During the early days of the Trump administration, assets in developing regions experienced unexpected growth. However, recent attention has shifted to the global economy and the U.S. dollar’s performance. The first 100 days of Trump’s presidency saw market turbulence, with the dollar hitting a three-year low, impacting U.S. stocks and bonds. Despite this, emerging markets flourished, with local currency bonds and stock indices outperforming the S&P 500, and a currency index achieving its best gain since 2017.
Concerns over a potential U.S. recession and a weaker dollar have made investors cautious about the impact of Trump’s trade policies. The International Monetary Fund (IMF) recently adjusted its global growth forecast for 2025 to 2.8%, citing potential tariff impacts. RBC Capital Markets strategist Luis Estrada noted that while a weaker U.S. economy could benefit foreign markets, a delicate balance is required.
Since Trump’s inauguration, emerging market stocks have returned 3.2%, whereas the S&P 500 fell 7.5%. Currencies in most emerging markets appreciated as the dollar declined by 7%. JPMorgan Asset Management’s Pierre-Yves Bareau highlighted the resilience of emerging markets in challenging conditions, with local currency bonds up 3.5% this year.
JPMorgan Chase & Co.’s survey during the IMF meeting indicated a consensus for a weaker dollar by 2025. Neuberger Berman’s portfolio manager Gorky Uribe emphasized the growing focus on dollar-sensitive assets. BBVA’s Alejandro Cuadrado expressed optimism for currencies like the Brazilian real and Mexican peso. Goldman Sachs suggested preparing for potential interest rate cuts in Asia, Chile, and the Czech Republic.
