bond traders fueled this with the EM carry trade. And currencies stabilized v the USD.
The above chart highlights a good performing year for stable and quality EM Sovereigns namely; the core BRICS, Southeast Asia
1.30.1 Risk-Reward Balance:
As stated in the paper, EM Sovereigns held to most risk reward balance, with the EM carry trade fuelling not just bonds but currencies. The currency risks would continually b le offset or held as the
1.40 Crypto: Accurate
ZE predictions were half right on crypto as we posited that it is expected to be the most volatile and potentially the asset class with the most upside. The later was delivered within the year as Bitcoin and other cyotos hit all-time highs.
However the second half of the year was unkind to cryptos in general and on the ZE Watchlis/Portfolio, except for Bitcoin Cash (BCH) and gold backed crypto PAXG.
Earlier in the year Bitcoin hit $120,000 mark, and breaching it briefly. Hence per the ZE outlook, Crypto performed as expected, producing massive returns with wild volatility swings.
Fixed income and crypto outcomes reinforced the dispersion thesis, as EM sovereigns delivered superior risk-reward via carry trades, DM sovereign performance remained uneven, and crypto produced upside with elevated volatility and strong sensitivity to liquidity conditions
2.0 2026 Outlook: Expectations at the ZE Camp:
2.10 Markets:
2.10.1 Equities:
Equities are expected to be dependent on company-specific data and the monetary environment in the US. This is as Federal Reserve interest rate policy affects the yield spread widening or narrowing depending on the cause of the policy. A looser than expected monetary policy would be bullish for stocks as USD strength moderate or is weakened lower.
However, mild growth is expected overall, with or without a looser Fed rate policy.
The US major indices are expected tonoutperform European and British peers, whilst the Japanese stock market can experience a plateauing giving inflationary and exchange rate concerns. Brazil's BOVESPA at all-time highs will depend on industrial activity/output as it is a very export oriented economy, with large trade partners and strategic alliance with the worlds second largest economy (China).
But the rate of change would be dependent on the economic integration with BRICS member States upon whom Brazil has relied on to no small degree. EM equities might outgrow DM equities on aggregate buoyed by a handful of nations of which BRICS member States are part of.
The Nigerian All Share Index might still have a lot more upside in the coming year, given the strength and stability of the Naira, but the exponential growth seem in the past year might not be replicated.
Target price for the NGX ASI is N160,000; S&P 500, could hit $6,800-$7,000 range. A sideways European equity movement is expected.
2.10.2 Commodities:
Silver is expected to hold up at current levels, and even breach $80, currently silver's demand is filed by industry and it's price fueled by trading action. Though it could still outrun goldz the yellow metal is expected to be less volatile, with $5000/oz. on the horizon for FY2026.
However, because silver is trading at the highest price in gold in decades, a pullback or temporary pullbacks are not entirely ruled out for silver. However gold is expected to remain stable and upward sloping.
We are extremely bullish on US Natural Gas, with a target price of $6.00(±20%).
2.10.3 Crypto:
Cryptocurrencies are largely expected to continue it's volatility, ZE views the resilience above $85k as a signal that Bitcoin could be poised back for a rally above the $100k levels. PAXG will continue to mirror gold, and a slight pullback could be seen on Q1 for Bitcoin Cash.
On that note ZE is bullish on BTC, PAXG and neutral on BCH. Due to the unexpected gains from PAXG and BCH, we found it reasonable to invest the returns in Bitcoin as a medium to long-term play, since the ZE Crypto portfolio has taken a hitgiven that Bitcoin has the largest weight in the crypto segment of our portfolio. A clear bullish stance. Additional investments
2.10.4 Fixed Income:
The Federal Reserve could become more dovish than they sound about next year, in the year owing either due to data or change of leadership at the Fed.
We anticipate the EM carry trade to continue and depress EM yields further (rasing it's price), such that investors earn from yield and price appreciation in terms of portfolio value. Thus, EM sovereigns are poised to continue outperforming DM.
So not only does it provide a risk-reward balance, EM could also be an outperformer relative to US Treasuries, Gilts, and other DM sovereigns, in the coming year. As a result, Zero Equilibrium is bullish on Commodities, midly bullish on Equities, and bullish on quality EM sovereigns. This is as yields on certain less
2.20 Economy:
The economy would naturally have bearing or impact on industrial activity, and soft numbers in major economies could easily lead to a change in sentiments. Because the market is trading equities based on company-specific data, the gold exposure is likely to remain a hedge for not just central banks but institutional investors.
Weakness is expected to continue out of Core Euro-Zone with negative growth (a contraction), not entirely ruled out for some countries such as Germany. The US is expected to grow just under 2% and China 4.5% in the year.
For emerging markets, certain countries are well poised for sustainable growth and manufacturing output, however in Africa the top economies are expected to grow only marginally, with a lot riding on efficient and prudent public financial management.
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