**Global Markets Mixed Amid Inflation Concerns and Rising Bond Yields** Two of Wall Street’s main indices hit fresh peaks, yet U.S. inflation rose, bond yields marched higher, and investors gave a thumbs down to seemingly solid earnings from U.S. financi

The provided text discusses the potential impact of trade tensions, notably between the US and Europe, on financial markets. Here’s a breakdown of the key points:

BlackRock‘s View:

BlackRock remains “overweight” on US stocks but acknowledges the possibility of sharp near-term market movements due to trade uncertainty.
They see opportunities for investors to earn “alpha” (above-benchmark returns) due to the dispersion in returns caused by this uncertainty.

The “Doom Loop” Concern:

There’s a worry that the US stock market’s resilience in the face of trade uncertainty might embolden President Trump to escalate tariffs.
However, most analysts believe cooler heads will prevail, as Trump’s tolerance for economic pain is likely limited.

Potential Retaliation and Market Impact:

Barclays warns that if markets are too complacent and Trump increases tariffs on EU goods, potential retaliation could led to a significant sell-off in European equities, similar to a past event.

The author suggests investors might be too focused on China regarding tariffs,possibly overlooking the greater impact of trade with Europe.
Data supporting this:
China’s share of US goods imports has decreased to its lowest in 20 years.
The US imports more goods from the European Union than from any other single jurisdiction.
The US goods deficit with the EU is its second-largest, though smaller than the deficit with China.
President Trump views Europe as “ripping off” America,similar to his view on China.What Could Move Markets tomorrow:

Japan: Non-manufacturing tankan survey (July)
Indonesia: Interest rate decision
UK: CPI inflation (June)
US:
Corporate earnings from major financial institutions (Morgan Stanley, Goldman Sachs, Bank of America)
PPI inflation (june)
Industrial production (June)
Speeches from Fed officials (Barr, Hammack, Barkin, Williams)

The opinions expressed are those of the author (Jamie McGeever) and not necessarily Reuters News.