Compared to the optimism when President Trump was re-elected in November 2024, market sentiment has shifted dramatically.
Since the announcement of reciprocal tariffs on April 2, volatility has surged across asset classes. Notably, even traditional safe havens like US Treasuries have seen sell-offs, while the US dollar has weakened. Some investors have remarked that the “new Trump trade” is to sell US assets.
With uncertainty dominating the global outlook, here are five key charts we’re closely watching in the wake of Trump’s latest tariff move.
1. US employment remains a bright spot in the economy.
As an economy that relies heavily on consumer spending, the labour market is absolutely critical to the US economy. Even though consumer sentiment has softened recently, the unemployment rate stood at 4.2% in March 2025, close to historical lows.
One key data point we monitor is initial jobless claims—the number of Americans filing new applications for unemployment—which provides early signals about the labour market. These claims remain at low levels. US initial jobless claims came in at 222,000 for the week ending April 19, staying within the healthy range of 200,000 to 250,000. This suggests the labour market remains strong despite growing fears of a downturn.
2. Keep a close eye on inflation.
The Core Personal Consumption Expenditures Price Index (Core PCE) is the Federal Reserve’s preferred measure of inflation in the economy. Since the rapid rate hikes in 2022, inflation has eased to 2.8% as of February 2025, edging closer to the Fed’s 2% target.
Looking ahead, one area of uncertainty is the extent to which new tariffs will feed into inflation—especially whether the impact will be temporary or longer lasting. A significant inflation surge could limit the Fed’s flexibility and delay any potential easing of monetary policy.
3. Foreign investors are still buying US Treasuries.
Since the recent market turmoil, some investors have speculated that foreign buyers may be stepping back from US government bonds due to the trade war. However, the latest Treasury auction paints a different picture.
One key indicator of demand is the bid-to-cover ratio for US Treasuries, which measures the total bids received relative to the amount of securities offered. A higher ratio signals stronger interest—often from institutional investors, including foreign holders.
In the latest 10-year US Treasury note auction on 9th April 2025, the bid-to-cover ratio came in at 2.67, the highest since December 2024 and well above the six-month average of 2.56. This points to healthy demand, despite concerns around trade tensions.
4. Earnings are likely to remain resilient, while valuations have returned to more reasonable levels.
Corporate earnings have been the structural driver behind the decade-long bull run in US equities. As Benjamin Graham, Warren Buffett’s mentor, wrote in The Intelligent Investor, stock prices often behave like a dog on a leash—the earnings are the leash, while the price is the dog. The dog may wander ahead or lag behind, but ultimately, it stays tethered to the path of earnings.
After a strong run in 2023 and 2024, the S&P 500’s price gains have outpaced earnings growth. However, the recent pullback has brought valuations more in line with fundamentals. Overall, the S&P 500 now looks reasonably valued. The current forward P/E ratio stands at 19x—below the 5-year average of 19.9x but above the 10-year average of 18.3x. With earnings expected to grow and structural trends like artificial intelligence providing long-term support, this could present opportunities for long-term investors.
5. China is now less dependent on US trade.
China has been actively reducing its reliance on trade with the US, a trend that has accelerated in recent years amid escalating trade tensions and strategic economic shifts.
In 2024, China’s exports to the US accounted for 14.7% of its total exports, down from 19.2% in 2018,and contributed only 3% to its GDP, less than half the peak seen in 2007.
Chinese companies’ exposure to US-based revenues has also declined to a historical low of 5%, based on MSCI market-cap weighted averages. In this context, a renewed US-China tariff war may appear far less threatening than in the past.
The Million-Dollar Question: Where Do Global Equities Go From Here?
History doesn’t repeat but rhymes. Back in 2018, Trump’s first round of tariffs on China triggered a full-blown trade war, rattling markets much like today.
There are two key takeaways from the 2018 trade war.
First, markets are likely to stay volatile in the coming months. Negotiations with China won’t be straightforward—it’ll be two steps forward, one step back. Headlines will drive sentiment, just like before.
Second, from a longer-term perspective, once tensions ease, markets tend to refocus on fundamentals. Back in 2019, after global trade tension eased, global equities bounced +26.6%. .
Could a similar pattern play out in 2025 and 2026? While nothing is certain, the upcoming 2026 midterm elections could shift Trump’s focus away from tariffs toward more market-friendly policies, such as tax cuts and deregulation.
What are the Investment Implications ?
1. Stay Diversified Amid Short-Term Volatility
With market sentiment rattled by renewed US-China trade tensions, expect near-term volatility across assets. Headlines will likely drive price swings, much like in 2018. Investors can benefit from adding in strategies that improve the diversification of the portfolio such as Protected Portfolio and private market opportunities (exclusive for accredited investors).
2. Long-Term Opportunities Still Intact
Despite ongoing uncertainty, the fundamentals are more resilient than many investors had feared. The US labor market remains strong, corporate earnings have held up, and valuations have corrected to more reasonable levels. Combined with structural tailwinds from AI and innovation, this environment may offer compelling opportunities in global equities for long-term investors during market pullbacks.
3. Fixed Income Still Deserve a Place in Your Portfolio
The recent rise in bond yields has unsettled investors, but concerns about foreign investors dumping US Treasuries may be overstated. Fixed income still offers attractive yields, particularly in high-quality, shorter-duration bonds. We see greater value in diversified, multi-currency, multi-strategy fixed income funds—especially as the US dollar could face downward pressure this year.
4. Chinese Equities Remain as Interesting Tactical Call
In our outlook at the beginning of the year, we highlighted the potential for a turnaround in Chinese equities, and we continue to view the market as attractive. Many listed companies are domestically focused, which helps contain the impact of tariffs. Innovation, policy support, and compelling valuations remain key drivers for a potential rebound. Strategically, we prefer focusing on companies in the new economy sectors, such as technology, green energy, and consumer services.
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