NAB Morning Call Going round in circles
May 25, 2025
Ray Attrill, NAB's market strategist with deep expertise in fiscal policies and trade negotiations, dives into the swirling chaos of global markets reacting to Donald Trump's tariff threats against the EU. He discusses how these tensions have triggered a 'Sell America' sentiment, with falling equities and rising bond yields. The conversation also touches on the looming risks for businesses, particularly tech giants like Apple, amidst fluctuating tariffs and currency shifts, while exploring broader economic implications tied to these trade dynamics.
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Sell America Theme Returns
- The return of the 'Sell America' theme reflects falling U.S. equities, rising bond yields, and a weaker dollar.
- The tariff threats heighten fiscal uncertainty and weigh on business decision-making.
EU's Trade Deal Stance
- EU seeks zero-for-zero tariff trade deal with the US, ignoring non-tariff barriers like digital taxes.
- Achieving a comprehensive trade deal will take months or years, not weeks.
Tariff Uncertainty Raises Risk Premium
- Markets price in the risk premium caused by tariff uncertainty with increased term premiums in US bonds.
- Equity enthusiasm by foreign investors diminishes amid tariff and fiscal concerns.