On February 4th, 2025, an Equities Leaders Summit panel on global macro pressures in markets established a sobering reality regarding equity market volatility. Entitled, "Global Macro Predictions: Looking Ahead to 2025 & Beyond,” the panel explored the major trends facing the industry.

One participant pointed out what is perhaps the most important trend:

"As Benjamin Franklin said, ‘In this world, nothing is certain except death and taxes,’ and for 2025, I would also add volatility.”

What the industry witnessed throughout 2025 wasn't just periodic market disruption, but systematic shocks that tested the foundations of traditional trading approaches. The events ranged from DeepSeek's AI disruption that rocked technology valuations to aggressive tariff rhetoric that sent ripple effects across global supply chains.

These weren't isolated incidents—they represented what State Street Global Advisors' research team has identified as the "age of fragmentation” in global markets.

Traditional Correlations Are Eroding Due to Macroeconomic Uncertainty

While the 2025 summit's panelists discussed macro-aware algorithms and equity market volatility management tools, the underlying challenge is much more fundamental. Practitioners are struggling with the breakdown of historical relationships that trading desks have relied upon for decades.

Periods following major electoral cycles also create unique challenges for trading teams. This is particularly true as they work to adapt risk models that must account for significant policy shifts and macroeconomic uncertainty.

The 2024-2025 transition has been especially complex, with the new administration's policies around tariffs, immigration, and deregulation creating cascading effects across global markets that traditional risk models may not have anticipated.

Post-Electoral Turbulence and the Challenge to "American Exceptionalism”

Miles Sampson, Vice President and Head of Asset Allocation Research at Franklin Templeton, noted during the "Macro Predictions” panel that "American exceptionalism" was being challenged by immigration policy changes and tariff implementations—both of which would fundamentally alter the economic dynamics that had supported US market outperformance.

"One of the drivers of American exceptionalism has been immigration,” said Sampson. "Similarly, tariffs are really a consumption tax. Both are going to affect the concept of American exceptionalism this year, and we don’t think either has been priced into the market.”

Traditional hedging relationships—such as the dollar's correlation with real rates—have become unreliable during critical market stress periods such as these. This correlation breakdown forces desk managers to completely rethink their risk frameworks, moving beyond historical models toward real-time adaptive systems.

Liquidity Shocks in an Age of Fragmentation

Perhaps most concerning is how systemic equity market volatility has intersected with liquidity dynamics. The summit's discussions about venue proliferation and market fragmentation took on new urgency as 2025 progressed.

During a different panel discussion called "Market Microstructure – Order Routing & Nuances of Different Markets,” Sean Paylor from Acadian Asset Management highlighted a critical issue: As retail flow becomes increasingly segmented through wholesaling arrangements, institutional traders face effectively higher trading costs because accessible liquidity has shrunk dramatically.

This segmentation creates dangerous feedback loops during stress periods. When equity market volatility spikes, the very liquidity sources that trading desks depend upon—retail flow, cross-venue arbitrage opportunities, dark pool interactions—become either inaccessible or prohibitively expensive. The result is that trading desks must build resilience not just against price volatility, but against liquidity scarcity that amplifies that volatility.

"Macro-Ready” Tools and Infrastructure Will Be Key to Building Resilience

Looking toward 2026, trading desks must evolve from reactive volatility management to proactive macro-aware infrastructure. This means developing systems that can rapidly recalibrate to shifting policy environments, broken correlations, and liquidity fragmentation.

As Tiwari advised summit attendees: trading tools must become "macro-ready” to handle "policy changes, Fed dot plots that change more than my daughter changes her mind about dinner, and global economic shifts.”

The most sophisticated desks are already implementing real-time recalibration systems that can adjust risk parameters not just based on realized equity market volatility, but on forward-looking policy signals and geopolitical developments.

This represents a fundamental shift from the static models that dominated pre-2020 trading infrastructure. These newer, more dynamic systems can more easily adapt to an era where a range of once-structural features of trade have become unpredictable.

Adapting to the "Decoupling” with China

What represents perhaps the most significant structural shift facing trading desks today is what the Hinrich Foundation refers to as the "Crash U.S.-China Decoupling.” The accelerating economic separation between the world's two largest economies has moved beyond theoretical policy discussions into tangible market impacts.

Trading teams are now grappling with how to model risks in an environment where export license approvals for mainland China have declined, and where entire supply chains are being restructured in real-time. As of August 2025, thousands of export license applications are still being held up at the U.S. Department of Commerce, Reuters reported.

These delays, when combined with tariffs, hurt both importers and exporters in the U.S. market.

The complexity extends beyond simple bilateral trade flows—it encompasses technology transfers, rare earth materials access, and the emergence of competing economic blocs that traditional correlation models may not capture.

Anticipating Moves by the Fed

Meanwhile, the Federal Reserve's approach to rate normalization continues to evolve, with balance sheet reduction (also known as "quantitative tightening”) expected to be completed by late 2025 or early 2026, according to the Federal Reserve Bank of Richmond. This timeline creates unique modeling challenges as trading desks must account for both the mechanical effects of quantitative tightening and the policy uncertainty that comes with a new administration's approach to monetary policy coordination.

A press release from the Board of Governors of the Federal Reserve System says that the federal funds rate currently ranges from 4.25% to 4.5%. This represents a significantly higher baseline than previous cycles, adding complexity to duration risk models and cross-asset correlation assumptions.

Healthy People and Resilient Teams Can Mitigate the Human Costs of Disruption

The intersection of macro uncertainty and people management presents perhaps the most underappreciated challenge facing trading desk leadership today. As equity market volatility increases and political tensions create daily headline risk, the pressure on trading professionals has intensified beyond traditional market stressors.

Recent research reveals trends in trader wellbeing. According to a study cited by Global Trading, 37% of trading employees highlighted the negative impacts of long working hours on their health, family life, and career longevity. Furthermore, only 27% of the employees surveyed participated in mentorship programs, highlighting a need for more career development opportunities.

Opportunities to Improve Mental and Physical Health

The challenges extend beyond simple workload issues—they encompass the psychological pressure of making high-stakes decisions in an environment where policy announcements can instantly reshape market dynamics.

One trading professional from the Global Trading study noted, "I think the determining factor to staying in the industry is if my health would let me keep up with the hours and early starts.”

The industry's response has been notably uneven. Some firms have invested in comprehensive wellness programs, such as the following:

• 24/7 mental health support and stress management resources
• Flexible hours and work schedules
• Remote work and work-from-home options
• Access to professional counseling, therapy, and Employee Assistance Programs (EAPs)
• Mindfulness and meditation training (including mobile apps and guided sessions)
• Stress reduction workshops and resilience-building seminars
• Health and fitness initiatives (onsite gyms, subsidized memberships, fitness challenges, or wellness reimbursement)
• Nutrition programs and healthy snack options in the office
• Wellbeing check-ins and peer support networks
• Work-life integration support, promoting time for family, hobbies, and self-care

However, others continue to operate under traditional high-pressure models that may no longer be sustainable.

For example, merit-based incentives can improve competition, productivity, and outcomes, but they can also encourage people to overwork. For years, some firms have maintained unsustainable cultures that promote working late, working on weekends, and the expectation that team members be "available” 24/7.

A Qualitative Case for Employee Well-Being

The data suggests a clear business case for intervention: According to a report by McKinsey & Company, enhanced employee health and well-being could generate up to $11.7 trillion in global economic value.

"Organizations that prioritize health often see marked improvements in productivity, reduced absenteeism, lower healthcare costs, and heightened employee engagement and retention,” the report said. "They are better placed to adapt to increased regulatory pressures on workplace health and safety standards and withstand greater focus from investors and the public on how organizations are meeting environmental, social, and governance (ESG) criteria.”

Key focus areas for building resilient trading teams include:

• Proactive stress management systems that address the unique pressures of real-time decision-making under uncertainty
• Mental stamina preservation programs that help traders maintain performance during extended periods of equity market volatility
• Flexible support structures that account for the demanding schedules and global time zone requirements of modern trading operations

These changes can be substantial. However, experts claim it’s even more critical to focus on people in the face of continued market turbulence, technology disruptions, and shifting regulations.

"A healthier workforce is a more resilient and adaptive workforce, more capable of navigating the uncertainties and challenges of a rapidly changing world,” McKinsey said.

Equities Leaders Are Recalibrating Equity Market Volatility in 2026

Navigating a landscape defined by volatility, fragmentation, and shifting global macro pressures requires both technical adaptability and a renewed investment in people. As trading desks recalibrate their systems and strategies for 2026, resilient teams will be those that prioritize building a robust infrastructure, supporting team members’ well-being, and creating innovative solutions to challenges.

In this era of persistent uncertainty, success will belong to organizations that respond to disruption not just with sharper models, but also healthier and more adaptive teams. To learn more about how your teams can prepare, don’t miss Equities Leaders Summit 2026, happening from January 26^th to 28^th at JW Marriott Marquis in Miami, Florida.