Despite all the economic and political concerns, the trend for equities is upward and that for credit spreads is downward. What are the reasons for this and how long will the markets continue to climb the proverbial “wall of worry”?
Markets act as if tariffs, trade uncertainty, and fiscal worries are in the rear-view mirror, while the windshield shows fiscal easing, Fed rate cuts, and AI-driven profits. We disagree, expecting major obstacles to make the ride bumpy for investors, and position our tactical asset allocation accordingly.
After a V-shaped recovery, will major stock markets climb a 'wall of worry' as in 2021, or are we on the brink of a 2000-2001-style decline? We explore whether long-term rates will hit new highs and how this shapes tactical asset allocation.
The next hurdle for financial markets: recession fears
Monday, 28 April 2025
A weaker dollar makes higher import tariffs feel like a tax hike for the U.S. economy. For financial markets, tariffs pack a harsher punch than a tax increase, risking sharp declines in asset prices. While market turmoil might push Trump to dial back trade tensions further, relief could be fleeting as recession fears are creeping in. Unlock the insights in our report to navigate this stormy economic landscape.
