Trump tariffs: Stocks to bonds—How to rebalance your portfolio for minimum risk? Here’s a 5-point guide | Stock Market News

Trump tariffs: Rebalancing means adjusting the allocation of assets in your portfolio to match your original investment plan. Example: Shifting funds from stocks to bonds if stocks have grown too much in value. One should rebalance every six months or annually. When allocation drifts by five per cent or more or after major market movements.

According to Justin Khoo, Senior Market Analyst – APAC, VT Markets, “Trump’s sudden 90-day China tariff delay in April 2025 wasn’t solely for the sake of stock market hysteria—it was the bond market that really made the White House act. While equities dictate what’s bought, the bond market dictates how the government borrows.”

“When bond yields rose rather than declined, it indicated investors were selling Treasuries, not fleeing to safety. With US debt over $34 trillion and yields surging at a rate not seen since 1982, warning signals sounded on Wall Street and the Fed.”

Higher yields raised mortgage and corporate borrowing rates, amplified recession concerns, and challenged the U.S.’ long-term fiscal credibility—particularly with debt now reaching 120% of GDP. The concern wasn’t merely market volatility but a structural change as the dominance of the dollar erodes. USD reserves worldwide have declined from 72% in 2000 to 58% in 2024, as nations diversify into the yen, franc, and pound. 

De-dollarization is accelerating due to U.S. fiscal recklessness, rising debt, and tariff belligerence. The less dollars countries hold, the fewer Treasuries they’re selling. Trump’s tax-cut-and-spend agenda is threatened directly when borrowing becomes more costly. In today’s landscape, the bond market—not the battlefield—can dictate geopolitical strategy.

Why Rebalancing Matters?
-Keeps risk in check
-Prevents overexposure to volatile assets
-Helps you stick to long-term goals

How to rebalance your portfolio? Here’s a five-point guide:

Portfolio Drift Explained
-Over time, asset values change
-A 60:40 stock-bond portfolio may turn into 75:25 if stocks outperform.
-This increases risk unintentionally.

Use new investments to balance without selling
-Review current asset allocation
Review. Realign. Rebalance.
Compare it with your target allocation
Sell overweight assets, buy underweight ones
 

Strategies
Calendar-based: Rebalance at regular intervals
Threshold-based: Rebalance when deviation crosses a set limit (e.g., 5%)
Hybrid approach: Combine both

Example of rebalancing one’s portfolio-

Equity grows to ₹80,000

New allocation = 65.57 per cent Equity/34.43 per cent Debt

Sell 6,784 worth of equity 
Invest 6,784 into debt

Tax and cost calculations

Capital gains tax may apply when selling assets
Account for brokerage fees
Consider rebalancing within tax-advantaged accounts if possible