The liberal world order, if not dead, is very ill in bed. What replaces it will not be orderly or come cheap.
States, previously part a network of alliances, will go it alone to ensure their own defense and strategic interests. There will be a massive increase in defence spending in Japan, S. Korea and Europe.
Markets may ignore the increased economic costs of fragmentation for a while as world order breaks down fast but costs surface slowly.
Any peace dividend in European assets will be fleeting. The EU faces multiple crises on a wide range of issues: defence, trade, economic restructuring, and the rise of populism. Risk premia in European assets have to rise.
Bonds are in a bear market globally as President Trump’s policies in the US and defence spending elsewhere boost fiscal deficits by 2-3% of GDP. Bond vigilantes will emerge and cause crises.
Gold is now the safe haven asset to own. Gains on the USD DXY are probably capped at around 110 (currently 107.5)