The new US government under President Donald Trump has brought major changes in many policy areas. In terms of economic policy, the focus is on deregulation, savings in the US budget and customs policy. While the first two areas affect the US domestic economy, tariffs have international consequences.
Review: Yields on US government bonds have been on a rollercoaster ride
The combination of the level of tariffs, the manner in which they were announced and the subsequent changes to the rates can only be described as chaotic and has led to global uncertainty among investors. When trying to categorize the current tariff policy, one quickly ends up with the so-called Mar-a-Lago Accord, which aims to improve the US trade balance by devaluing the dollar and, under the pressure of higher import tariffs, relocating the production of international companies to the US.
Looking at the impact of the tariff measures on the financial markets since Trump's inauguration on January 20 this year, it can be stated that the goal of weakening the dollar has been "successful" with a fall in the dollar index of around 10%, but this is mainly due to the rapid loss of confidence in the US government. Although the yield on ten-year US government bonds has been on a rollercoaster ride since the inauguration, fluctuating between 4.66% and 3.86%, it is still slightly below the level since Trump came to power. One of the main reasons for this is likely to be the significant fall in oil prices since mid-January, which in turn is due to the deteriorating economic outlook.
Outlook: Great uncertainty among private individuals and companies
Surveys show a high degree of uncertainty among both private individuals and companies. This uncertainty can be seen in two developments in particular: The poor performance of the US stock market in absolute and relative terms and the sharp rise in the price of gold.
Since the start of Trump's second term in office, the S&P 500 Index has lost around 20% at its peak. On April 23, the underperformance compared to the MSCI World was around 1%, although the USA accounts for almost three quarters of this index. By contrast, the price of gold has risen by more than 21% since Trump's presidency began.
Legal information
Marketing advertisement: All information published here is for your information only and does not constitute investment advice or any other recommendation. The statements contained in this document reflect the current assessment of DJE Kapital AG. These may change at any time without prior notice. All statements made have been made with care in accordance with the state of knowledge at the time of preparation. However, no guarantee and no liability can be assumed for the correctness and completeness.