The escalating trade conflict between the US and China is causing significant volatility in the financial markets. New US tariffs led to a massive sell-off in the S&P 500 and US high-yield bonds, similar to the pandemic effects of 2020. Analysts have revised their profit growth forecasts for 2025 downward from 14 percent to 9 percent. China responded with countermeasures. The uncertainty is deterring investors from taking large risks, with more investments flowing into short-term US Treasury bonds.
The US Federal Reserve is under pressure as it faces inflationary threats and a slowdown in economic growth. Economists are divided on whether interest rates should remain to combat inflation or be reduced to support the economy. A rate pause is expected before potential cuts follow.
In Europe, growth prospects are also deteriorating. Experts have revised GDP growth forecasts for 2025 to 0.9 percent. Geopolitical tensions and trade disputes are dampening consumption and influencing the ECB’s decisions.
In the mortgage financing sector, interest rates remain stable between 3 and 3.5 percent, providing planning security for property buyers and investors. Major cost fluctuations are currently not expected.
Overall, geopolitical risks and monetary policy decisions are shaping the markets. Investors should remain flexible and review their portfolios regularly.