2025 Financial Markets in Review: From US Exceptionalism to the Everything Rally
๐ 2025: A Truly Dramatic Year
If I had to describe the 2025 financial markets in one phrase, it would be "a rollercoaster of extremes." From the beginning to the end of the year, we witnessed market sentiment completely flipโmultiple times. It was a breathless year for investors.
In this article, I'll walk you through how the market evolved throughout 2025, quarter by quarter. After all, understanding the past helps us see the future! ๐
๐ Q1: US Exceptionalism
The term that dominated financial markets early this year was undoubtedly "US Exceptionalism."
America Was the Only Answer?
Global capital flowed into the United States like a black hole pulling in everything around it. US stocks soared sky-high while stocks in other countries tumbledโa truly unique situation.
Here's what happened:
- ๐บ๐ธ You needed dollars to buy US assets, so the dollar strengthened dramatically
- ๐ต The USD/KRW exchange rate broke through 1,480 won in January-February
- ๐ Only US stocks rose while everything else fell
The market consensus was crystal clear: "Where else would you go but America?"
๐ฅ Q2: Sell America
But on April 2nd, everything flipped.
Liberation Day, the Start of Tariffs
When the Trump administration began imposing tariffs in earnest, market sentiment did a complete 180. Suddenly, voices saying "We need to isolate America" and "We need to sell all US assets" grew louder.
The Sell America phenomenon:
- ๐ Simultaneous selling of US stocks, bonds, and dollars
- ๐ฑ An unusual situation where stock prices fell AND the dollar weakened
- ๐ Growing concerns that "under Trump's tariffs, America could become isolated"
What was truly surprising was that normally when stocks fall, the dollar strengthens as a safe haven. But this time, the dollar fell too. It was as if the market was losing faith in America itself.
๐ Mid-Year: Enter TACO (Trump Always Chickens Out)
Through May and June, a new keyword emerged: "TACO."
Trump Always Backs Down?
TACO stands for "Trump Always Chickens Out." It literally means Trump always gets scared and backs off.
What actually happened:
- โธ๏ธ Extended tariffs by 90 days
- ๐จ๐ณ Told China "let's see in a year"
- ๐ก Showed flexibility to back off when needed
Markets interpreted this positively: "Ah, Trump doesn't intend to completely destroy the market. He's not going all-inโhe's taking care of the market."
As this perception spread, relief began to return to markets.
๐ Q3 to Early Q4: The Everything Rally
The TACO perception combined with expectations of Fed rate cuts, and finally, the rally began!
Everything Went Up
Characteristics of the Everything Rally:
- ๐ Stocks rose
- ๐ฅ Gold prices surged (the debasement trade)
- ๐ฐ Explosive demand to hedge against currency devaluation
The surge in gold prices was particularly notable. This was the "debasement trade"โa movement to seek refuge in physical assets like gold amid concerns about currency value collapse.
๐ฎโ๐จ Year-End: Catching Our Breath
And now? We're in a pause phase, catching our breath.
Why the Pause?
Several reasons:
- ๐ฆ Signals that rate cuts might be put on hold
- ๐ Central banks in various countries moving in different directions
- ๐ Markets searching for a new direction
๐ 2025 Key Summary
| Period | Keyword | Characteristics |
|---|---|---|
| Q1 | US Exceptionalism | Global capital concentrated in US, ultra-strong dollar |
| Q2 | Sell America | Tariff shock, US asset sell-off |
| Mid-Year | TACO | Trump's flexible stance, market relief |
| Q3-Q4 | Everything Rally | All assets rising together, gold surge |
| Year-End | Catching Breath | Policy uncertainty, direction searching |
๐ก Final Thoughts
2025 was truly a dramatic year. A market that screamed "America is the only answer" at the start of the year shifted to "Sell America" within months, then pivoted again to "Buy everything."
These dramatic changes teach investors an important lesson: Markets can flip at any time, and going all-in on one direction is dangerous.
What drama awaits next year? In my next post, I'll cover the key issues to watch in 2026! ๐