Donroe Doctrine

Global stock markets continued to demonstrate remarkable stock market resilience in the face of a series of extraordinary geopolitical developments, with many major indexes posting all-time high prices. As laid out in Trump’s 2025 National Security Strategy, Team MAGA have been busy reshaping foreign policy, forcing AI search engine traffic for the ‘Monroe Doctrine’ to explode.

In short, the Monroe Doctrine is a cornerstone of American foreign policy first established by the fifth US President, James Monroe, in 1823. Its original purpose was to warn European nations that America would no longer tolerate further colonisation or ‘puppet monarchies’ in the Western Hemisphere. While it began as a defensive strategy to protect the newly independent nations of Latin America, the strategy eventually evolved into a tool for the US to assert itself as the dominant power in the region.

Fast forward 200 years and the Donald has dusted off, and tweaked, this policy document, giving rise to the self-proclaimed ‘Donroe Doctrine’. Rather than focusing on expelling 19th century European empires, this modern adaption aims to sideline 21st century rivals such as China and Russia through targeted US control of all Western Hemisphere strategic natural resources, including critical minerals and rare earth metals, and building a self-sufficient hemispheric supply chain.

America’s new geopolitical agenda is marked by a tectonic shift away from global alliances and economic diplomacy, and towards ‘defence and confrontation’. The Donroe Doctrine has been used to justify direct military and economic interventions, most notably with the recent capture of Venezuelan President Nicolas Maduro. Coincidentally, Venezuela holds significant oil reserves, a vast strategic gold reserve, and, by some estimates, a meaningful Bitcoin reserve.

This week, investors have been digesting news that Trump wants to acquire Greenland and ‘take back’ the Panama Canal. Betting markets have also swiftly moved to price in very high odds (90%+) that the Presidents of Colombia and Peru will both be ousted before 2027. Astonishing.

That sphere of influence also extends to Iran, whose rulers are confronting their most serious challenge since their own 1979 revolution. What began as a low-key march following a sudden currency collapse swiftly mushroomed into a nationwide protest calling for economic and political change. Iran’s leaders have countered with a ferocious security crackdown and near total internet shutdown, whilst government forces have reportedly murdered hundreds and detained thousands of civilians. US President Trump has repeatedly threatened military action, and his maximalist demands include zero nuclear enrichment, a redline for Iran.

Turning to US domestic matters, critical midterm elections are looming in November. They carry significant weight because the ruling party in the House of Representatives can call for impeachment of the President. The issue of American ‘affordability’, or lack of it, is growing increasingly louder amongst the Republican’s core voting power base, evidenced by the dramatic drop in Trump’s approval ratings.

In a signal that they plan to go ‘all in’ on affordability, the President announced a succession of measures aimed to relieve the burden on ordinary working households. First, Trump directed government agencies to purchase mortgage-backed securities to the tune of 200 billion dollars to bring down ‘jumbo’ (30 year) mortgage interest rates. Second, the President announced steps to ban institutional investors from buying single family homes, noting that ‘people live in homes, not corporations.’ And third, he ordered that credit card interest rates be capped at 10% for the next 12 months (most usually run at 20-40% per annum).

Meanwhile, US Federal Reserve Chairman Jerome Powell dropped a bombshell that he is under criminal investigation by the Department of Justice. The matter centres on the recently completed two and a half billion-dollar renovation project of the Fed’s headquarters where it is alleged that Powell mismanaged funds and lied to Congress about ‘lavish’ features like VIP dining rooms. However, Powell has publicly dismissed these claims as ‘pretexts’, arguing that the real motive is political retaliation for his refusal to drastically cut interest rates as the President has demanded. At stake is the independence of America’s central bank.

Away from the US, arguably the most fascinating development is taking place in Japan’s bond markets, where the 10-year government bond yield blasted through 2% to its highest level since 1999. There is growing speculation that Prime Minister Sanae Takaichi could dissolve parliament as early as next month, leveraging her strong public approval to advance expansionary fiscal policies. Anticipation of increased government spending has pushed Japanese yields higher, reflecting growing concerns over the country’s fiscal health.

Commodities once again stole the show, with physical gold and silver soaring to new all-time highs this week as ongoing factors of geopolitical instability, currency debasement, and physical supply shortages kept a strong bid under prices. Crude oil, or ‘black gold’, also rallied more than 3% as investors focused on potential supply disruption in the Middle East.

Looking ahead to this week, markets will be closely watching the US inflation report out Tuesday and the weekly unemployment claims from the US Department of Labour on Thursday. Trends within both reports are likely to feed into Federal Reserve spreadsheets and may influence the path ahead for interest rates in 2026.

(Cover Image Source: Marcus iStrfry)