Global equity markets have demonstrated remarkable resilience to political uncertainty and tariff rhetoric, with investors increasingly focusing on economic fundamentals rather than political noise, according to Ed Yardeni of Yardeni Research. Speaking to ET Now, the market strategist outlined how markets have adapted to treat aggressive trade and geopolitical positioning as negotiating tactics rather than definitive policy outcomes.

Market Response to Political Developments

Yardeni noted that while Trump has maintained tough stances on various issues including Greenland and trade policies, his softer approach toward NATO partners and decisions to delay tariff implementation have provided reassurance to investors. The markets showed relief upon hearing that military force options were removed from consideration and that tariff actions could be postponed.

"The markets were relieved to hear that military force was off the table and that tariffs could be postponed. This uncertainty remains unresolved, but it is not a serious obstacle for stocks to keep advancing," Yardeni explained, even as Denmark declined to endorse the proposed framework.

Investment Strategy Beyond Political Volatility

The research head emphasized that long-term investors should avoid allowing political volatility to interfere with sound investment strategies. He highlighted the underlying strength of the US economy and stock market performance despite political uncertainties in Washington.

"The US economy and stock market have done remarkably well despite Washington. The real strength lies in economic resilience and the ability of businesses and workers to adapt," Yardeni stated. He pointed to the absence of meaningful recessions since the global financial crisis, aside from the brief pandemic-induced downturn in 2020, demonstrating how economic shocks have repeatedly failed to derail sustained growth.

Earnings-Driven Market Outlook

Yardeni expects robust earnings momentum to continue fueling equity market gains rather than relying on valuation expansion. His projections show strong earnings growth supporting market advancement through 2026.

This earnings strength forms the foundation for Yardeni's expectation of double-digit market returns in 2026, driven by fundamental business performance rather than speculative factors.

Bond Market and Interest Rate Environment

Regarding interest rates, Yardeni observed that the bond market has shown resistance to the Federal Reserve's easing cycle, reflecting underlying confidence in economic strength and persistent inflation pressures. Despite rate cuts implemented by the Federal Reserve, the US 10-year yield has remained at elevated levels.

Yardeni expects yields to trade within a range of 4.25% to 4.75%, which he characterized as historically normal levels. "The bond market is signalling that the economy is strong and inflation is closer to 3% than 2%," he noted, indicating market expectations for continued economic resilience.

Long-Term Market Projections

Looking toward the remainder of the decade, Yardeni maintained his bullish long-term outlook despite acknowledging that Trump-driven volatility may continue influencing short-term market movements. He emphasized that earnings growth will remain the primary driver of market performance over the longer term.

Yardeni reiterated his projection that sustained earnings growth could eventually push the S&P 500 toward 10,000 by the end of the decade, reinforcing his established view of the "roaring 2020s." This outlook reflects confidence in the underlying economic fundamentals and corporate earnings capacity to drive substantial market gains over the coming years.