Overview

• European benchmarks have outperformed US markets in the first half of 2025, with Germany’s DAX up about 16 percent and US indexes gaining less than 2 percent.
• Trump’s tariff threats and erratic policy shifts have eroded confidence in US assets and driven a wave of reallocations toward Europe.
• European equity funds recorded net inflows of roughly €48 billion across the first and second quarters, reversing more than a year of sustained outflows.
• US federal debt has nearly doubled over the past decade to $35.4 trillion, lifting bond yields and raising concerns about US asset valuations.
• Analysts project continued but slower capital flight from the US as the dollar maintains its reserve status and European fiscal measures bolster market optimism.