In terms of the international context, expect a period of reflection. To the extent that US yields fall in consequence, there is a downward effect on global rates, and a tightening versus lower yielders. Versus higher yielders, there is room being made for those rates to ease lower. No new news on Mexican tariffs, and Brazil was listed with a 10% tariff, which in net terms is a positive outcome for Latam.
For Asia, it a more troubling complex. China now averages at a 54% tariff, while Vietnam, Korea, India, Indonesia and Thailand are up for special extra tariffs mostly in the area of 25% to 45%. Then in Europe, a selection of countries are now on a 20% tariff, and we need to await retaliatory measures. Overall, there are negative kick-backs which likely mean a risk-off and lower yields combination dominating. See more detail on the tariff-impacted macro risks for Europe here.
Expect a degree of correlation in terms of performance ahead. So risk-off should be a common theme, and should lower market rates. Europe is the most likely to buck this trend further forward, as fiscal spending plans get fast tracked in the wake of a Trump that’s not for changing. This can push yields up in Europe. Similar for Japan in terms of yield. At the other exteme, the likes of Mexico and Brazil can see market rates being pulled lower by lower Treasury yields.
