The prospect of a “trade war” between the United States and China has caused some investor trepidation over the past year. But are the fears of economic fallout from this “war” warranted? And, was there ever really a war at all? Franklin Templeton Fixed Income CIO Sonal Desai weighs in.

In the Sherlock Holmes story “The Adventure of Silver Blaze,” during the night a prized race horse gets spirited away from his stable and its trainer gets murdered. In the investigation, Sherlock Holmes calls attention to what didn’t happen: The dog on the property did not bark.

For over two years we have lived in fear of trade wars—fear that a spreading escalation of protectionist measures would cripple global trade flows and send the global economy tumbling into a severe downturn. The International Monetary Fund (IMF) has just stoked a fresh wave of alarmist media headlines with its newly released World Economic Outlook (WEO).

Yet global trade hasn’t collapsed, and the global economy hasn’t stalled. Global trade wars are the dog that didn’t bark.

I believe there are three reasons for this: The wars turned out to be limited skirmishes; free trade was never truly free to start with; and most importantly, the elasticity of global growth to global trade has undergone a structural change.

This has two important implications for financial investors, on which I will elaborate at the end: (1) global growth will likely surprise to the upside, and bond yields with it; and (2) the real action is at the company, industry and country-specific level, making portfolio selection more important than ever.