BlackRock: US tariff measures may ultimately create more room for Asian central banks to lower interest rates.

BlackRock's Fixed Income team points out that the divergence in monetary policies between the US and Asia has created new opportunities for global investors. The Asian markets not only offer attractive yield rates but also bring diversification benefits to investment portfolios. The US tariffs may lead to asynchronous inflation trends, with inflation rising in the US but potentially causing deflationary pressures in Asia. This may eventually create more room for interest rate cuts by Asian central banks, while reducing the easing space for the Federal Reserve. Additionally, the US fiscal expansion policy may bring uncertainty to the longer-term portion of the US Treasury market, but also provide opportunities for sustained economic growth and inflation, potentially generating returns for short to medium-term US Treasury investments.