Global Markets Overview is published and updated every month. This includes what has happened in markets, our macroeconomic outlook and price updates on assets such as government bonds, credit and equities.
In this Global Markets Overview
The top highlights from our latest Global Market Overview.
The most important events of the last month have been government policy rather than economic-data related. This also helps to highlight why economic policy uncertainty – as measured by the number of news articles discussing it – has also jumped materially in recent months. Equity volatility has started to rise too, as this political, geopolitical, and policy uncertainty looks increasingly likely to persist for the next few months and through 2025.
It's important to emphasise that the impact of economic policy uncertainty on financial markets can be two-sided. That is, it can create new positive surprises and opportunities for financial assets as well as downside risks. Three of the big policy surprises we have been tracking over the last month have been:
- First, the new German coalition government leaders have already announced plans for a surprisingly big government spending package. If approved within the next week, it would materially boost German real GDP growth in 2025 and 2026, e.g., it could add between 0.2% to 0.5% to growth this year and more in 2026, relative to our expectations at the start of the year. This would be an important positive factor to help offset downside risks to German growth from likely U.S. tariffs.
- Second, on March 4, an additional 10% tariff on U.S. imports from China came into effect, bringing the total additional tariff rate for imports from China to 20%. This was in-line with our baseline forecast at the start of the year. However, macro uncertainty and associated market volatility linked to U.S. trade policy with Canada and Mexico has continued. 25% tariffs against many goods from Canada and Mexico – larger than our baseline expectations – were implemented but then rapidly postponed to April 2, having already had a month's suspension from February. We expect a wide-ranging set of U.S. tariffs on various industries and countries to be announced on April 2.
- Third, the Chinese government has set a 2025 growth target of around 5%, with a record 9.9% fiscal deficit to support this target, counter U.S. tariffs, and offset deflationary pressures. This is broadly in-line to a little above our expectations.
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David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.
