With trade tariffs largely defined and already priced into equities, the market finds itself in a rare position where a major source of uncertainty has been neutralized. The outlines of U.S. trade policy are no longer a moving target, allowing institutional money to recalibrate risk models and redeploy capital into risk assets. Even more striking is President Trump’s direct influence over monetary policy—through pressure on the Federal Reserve and the shaping of government-reported economic metrics—effectively dampening the immediate prospect of rate hikes. While not codified as official policy, the signal is clear to markets: interest rates will not be the primary weapon against price growth in the near term.
Yet the inflation picture is not as tame as the official numbers suggest. Unofficial, real-world inflation—reflected in housing, food, and discretionary goods—remains stubbornly high, eroding purchasing power but also making fixed-income returns less attractive in real terms. This dynamic is pivotal. If bonds fail to deliver inflation-beating yields and cash continues to lose value quietly, capital has little choice but to seek higher returns in equities. This “TINA” (There Is No Alternative) environment may be entering a new phase, where even cautious money managers find themselves forced into equity exposure, not because valuations are screaming bargains, but because everything else offers worse odds.
Liquidity conditions are another key accelerant. Corporate buybacks remain robust, sovereign wealth funds are quietly adding U.S. exposure, and retail investor flows—particularly from high-yield savings accounts and money market funds—are trickling back into growth names. With the market already conditioned to discount negative tariff effects and shrug off political theater, it’s primed for a “melt-up” scenario. Volatility may spike on economic headline noise, but the structural direction is likely higher as sidelined cash is funneled into the stock market for lack of better alternatives. If unofficial inflation persists and Trump’s influence over interest rates holds, the path of least resistance for equities is not just up—it’s up with conviction.