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Markets rallied on US–China trade deal progress and soft US inflation data, boosting risk assets and expectations of a Fed rate cut. Yields fell while credit spreads tightened. However, at the end of the week gains faded as Israel–Iran tensions flared up, but this lifted defence stocks. The US dollar weakened, while gold and oil rose on geopolitical tensions.

The US dollar has declined by more than 10% since President Trump took office, driven by policy uncertainty, lower growth expectations, and rising inflation concerns.

As we enter the second half of the year, the fading trade war rhetoric is paving the way for a renewed focus on diversified asset allocations.

The potential of US equities is being tested by the compression of the risk premium.

On 12 May, the United States (US) and China established a temporary ‘trade consultation mechanism’, reducing tariffs by 115% for 90 days. While this may ease tensions, high tariffs are still expected to exert upside pressure on US prices, and trade volatility could drag on economic growth in China.

Equity markets welcomed Trump’s 90-day tariff truce by rebounding swiftly. However, we are maintaining a wait-and-see stance during this pause, while hedging against potential US dollar weakness by increasing our exposure to gold.

On 9 July, President Trump’s 90-day tariff suspension is set to expire. What will this mean for investors?

Since early November 2024, the gold price has risen from USD 2,600 to highs of above USD 3,500 per ounce. The precious metal received additional support in early February when investors realised that Donald Trump was serious about his tariff programme.

Tactical risk management helped us ride out one of the sharpest market dips since 2020. Gold and cash remain reliable safe havens.

The tariffs announcement by US President Trump last Wednesday evening exceeded most expectations, raising the average tariff on US imports from 2.5% to 24%, a level not seen since the 1930–40s.

Supported by innovation and the government, technology is the only Chinese sector offering great visibility.

Observers and investors were expecting the US dollar to go up in value. This was without counting on the new US administration’s erratic policymaking and announcements on tariffs. Where is it going next and what other factors are affecting the greenback?