Vassili Panoussis

Q2 brought about more clarity on Trump’s foreign policy, showing on multiple occasions his inability to hold fast to his initial proposal and ultimately using exorbitant tariff threats as a mere negotiation tactic before dropping them to more realistic levels. Efforts to profit from the initial selloff that is followed by a strong rebound are colloquially known as the TACO trade – Trump Always Chickens Out. 

We believe that this trend will continue and ultimately result in more realistic tariff levels worldwide. Our outlook is that a risk-on environment will perpetuate as a result and lead to higher equity prices, with emerging market equities taking the lead. On the fixed income front, we believe South African government bonds are well-positioned to rally given that real yields in South Africa are some of the highest in the world and have sizeable room to compress.

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