2025 has started weakly, due to interest rates increasing and the euro losing value.

These movements are driven by Donald Trump’s policies. The threat of tariffs is increasing the value of the dollar, while increased uncertainty about fiscal policy is driving bonds lower.

Several analysts predict the 10-year US Treasury yield might reach 5%, from 4.8% currently.

However, 5% would be a good level to buy bonds, argues Bank of America’s Michael Harnett. That’s because high bond yields might force Trump to mellow on tariffs and increase fiscal discipline. If that happened, it could also create a good opportunity to buy non-US stocks, probably around February or March.

Non-US stocks could be further boosted by monetary easing by the European Central Bank, Chinese fiscal stimulus, and a potential peace deal in Ukraine.

I believe that yields above 4.5% are starting to make bonds interesting. I wouldn’t rate them a screaming buy yet, just attractive. If there was a bond panic taking yields above 5%, then I would become a more aggressive buyer.

The portfolio has fallen recently because many stocks in the portfolio, especially those from the real estate sector, are like bonds on steroids. They yield more than bonds, but behave like bonds on a daily basis. Higher rates lower their value, and vice versa.

Under stable rates, these stocks yield 8-10% a year. If interest rates were to decrease, higher returns could be obtained. The risk is that interest rates continue to increase, which could create good buying opportunities.

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