Reimagining Global Trade (and the Volatility That Goes Along with It)
By John Majoros, Senior Portfolio Manager and Head of Taxable Strategies
This year started with much promise. The new administration’s focus on business and growth overshadowed the background talk of tariffs and trade wars and the implications for inflation and economic growth. Fast forward to the end of the quarter and those very concerns have come front and center, repricing the U.S. Treasury market as well as domestic risk markets broadly.
We could write many pages on how we got to this current global trading system and the historical basis for the current tariff regime, however, to get to the point, the Trump administration is looking to remake the current system, which has led to increasing volatility across nearly all financial markets. This has affected much of the recent stream of consumer sentiment numbers and the expectations related to wider tariff policies, and more specifically, the rhetoric surrounding inauguration. In that same survey data, one-year inflation expectations increased to 5%. While we must see how this data translates to actual inflation and growth numbers, it is hard to ignore given that two thirds of domestic economic activity is tied to individuals.
View the full Q1 2025 Quarterly Bond Market Overview here.
