The need for refinancing

Global equity markets are showing strength today, buoyed by President Trump’s decision to temporarily exempt certain electronics—such as smartphones and laptops—from tariffs. While this offers a short-term relief for companies like Apple and Dell, the administration has emphasized that these exemptions are only temporary. Given the unpredictability of trade policy from the White House, further twists and reversals remain likely.

Last week's market volatility has reaffirmed the existence of a "Trump put," but the real battleground appears to be shifting toward the bond market. The U.S. faces the challenge of financing its twin deficits—budget and current account—at a time when foreign investors are increasingly questioning the notion of U.S. exceptionalism.

Notably, the rest of the world holds approximately 33% of the U.S. Treasury market, amounting to USD 8.5 trillion, which will require refinancing over the medium term. Persistent uncertainty is putting downward pressure on U.S. Treasuries and the USD, a trend we do not expect to reverse in the near future.