Year-to-date, the benchmark for global equities has only risen by 0.55%, underscoring worries that higher tariffs will negatively impact inflation and corporate profits.

In a notable shift, Barclays has prioritized fixed income investments over equities for the first time in several quarters, citing increased policy risks.

This change comes in the wake of President Trump's recent tariff increases, including a substantial 25% levy on auto imports, which have injected uncertainty into global financial markets.

Barclays anticipates a significant slowdown in both U.S. and global economic growth, projecting a 1.5% growth rate for the U.S. and 2.9% globally for 2025, though these forecasts may be overly optimistic given the worst-case tariff scenarios.

Reflecting these concerns, the firm has revised its year-end target for the S&P 500 down from 6,600 points to 5,900 points, marking the lowest forecast among Wall Street brokerages as the index recently closed at 5,712.20.

In contrast, the U.S. stock market has struggled, with the benchmark down nearly 3% amid these economic uncertainties.

Meanwhile, benchmark 10-year Treasury bonds have seen yields decline from a peak of 4.8090% to 4.3595%, indicating a flight to safety among investors.

Analysts at Barclays have noted that while Western economies are grappling with rising prices and poor fiscal outlooks, fixed income assets currently present a less risky investment compared to equities.