Market developments
Equities: Global stock markets experienced volatility this week, driven by uncertainty surrounding U.S. tariff policies under President Trump. The U.S. court blocked some proposed tariffs, leading to a rally that later lost steam. The developed market indices saw gains as Trump paused 50% EU tariff hikes for faster trade talks, boosting optimism, though high valuations and moderating earnings growth tempered enthusiasm.
Fixed Income: This week, global bond markets saw heightened volatility as U.S. Treasury yields fluctuated, with the 10-year Treasury yield briefly crossing 4.5% before settling at 4.4% amid mixed signals from U.S. tariff policy developments. Investors are urged to diversify fixed-income strategies, as rising yields and correlations with equities signal increased market risks. The Bank of Japan’s dilemma over raising rates to defend the yen risks higher debt costs, projected at $289 billion in 2025 if rates rise 1% beyond expectations.
Commodities: Commodities saw reduced demand for haven assets like gold, which pulled back after a strong year-to-date performance, as U.S. and EU trade talks eased tariff-related fears. Oil prices remained low at $55, reflecting market caution amid trade uncertainties.