Markets will send Trump ‘powerful signals’, says $16 trillion money manager

The boss of global investment behemoth Vanguard says the Trump administration’s keen focus on how financial markets are performing will add “discipline” to its actions, as a sweeping overhaul of US trade policies spooks investors around the world.

President Donald Trump’s escalating trade war with countries including Canada, China and Mexico has sparked a slump on global sharemarkets as investors fret over the likely fallout from his move to impose trade barriers on key partners. The S&P/ASX 200 fell another 0.7 per cent on Wednesday, having wiped out all its gains since the start of the year.

Vanguard chief executive Salim Ramji said markets wanted certainty.

Speaking in Sydney on Wednesday, Vanguard chief executive Salim Ramji, whose company manages $16 trillion globally, said Trump’s trade policies had sparked uncertainty in financial markets as the US is reversing a decades-long move towards more open trade.

“I think it’s about re-establishing the equilibrium of trade relationships, at least between the United States and our major trading partners all around the world,” he said at an American Chamber of Commerce lunch.

“In the near term, that is super messy. But over the medium term, if these arrangements can be negotiated and done – they may be favourable, they may not be – but at least it will provide certainty.

“And I think what the markets and business community ultimately want is certainty.”

Despite recent market turbulence, Ramji said the Trump administration was focused on sharemarkets and the US bond market.

Observers have said Trump appears less concerned with the sharemarket reaction to his policies than during his first term, though at the same time, US Treasury Secretary Scott Bessent has said he wants to lower the rate on 10-year Treasury bonds, which affect borrowing rates across the economy.

Ramji maintained the Trump administration watched equity markets and 10-year Treasury bonds closely, and this meant investors could provide signals if things got “out of balance.”

“I think that the administration is very focused on equity markets. They’re also very focused on the 10-year Treasury,” he said.

“And I think both of those things add a degree of market discipline.”

Ramji said the market didn’t care about the politics but was instead focused on “rational” issues such as bond prices, yields or inflation expectations.

He said bond markets could send powerful signals to policymakers, citing the British government’s 2022 crisis, when a poorly received budget triggered a surge in UK bond yields and a plunge in the pound and ultimately led to the resignation of prime minister Liz Truss.

Vanguard is one of the world’s biggest investment firms. In the 1970s, it launched the first index fund – vehicles that let investors track an entire market index rather than bet on individual stocks – for individuals.

Index investing has surged in popularity in recent years due to its low costs and diversification benefits. In 2022, Vanguard launched a superannuation fund that now manages almost $3 billion.

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