Trump’s tariff rhetoric loses momentum amid a more skeptical market

Last Friday, U.S. President Donald Trump threatened to impose a 50% tariff on the European Union starting June 1st. However, after a phone call with European Commission President Ursula von der Leyen, he extended the deadline to July 9th. This announcement, which a few months ago would have sent global stock markets into a frenzy, had little impact this time. In fact, many major international stock indices are now trading above the levels seen before the announcement.

Alberto Matellán, General Manager of La Financière Responsable, explains that the market consensus now treats tariffs as part of the usual “tug of war” in negotiations, and generally expects that the worst-case scenarios will not materialize. In contrast, U.S. debt and its sustainability have become “one of the most significant concerns” for investors, serving as “a clearer indicator” of investor sentiment, which now anticipates higher inflation and shows declining confidence in the U.S.

Matellán described recent rises in U.S. debt interest rates as a genuine “turning point,” noting that “for the first time in decades, U.S. debt is no longer considered a safe-haven asset.” This shift “won’t happen overnight,” and demand for U.S. government bonds will remain strong, with the dollar still the global reserve currency. Nonetheless, it marks a critical development for understanding the current economic landscape.

When asked about the defense sector’s potential amid anticipated increases in Western military spending, Matellán acknowledged its appeal but cautioned that investment decisions shouldn’t rely solely on political developments. He emphasized the importance of stock picking, where active managers can find opportunities and invest “beyond short-lived trends.” Specifically, he sees potential in companies that may not manufacture weapons directly but provide related technologies such as sensors and other components.

OPEC meeting with limited influence; interest rate cuts “difficult” to justify

This week, OPEC+ convenes with plans to increase oil production. While this move should lower crude prices, Matellán notes that producers have limited control over prices, which depend largely on demand and economic growth. This was “evident” in recent price declines tied to weakening economic outlooks in the U.S.

Regarding further interest rate cuts, Matellán believes these would be “hard to justify” for central banks. In Europe, economic growth remains weak but stable, so no cuts beyond those already planned are expected. The U.S. faces a similar growth picture but with greater inflationary pressure, leading Matellán to expect a “wait and see” approach going forward.