A rising chorus of forecasts suggest as much. But for the moment, this is still guesswork as markets struggle to price in a dramatically altered macro outlook due to the rising risk of a global trade war.
Macro Briefing: 7 April 2025
President Trump hints he’s ready to negotiate on tariffs as stocks around the world continue to tumble on Monday. On Sunday evening he said he’s “open to talking” with world leaders on new trade deals. “I’m willing to deal with China, but they have to solve their surplus,” he said aboard Air Force One. But he also advised that the tariffs will continue until the US trade deficit is eliminated: “Unless we solve that problem, I’m not going to make a deal.”
Book Bits: 5 April 2025
● The Measure of Progress: Counting What Really Matters
Diane Coyle
Summary via publisher (Princeton U. Press)
The ways that statisticians and governments measure the economy were developed in the 1940s, when the urgent economic problems were entirely different from those of today. In The Measure of Progress, Diane Coyle argues that the framework underpinning today’s economic statistics is so outdated that it functions as a distorting lens, or even a set of blinkers. When policymakers rely on such an antiquated conceptual tool, how can they measure, understand, and respond with any precision to what is happening in today’s digital economy? Coyle makes the case for a new framework, one that takes into consideration current economic realities.
US Services Sector, An Exporting Powerhouse, At Risk In Trade War
The US is the world’s leading exporter of services to the global economy. The services sector is also the dominant source of economic activity in America. Those are strengths, but they’re also vulnerabilities in a global trade war.
Macro Briefing: 4 April 2025
The US bond market rallied yesterday amid rising fears that a global trade war is unfolding. The Vanguard Total Bond Market ETF (BND), a proxy for US government bonds and investment-grade credits, rallied to its highest level since September, fueled by a rush for safe havens amid a stock market rout on Thursday. US stocks, by contrast, suffered their worst daily loss on Thursday since 2020, with the steepest declines in tech and energy sectors.
Managing Expectations For A Global Trade War
The sweeping policy change for US tariffs announced yesterday by President Trump is a game changer for the global economy. Exactly how trade flows shift, economies pivot and governments around the world react is unclear, but most forecasts point to slower growth, higher inflation and a reduction in global trade. Trump, by contrast, says the tariffs will “quickly” usher in a new era of prosperity for the US.
Macro Briefing: 3 April 2025
President Trump announced a sweeping set of tariffs on Wednesday that threaten to trigger a global trade war as governments around the world say they will respond. The shift in US policy marks the biggest change to global trade in a century. The core change is a universal tariff of 10% on all imports, plus additional tariffs on the “worst offenders.” A notable exception: Russia. A White House official says Russia is “not on this list because sanctions from the Ukraine war have already rendered trade between the two countries as zero.”
Total Return Forecasts: Major Asset Classes | 02 APR 2025
The long-run expected total return for the Global Market Index (GMI) fell again in March, dropping to an annualized 6.9% vs. the previous month’s 7.1%. The analysis is based on three models (defined below) for GMI, a global benchmark that’s based on a market-value weighted mix of the major asset classes (excluding cash).
Macro Briefing: 2 April 2025
New US tariffs are set to start today, according to the Trump administration. Analysts are hoping that the details will provide more clarity on the policy shift. This much is clear: the stakes are high. “The main channel from trade policy uncertainty to GDP is via business investment. Under higher trade policy uncertainty, future revenue streams of an investment become more uncertain, raising the option value of delaying investment decisions until the situation is clearer,” Oxford Economics analysts said in a research note.
Major Asset Classes | March 2025 | Performance Review
Commodities led widespread rallies in March for the major asset classes, based on a set of ETFs. US assets posted the only losses last month, with American shares leading on the downside.