Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at why gold has dethroned US Treasuries as the world’s top reserve asset, how Trump is rebuilding his tariff wall on forced-labour grounds, and why AI and policy are squeezing Britain’s young workers out of jobs.
But first, our number of the week…
37,000
That’s how many potential UK layoff notices were filed in just the four weeks to 24 May. That figure is up 62% on a year earlier, and the highest for any four-week stretch since 2020.
Sidekick Takeaway: The layoff surge is an early read on the energy shock from the war in Iran, which is expected to hit the UK hard. It also sharpens the Bank of England’s dilemma: with inflation set to rise, policymakers may be weighing rate hikes even as the labour market visibly weakens.
Only have a minute to read? Here’s the TL;DR:
- Gold has overtaken US Treasuries as the world’s top reserve asset, reaching 27% of global central bank reserves at the end of 2025. While dollar assets remain the largest share, the shift towards gold reflects years of steady central bank buying and a growing search for assets that are harder to freeze in a crisis.
- The US has proposed tariffs of 10% to 12.5% on 60 trading partners, accusing them of failing to police goods made with forced labour (including the UK). The move aims to rebuild the tariff wall struck down by the US Supreme Court in February. However, a long list of exceptions means that the economic hit looks modest.
- A government review found the number of young Britons not in education, employment, or training has climbed to 1.01 million, the highest since 2013. The report notes that this is partly a policy failure driven by high labour costs. However, AI is also eroding entry-level work, a challenge that may be far harder to solve.
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Golden Opportunity: Central Banks Rethink Reserve Assets
For decades, US Treasuries have been the bedrock of central bank reserves.
Treasuries have attractive qualities, including low default risk and deep liquidity. They’re also denominated in dollars, the currency of international trade.
But in recent years, one issue has troubled central bank officials: will they actually be able to access their Treasuries in a crisis?
Geopolitical tensions have heightened that concern – and this week, the ECB reported that gold has overtaken Treasuries as the world’s top reserve asset for the first time in decades.
A slow retreat from dollar dependence
The shift towards gold has accelerated in the past few years:
- Gold made up 27% of global central bank reserves at the end of 2025, up from 20% a year earlier. Meanwhile, Treasuries fell to 22% from 25%.
- Reserve diversification increased after the US froze Russia’s dollar reserves in 2022, demonstrating how Treasury concentration could be a vulnerability. China, Turkey, and India have led the charge towards gold.
- With that said, part of the move is mechanical: gold’s price has nearly doubled in two years, automatically lifting its share. Moreover, dollar assets still form the largest bloc at 42%.
In the past, central bankers could evaluate reserve assets on financial qualities, such as creditworthiness and yield.
But now, geopolitical qualities are becoming increasingly important – and gold is far harder to freeze than Treasuries.
Sidekick Takeaway: Global central banks have historically been among the largest buyers of US government debt, and a sustained rotation away could put upward pressure on Treasury yields. By extension, that could contribute to a rise in global rates, reflecting a world where countries are less eager to hold each other’s obligations.
Forced Errors: The Strained Logic Behind Trump’s New Tariffs
In February, the US Supreme Court struck down Donald Trump’s ‘Liberation Day’ tariffs, ruling he had overstepped his powers.
Refusing to be deterred, Washington has been searching for another route to the same destination.
This week, it found one: accusing 60 trading partners of failing to police goods made with forced labour (including the UK).
The levies, ranging from 10% to 12.5%, would rebuild much of the former tariff wall on firmer legal ground.
America’s questionable rationale
Trump’s forced-labour tariffs may be more legally durable, but they still rest on questionable reasoning:
- The US is proposing tariffs on 60 economies, covering almost all US imports. Tariffs on the UK and EU are set at 10%.
- US officials made no attempt to prove forced-labour goods are actually entering the US; instead, they’re simply assessing enforcement effort. Canada, which banned such imports six years ago, was hit for not publishing enough data.
- Due to a long list of excluded products (including crude oil and pharmaceuticals), the immediate hit is expected to be modest. One analyst estimates that the levies would lift effective US tariff rates by just 0.5 points.
The forced-labour framing may be new, but Trump’s goal is the same: a tariff wall that can survive the courts.
What stands out is the administration’s willingness to reach for more creative legal tools to get there.
Sidekick Takeaway: Forced-labour tariffs are likely just Trump’s opening move to rebuild his tariff wall. A parallel investigation into ‘excess capacity’ is still pending, and could result in additional levies in the weeks to come.
Rung Out: AI and Policy Squeeze Britain’s Young Workers
A soaring number of young Britons are out of work. But the problem isn’t a lack of effort.
Last week, a government review found that the number of young people not in education, employment, or training (NEETs) has climbed to 1.01 million in the UK. That’s the highest level since 2013.
Yet young people are rarely NEETs by choice. The same report found that 84% of jobless youth surveyed wanted a job or training but couldn’t get one.
This trend is partly a story about policy failure. But it’s also a story about technological change.
More than a policy failure
The review points to a number of pressures driving the decline of entry-level work and the associated rise of NEETs:
- Surging employment costs (including last year’s payroll-tax and minimum-wage rises) have pushed firms to cut junior hiring. That means fewer apprenticeships and training opportunities.
- Notably, hospitality vacancies have fallen dramatically over the past several years. Service roles have traditionally served as entry-level jobs for young people.
- Employers are also turning to AI for the routine tasks that once gave young workers their first responsibilities – a structural shift that may be far harder to address.
The NEET crisis could partly be fixed by policy: reviving apprenticeships and easing hiring costs.
But the crisis is also a sign of how AI is reshaping the bottom rung of the labour market. That’s something no jobs programme can simply undo.
Sidekick Takeaway: The report projects NEETs could reach 1.25 million within five years, at an annual cost of around £125bn in lost tax revenue and added social security spending. Unless the issue is addressed, it could be a slow fiscal drag on Britain’s growth for decades to come.
Notices
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