Navigating a fragmented global order: what investors need to know

As the world shifts away from US exceptionalism toward a more fragmented global order, investors are facing a new era of uncertainty.

A more inward-looking US and the implications for the global economy

Despite these headwinds, the US economy entered the year in a relatively strong position, with no major imbalances. However, the path forward remains fluid. President Trump’s Liberation Day tariff announcement initially rattled markets, but his deal-making instincts have led to key agreements, including a temporary truce with China and agreements with the Gulf countries unlocking major capital investments.

Global supply chains remain resilient, and while trade with China has slowed, overall shipping activity has held steady. This resilience, coupled with a weaker US dollar, could create opportunities for emerging markets like India, which boasts a domestic-driven economy growing at over 6% annually.

Tariffs and the US Treasury market

The US government’s debt load means it simply can’t afford persistently high bond yields. That reality has become a guardrail – shaping policy and tone going forward.  With 10-year Treasury yields sitting around 4.5%, they’re offering a decent return for investors, especially after years of ultra-low rates.

But what is worth noting is what’s happening outside the US. In several other sovereign bond markets, we see lowering inflation, and governments showing real fiscal discipline. That combination is creating some compelling opportunities in the bond market.

The role of the US dollar as a reserve currency

Since there isn’t a clear alternative just yet, we probably won’t see the end of the US dollar as the world’s reserve currency in the near future. What we’re seeing now is a natural correction – an unwinding of the dollar’s previous strength.

At the same time, gold is increasingly being used as an alternative to the dollar, and for some countries, it offers a way for them to diversify their sovereign reserves and reduce reliance on the dollar.

What investors need to know

As always, with any big market event, investors should be careful not to overreact to headline news. If they’ve received advice and guidance from a qualified adviser, the best course of action would be to stay focused on their long-term investment strategy, making sure their portfolios align with their risk tolerance and investment time horizons.

Investing is never about trying to time the market. History shows that investors who remain invested throughout market volatility tend to do better over the long term. We see this right now, in how markets have bounced back after the initial tariff announcements. This is a clear reminder that kneejerk reactions often do more harm than good.

*Francois van der Merwe is Head of Global Solutions at Sanlam Investments Multi-Manager