The current market signals about President Trump’s escalating tariffs produce conflicting messages which make investors uncertain about which asset class between stocks and bonds will experience a significant decline when clarity emerges.
The President announced a 35% tariff on Canadian imports while imposing 15% to 20% duties on all other trading partners. The market showed minimal reaction to this announcement because traders have lost their sensitivity to tariff-related news that used to cause market declines.
The current market situation has created a division among investors. The market continues to show positive trends because AI optimism drives stocks to new highs while bitcoin approaches $112,000. The market indicators of bond yields together with gold prices and oil prices demonstrate increasing concerns about worldwide economic expansion.
Neil Birrell from Premier Miton believes the market complacency stems from the fact that we are in a late-cycle rally phase. Investors wish to maintain the belief that positive times will persist according to him. The economic downturn could become severe if tariffs reduce consumer spending levels.
The mixed market signals indicate that investors remain uncertain about both the extent of Trump’s “One Big Beautiful Bill” and his complete trade policy framework. The current high level of household investment in equity markets makes it likely that any confidence shock will trigger rapid financial instability across the market.
