Trump’s tariffs: What it means across asset classes
A bird's eye view on the impact tariffs had beyond stocks.
I’m writing this because I feel most of the headlines are focused on plummeting stocks, but the impact is broader. Here’s a short, efficient breakdown of what’s happening across asset classes and how to think about positioning going forward.
Equities
📉 US stocks sold off hard — S&P 500 down 4.8%, Nasdaq nearly 6%.
🧨 Tech, small caps, and consumer cyclicals led the decline.
🛒 Consumer defensives were the only sector that stayed green - companies like Procter & Gamble, Walmart, PepsiCo, and Dollar General, which tend to hold up when spending shifts toward essentials.
Fixed Income
📉 Treasury yields dropped - 10Y fell to 4.05% from 4.20%.
📈 Bonds rallied as investors rotated into safer assets.
🧮 Markets are now pricing in increased odds of Fed rate cuts in 2025 - even as inflation risk rises, growth concerns are becoming harder to ignore.
Commodities
🏅 Gold approached $3,200 - a new record, as demand for hedges spiked.
🛢️ Oil slipped despite supply constraints, as traders braced for weaker global demand.
🧮 Tariffs introduce input cost pressures - watch for this to feed through into inflation data over the next few prints.
Currencies
💵 The US dollar weakened against a basket of global currencies, a typical move when markets expect slower U.S. growth and rate cuts.
🇪🇺 The euro held up better than expected - likely due to the EU’s measured response so far.
💴 The yen gained on safe-haven flows, as Japan continues to be seen as a relative anchor during global policy turbulence.
Implications
🌀 Tariffs aside, this period has increased uncertainty
⏳ Business investment could slow as firms wait to see if this trade regime sticks post-election.
⚖️ The Fed now has to weigh softer demand with potentially stickier prices. Monetary policy flexibility just got more constrained.
What to look forward to
Earnings season — especially in manufacturing, retail, and transport. Will the tariffs really bring back manufacturing to the U.S.?
Rotation into global assets — if U.S. policy looks increasingly unpredictable
🔌 Thanks for making it to the end. It’s sad to see so much red in portfolios. We introduced a Bond Portfolio and a Gold Portfolio in case folks want to add some safety to their equtiy investments - reach out if you’re interested.