Global markets have struggled to make new gains since late February. In our view, this is partly due to concerns surrounding widening trade frictions between the U.S. and its major trading partners, heightening fears of a potential global trade war. Thus far, U.S. trade action has targeted certain products (i.e. steel and aluminum). However, recent talk of broader economic sanctions directed at China and aimed at reducing the U.S.’s trade deficit with the world’s second largest economy could increase risks of an escalation. As long as protectionist action remains modest in scale and focused on a few products, then risks of a global trade war should remain contained, in our view, helping to ease market anxiety. Near-term market focus should shift to monetary policy. The Fed’s rate hiking cycle remains on course with Jerome Powell earlier steering the U.S. Federal Open Market Committee to its first increase in the Fed target rate (25bp) to 1.75% since taking over as Chairman of the Fed early this year. Key for investors is the evolving trajectory for interest rates over the remainder of this year and 2019. The Fed has reconfirmed a gradual approach to its interest rate hiking plans (target 3%), leaving expectations for this year at three rate hikes (75bp) while bumping up its 2019 projection to a three rate hike (75bp) pace, reflecting its optimistic outlook for the economy. As a result, the environment for equity market volatility has changed noticeably in recent months.