As the possibility of tariff-induced economic disruption hangs over the global outlook, investors remain anxious to see results from ongoing US trade talks. Headlines suggesting progress—or lack thereof—toward new trade deals continue to move financial markets. In recent days, stocks and bonds received support from growing optimism that tensions between the US and major trade partners are cooling down. Economic indicators are also in focus, with the initial estimate for US first-quarter growth looming next week. Some early readings on the economy this year, such as softer inflation and resilient job creation, have been relatively reassuring. Nonetheless, growth in the US and elsewhere has been forecast to slow amid tariff threats. In a report published on Tuesday, the International Monetary Fund cut its 2025 global growth estimate to 2.8% from 3.3%, citing major policy shifts and related downside risks.

Uncertainty around the trade spat has undercut consumer and business sentiment, fanning recession fears. This has raised the stakes not just for US trade negotiations, but also for legislation that is expected to deliver additional tax relief this summer. In its quarterly outlook, PGIM Quantitative Solutions discusses investment opportunities and managing risk as changes in trade, fiscal and monetary policies upend the status quo.