A turbulent first quarter was marked by uncertainty over President Trump’s tariff policies, the corresponding economic impact, and the unexpected release of competitive, lower-cost Chinese AI models. The MSCI World Index fell 1.8% in USD, led by the “Magnificent 7,” which suffered one of their worst quarters on record. International equities (MSCI EAFE +6.9% USD) outperformed, bolstered by improving economic conditions and a historic shift in German fiscal policy to release its debt brake, paving the way for €500B in new spending. Foreign currencies strengthened against the US dollar (DXY Index -3.9%) as concerns over President Trump’s protectionist actions contributed to a narrowing of growth and interest rate differentials. Bonds (Barclay’s Global Agg +2.6%) were resilient, with escalating recession fears driving a flight to safety and sending treasury yields lower. Commodities (S&P GSCI +3.4%) benefitted from the unstable policy and geopolitical landscape, which pushed gold and US copper futures to record highs.
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