Until ongoing tariff uncertainty is resolved, countries may be hesitant to strike new trade deals with the US.<\/p>\n\n\n\n
Despite the noise of the trade war, US financial markets and the economy have shown remarkable resilience.<\/p>\n\n\n\n
We continue to believe non-US dollar assets are more attractively valued and well-positioned in today\u2019s environment.<\/p>\n\n\n\n
Feeling dizzy? You\u2019re not alone. Last week began with a whirlwind: A 50% US tariff on European Union exports was delayed just days after being announced. A few days later, the Court of International Trade declared many of the <\/a>Trump-era tariffs invalid<\/a>, including ones announced on \u201cLiberation Day.\u201d Then hours later, a US Federal Appeals Court paused that ruling from the trade court, putting the impacted tariffs back in place until further legal arguments can be made.<\/p>\n\n\n\n Spare a thought for the researchers at the Yale Budget Lab, who are constantly updating the \u201cUS effective tariff rate.\u201d Their estimates have swung wildly \u2014 from 28% just after Liberation Day to 6.9% following the trade court\u2019s ruling, and now likely back to the mid-teens after the appeal.1<\/a><\/sup><\/p>\n\n\n\n Where trade policy goes from here is anyone\u2019s guess. Many of us have likely been brushing up on Sections 122 and 338 of the US Trade Act. Until the standoff between the Trump administration and Congress is resolved, countries may be hesitant to strike new trade deals with the US. The bottom line: Policy uncertainty is here to stay.<\/p>\n\n\n\n Despite the noise, US financial markets and the economy have shown remarkable resilience:<\/p>\n\n\n\n Our focus on the US this week isn\u2019t to suggest investors ignore global opportunities. On the contrary, we continue to believe non-US dollar assets are more attractively valued and well-positioned in today\u2019s environment. But it\u2019s worth noting that, despite the policy fog, the US economic backdrop has remained relatively sound.<\/p>\n\n\n\nThis week\u2019s focus: The US amid uncertainty<\/h2>\n\n\n\n
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<\/strong>Inflation<\/a> expectations and real yields have returned to levels seen at the start of the year.2<\/a><\/sup> Corporate bond spreads have tightened toward early 2025 levels,3<\/a><\/sup> and the S&P 500 Index has posted a modest gain year-to-date4<\/a><\/sup> \u2014 reflecting a market that\u2019s been weathering uncertainty without a clear direction, in our view.<\/li>\n\n\n\n
<\/strong>Concerns about the US funding its growing fiscal deficit may have been overblown. Last week\u2019s 5-year Treasury auction saw near-record demand,5<\/a><\/sup> easing fears of rising borrowing costs.<\/li>\n<\/ul>\n\n\n\n\n
<\/strong>While consumer spending softened in April \u2014 partly due to a record 20% drop in goods imports from tariffs6<\/a><\/sup> \u2014 the labor market has remained strong. Disposable personal income rose for the fourth consecutive month.7<\/a><\/sup><\/li>\n\n\n\n
<\/strong>Tariffs haven\u2019t yet pushed up prices. The Federal Reserve<\/a>\u2019s preferred inflation gauge, the Personal Consumption Expenditures index, rose just 0.1% month-over-month in April and 2.5% year-over-year \u2014 the smallest annual increase in over four years.8<\/a><\/sup><\/li>\n\n\n\n
<\/strong>NVIDIA announced strong first-quarter earnings, underscoring the enduring momentum behind the artificial intelligence theme. While we’re not offering a stock recommendation, it’s a reminder that investment themes can persist \u2014 even amid policy distractions.<\/li>\n<\/ul>\n\n\n\nLooking beyond the US<\/h2>\n\n\n\n
What to watch this week<\/h2>\n\n\n\n