Global markets stabilized during the week as trade-policy volatility and geopolitical developments reshaped risk premia. The Supreme Court ruling against key elements of President Trump’s tariff framework briefly reduced trade friction risk, but the administration’s subsequent 10% temporary global tariff reinstated uncertainty. Equity flows rebounded as AI-driven de-risking eased, oil recovered on renewed Middle East risk, and bond markets reflected recalibration rather than a shift in policy trajectory.
Key Themes
- US Trade Policy Volatility: The Supreme Court decision initially compressed trade-risk premia, but the administration’s rapid tariff pivot reintroduced policy uncertainty, lifting FX and multinational equity volatility.
- Positioning Stabilization: Global equity funds saw their largest inflow in five weeks, led by cyclicals and Europe, signaling normalization after AI-driven deleveraging.
- Increased Energy Risks: Limited progress in US–Iran negotiations supported a ~5.6% WoW rebound in oil, feeding into inflation expectations and energy equities – further pushed by the winter storms in the US.
