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As we enter the final stretch of 2025, the reality of a world where the United States imposes retaliatory tariffs on even its closest trading partners is sinking in.

Highlights:

• Rising U.S. tariffs are creating a structural supplyside inflation shock, challenging the market’s assumption of a return to a Goldilocks regime and signaling persistent price pressures.
  
• Despite near-term support from expected Fed rate cuts, markets are underpricing the risks of weakened Fed independence, which could lead to higher long-term yields, dollar depreciation, and increased volatility.
• We maintain a slight overweight in equities— especially in Europe and Asia—while staying underweight in global fixed income and favoring currencies like the yen and high-yielding EM FX, given macro and policy dynamics.

Your experts   Sébastien Mc Mahon, MA, PRM, CFA Chief Strategist, Senior Economist and Vice-President, Asset Allocation & Portfolio Manager Follow Sébastien Mc Mahon on          Alex Bellefleur, MA, CFA Senior Vice-President, Head of Research, Asset Allocation     Tuyen Tran, M.Sc., CFA Senior Analyst, Asset Allocation and Economics

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