What to expect at a first 'get-to-know-you' meeting

• For the time being, inflation rates are continuing to move in the right direction, thanks in part to lower oil and gas prices. Even so, inflation worldwide – but especially in the US – will increase again due to Trump’s policies (as a result of planned import tariffs and the impact of stricter migration policies on the labour market). 
• However, the speed at which higher tariffs will translate into rising inflation remains uncertain, though US inflation expectations for the next 12 months have increased significantly. 

• The US government seems determined to reduce the budget deficit, including by means of cost savings in government (DOGE). The question is whether the promised tax cuts can bring relief.
• China continues to regularly support its flagging economy through new policy decisions. 
• In the euro area, the major investments announced for defence and infrastructure are gradually taking more concrete shape, although it looks like their impact won’t be felt until 2026-27.
• In April, the ECB cut its key rate by another 25 basis points. A further cut may follow in the middle of this year. We expect that the Fed will also ease its key rate further this year, but the extent to which higher inflation (due to the announced import tariffs) will prevent it from slashing interest rates if the economy falters remains to be seen. For the time being, the Fed is not succumbing to pressure from Trump, keeping the rate unchanged.

• Bond markets are also reeling from the trade war and are anticipating an adverse impact on economic growth and (expected) further cuts in key rates. As a result, yields are falling on sovereign bonds. 
• This is largely offsetting the increase in German interest rates at the start of this year. 
• US interest rates are falling less sharply for now, as the uncertainty surrounding US debt has increased.

• Taking a 90-day pause before the high import tariffs of ‘Liberation Day’ take effect has given stock markets some breathing space. 
• However, whether we’re completely out of the woods is doubtful. Everyone is now subject to the uniform import tariff of 10% – considerably higher than the average import tariffs of 3.5% that had been in place – while China is subject to 125%. 
• It remains to be seen to what extent negotiations can turn the tide. Meanwhile, corporate earnings forecasts for 2025 are being lowered, although reporting for the first quarter has got off to a fairly strong start. However, quite a few companies are issuing warnings about the future.

• The conflict in the Middle East and Ukraine could continue to cause nervousness. As far as what will happen to the aid to Ukraine, Border disputes are also on the rise between India and Pakistan.
• Moreover, support for the German government seems limited, which may affect planned spending.
• Lastly, Chinese AI technology may throw a spanner in the works due to the fact that DeepSeek has achieved impressive results at a fraction of what it costs in the West.