Warning signals over the health of the global economy are flashing. US President Donald Trump's latest tariffs on Mexico have changed the rules of the game at a time when global growth momentum is fragile and even a contained macro shock could push it off track. Investors have taken cover. Central bankers should be poised to act.

This week's sharp moves in global equity and bond markets highlight the potential for a significant fallout from the escalating trade tensions.

Global equities had their worst month since December with sectors most exposed to global trade feeling the brunt of the weakness.

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