The Nasdaq has returned to April levels with its forward P/E falling to 25 from a peak of 32. Donald Trump launched a second tariff wave: 50% on Canadian goods and 10–12.5% "forced labour" levies on major partners. Market reaction was muted, reflecting the internalised "Taco trade" — the president accommodates under pressure. However, Steve Englander of Standard Chartered warns the overturned emergency tariffs left a fiscal hole; they had collected $150bn and the CBO projected $3tn by 2035 to offset the $4.7tn deficit from the One Big Beautiful Bill Act. New tariffs don't fully replace that revenue, so trade negotiations could indirectly affect yields.

Inflation remains above the Fed target with oil near $100; sustained higher tariffs could worsen price pressures. Meanwhile, a decades-long tailwind is reversing. Shrinking equity supply — de-equitisation — added roughly 0.7% annually to US returns between 2015–2025, per Sahil Mahtani and Dan Morgan of Ninety One, building on the inelastic markets hypothesis of Xavier Gabaix and Ralph SJ Koijen.

Net US issuance is expected to turn positive in 2025 for the first time since 2021, driven by AI IPOs and hyperscaler equity issuance, per JPMorgan. IPOs represent just 0.3% of the $75tn market, but expiring lock-ups amplify supply: firms floating 7% average 54% in circulation after two years. SpaceX floated 4% with another 27% due in August. Mahtani and Morgan's worst case sees new supply dragging index returns by 4.5% annually over the next decade; combined with valuation mean reversion, the outlook is "dire."