Rob Enslin

In Q2, global markets saw a modest recovery, buoyed by easing trade tensions and resilient corporate earnings. However, the core macro risks highlighted earlier this year - fiscal fragility, geopolitical friction and policy uncertainty - remain firmly in play as we head into Q3.

Trump’s tariff posturing continues to drive market volatility. The so-called ‘TACO [Trump Always Chickens Out] trade’  has supported risk assets in the short term, but the prospect of sharply higher tariffs presents clear inflation risks. The much publicised ‘one big beautiful bill’ has also raised alarm over the US fiscal outlook, with deficits expected to remain above 7% of GDP.

Bond markets are beginning to reflect these concerns, as rising yields signal investor unease. Elevated energy prices, amid heightened Middle East tensions, are adding to inflation pressures. Despite this, markets are pricing in two Fed rate cuts this year, reflecting expectations of softer growth ahead.

Locally, reform efforts offer some encouragement, but political uncertainty and structural challenges persist. We remain cautiously positioned, with diversified global exposure, favouring low duration, quality and value equities, and selective hedge fund allocations to navigate this complex environment.

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