Markets Cheer US-China Trade Truce
A truce between the US and China gave investors and the global economy a reprieve from recent trade jitters.
The resilience of the US economy and new twists in global politics grabbed investors’ attention to start the new year. Stocks, Treasuries and the dollar fluctuated over the last week as investors measured the health of the US economy against the outlook for fiscal policy and interest rates. An increase in job openings and brisk growth in the services sector bolstered market expectations for the Federal Reserve to move slowly as it considers further rate cuts in 2025. However, the next jobs report on Friday is forecast to show that employers added 155,000 jobs in December, down from 227,000 a month earlier. Investors also kept tabs on Donald Trump’s policy agenda, as the president-elect offered new clues on how he might implement plans to impose tariffs. Political winds are also shifting in America’s neighbor to the north. Justin Trudeau’s decision to resign set off a race to replace him as leader of the Liberal party and Canada’s prime minister. With an election due by October, a switch in party control of the Canadian parliament is possible this year with Conservatives seeking gains.
Economic trendlines deviated across North America, Europe and Asia in the past year, which prompted investors to rethink how capital is being allocated geographically. More changes to the macro landscape could be on the horizon, challenging investors to rethink true diversification and build portfolios that can be resilient amid macro volatility. PGIM President and CEO David Hunt discusses how recent developments, including geopolitics and the impact of major elections, will help shape the way investors construct their portfolios in 2025.
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