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March 21, 2025

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Trump Product and Reciprocal Tariffs
Paying Article

March 21, 2025 9:00 AM UTC

It appears that we will get bad news from April 2 on extra tariffs before any good news.  Firstly, the announcement effect of tariffs for many countries and extra products will hurt U.S. business and consumer sentiment.  Secondly, part of the reason for tariffs is extra tax revenue and to try to s

March 19, 2025

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Fed: Cautious Policy Due To Uncertainty
Paying Article

March 19, 2025 7:26 PM UTC

The Fed do not appear to be in a hurry to cut interest rates, both as economic momentum remains reasonable and as the Fed waits to see how Trump administration policy feedthrough – especially tariffs to inflation. This suggests that the Fed will need to see a weaker economy and we pencil in one 25

U.S. Fed's Powell - Waiting for greater clarity
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March 19, 2025 6:48 PM UTC

Fed's Powell is in no rush to change policy, and downplayed a technical reduction in QT.

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FOMC leaves rates unchanged, dots unchanged but skew more hawkish
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March 19, 2025 6:24 PM UTC

The FOMC has left rates unchanged at 4.25-4.5% as expected.  The median dots are unchanged but economic activity forecasts are weaker and the inflation forecast for 2025 is significantly stronger showing concern over the impact of tariffs. The statement notes increased uncertainty and announced a s

March 13, 2025

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Trump’s Policies and U.S. Equities
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March 13, 2025 8:35 AM UTC

Models would suggest that the current and prospective direct tariff impact should slow GDP growth to a 1.5% pace, which should see slow Fed easing in 2025 given the boost to inflation. However, the policy uncertainty means that business and consumer behaviour could see a large adverse hit that keeps

March 12, 2025

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FOMC Preview for March 19: No change and few clear signals given exceptional uncertainty
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March 12, 2025 6:46 PM UTC

In the current exceptionally uncertain environment, the FOMC looks set to keep rates unchanged at 4.25-4.5% at its March 19 meeting, and give little away on future policy. The dots will be closely watched but we expect they will change little from January 29. Powell is likely to stress at the press

March 10, 2025

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Trump and Dollar Policies
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March 10, 2025 6:04 AM UTC

   The Trump administration could decide to more broadly talk the USD down or less likely try to reach a cooperative Mar A Lago accord with big DM and EM countries. A more cohesive alternative is a forced currency deal for countries to appreciate their currencies to avoid more tariffs and withdraw

March 07, 2025

U.S. Fed's Powell - Well positioned to wait for greater clarity
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March 7, 2025 6:10 PM UTC

Currently the tone of data and policy uncertainty justifies steady Fed policy.

March 06, 2025

U.S. Fed's Waller - No March easing, but watching for signs of data weakness
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March 6, 2025 8:50 PM UTC

Waller continues his recent move into more dovish territory, but is not ready to ease yet. 

March 05, 2025

U.S. Fed Beige Book Summary - Slowing growth, some uptick in prices
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March 5, 2025 7:16 PM UTC

The latest Fed Beige Book looks a little slower on activity but slightly stronger on prices, though wage pressures slowed. 

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Trump Latest Thinking
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March 5, 2025 11:07 AM UTC

Bottom line: President Donald Trump signaled that he is committed to tariffs to raise revenue; bring production back to the U.S. and get fairer trade relations.  This three part approach will likely shape implementation of further product and reciprocal tariffs from April.  However, reports sugges

March 04, 2025

U.S. Fed's Williams - Beginning to factor in tariff impact on prices
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March 4, 2025 7:45 PM UTC

Fed's Williams' tone is cautious but he expect tariffs to have a high pass-through to consumers.

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Trump Tariffs: Bad for The U.S. Worse For Canada
Paying Article

March 4, 2025 3:48 PM UTC

When Trump announced 25% tariffs on Canada and Mexico in February, we put up a piece outlining the likely economic consequences, which became dated by the end of the day as Mexico and Canada won a one month delay in return for some concessions at the border. We are now recycling that story, with som

February 27, 2025

U.S. Fed's Schmid - More cautious about inflation
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February 27, 2025 2:36 PM UTC

Fed's Schmid is concerrned with recent data from inflation, and inflation expectations

February 26, 2025

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U.S. Budget Proposal Shows Fiscal Policy Scope is Limited
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February 26, 2025 6:55 PM UTC

While there is still a long way to go before legislation is passed, passage of a budget proposal in the House makes the fiscal policy outlook look clearer, and reduces negative risks such as a government shutdown or a debt default. The package is will probably be a mild negative for economic growth,

February 20, 2025

U.S. Fed's Musalem - Suggests risks skewed to upside
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February 20, 2025 5:46 PM UTC

Musalem sounds more hawkish than most recent Fed speakers, though still has a central view of inflation returning to target. 

U.S. Fed's Bostic - Still sees two rate cuts this year
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February 20, 2025 4:10 PM UTC

Fed's Bostic's central view is a cautious one given uncertainty.

February 19, 2025

U.S. Fed's Bostic - Doesn't expect inflation progress to be a straight line
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February 19, 2025 8:36 PM UTC

Fed's Bostic's moderate tone is consistent with that of the recent minutes.

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FOMC Minutes from January 29 - No rush to ease, but not hawkish
Paying Article

February 19, 2025 7:59 PM UTC

FOMC minutes from January 29 showed agreement to hold policy steady, and that further progress was needed before additional policy adjustments were made. High uncertainty was seen as making a careful approach appropriate, but the minutes contained few shocks, in a market that appeared to be braced f

February 18, 2025

U.S. Fed's Daly - Stay restrictive until inflation declines
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February 18, 2025 4:08 PM UTC

Fed's Daly's tone is consistent with most recent Fed speakers, but perhaps too optimistic.

February 14, 2025

U.S. Fed's Logan - Wants caution on rates
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February 14, 2025 8:06 PM UTC

Fed's Logan continues to sound quite hawkish, particularly after the strong CPI.

February 13, 2025

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Revised FOMC view: One 25 bps easing in late 2025, two 25bps easings in 2026
Paying Article

February 13, 2025 12:46 PM UTC

Strength in January CPI does in part reflect residual seasonality, but continued stalling of progress in yr/yr growth is of concern. This revives concerns that the economy may need to slow to return inflation to the 2.0% target, something tariffs are likely to make more difficult. Uncertainty is exc

February 11, 2025

U.S. Fed's Williams - Sees inflation returning to target, but not this year
Paying Article

February 11, 2025 8:40 PM UTC

Fed's Williams' tone is moderate but his economic views suggests limited easing this year.

U.S. Fed's Powell - Cautious answers in Q+A
Paying Article

February 11, 2025 5:20 PM UTC

Fed Chairman Powell's Q+A provided few fireworks, with his answers particularly cautious on trade policy.

U.S. Fed's Powell - No hurry to change policy, but not hawkish
Paying Article

February 11, 2025 3:10 PM UTC

Fed Chairman Powell's testimony offers little new. We await the Q+A for questions on Trump's policies, tariffs in particular. 

U.S. Fed's Hammack - Hold rates for some time
Paying Article

February 11, 2025 1:46 PM UTC

Cleveland Fed President Beth Hammack is sounding hawkish, consistent with her dissent against December's easing.

February 10, 2025

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Markets and Trump’s Early Days
Paying Article

February 10, 2025 7:55 AM UTC

  The early days of the new Trump administration has seen lots of volatility around the on-off tariffs with Canada and Mexico, but the more stable U.S. Treasury market has helped provide an anchor.  U.S. Treasuries have shift towards the view that the 10yr budget bill will be delayed until H2 and

February 06, 2025

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Fixing The U.S. Trade Deficit
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February 6, 2025 2:30 PM UTC

  New U.S. trade deals will likely make slow progress in reducing bilateral trade deficits as the underlying drivers behind the U.S. trade deficit are macro forces.  While the U.S. economy outperforms other major trading partners; the value of the USD remains overvalued and as long as tariffs are

February 05, 2025

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Congress Struggles Over Budget Bill
Paying Article

February 5, 2025 2:48 PM UTC

The House is struggling to reach consensus on the beautiful huge 10yr budget bill, as GOP budget hawks want to see multi trillion expenditure cuts, though eventually the 10yr expenditure cuts will likely compromise around USD 0.5-1.0trn.  Tax cuts are also unlikely to match President Trump campaign

February 04, 2025

U.S. Fed's Daly - Can take our time on policy changes
Paying Article

February 4, 2025 8:12 PM UTC

Fed's Daly's tone is consistent with most recent Fed speakers.

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China/U.S. Trade War and next To Talks?
Paying Article

February 4, 2025 10:02 AM UTC

China’s targeted and measured counter tariffs against the U.S. are designed to push the U.S. towards the negotiating table on the wider issue of the U.S./China trade deficit.  Negotiating will likely start into the spring, but negotiating will be tough as the U.S. wants a phase 2 deal with new ob

February 03, 2025

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Trump Tariffs, or Not: Trying to Make Sense of a Policy Farce
Paying Article

February 3, 2025 11:46 PM UTC

So, after a weekend and a day of drama we are back to where we were on Friday morning. Forecast updates made on the imposition of tariffs will not be thrown in the trash can, but now will be held as an alternative should Trump decide to go ahead on March 1 after postponing them from February 1 (whic

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Trump Tariffs: Bad for The U.S., to Canada and to Mexico
Paying Article

February 3, 2025 6:34 PM UTC

In announcing 25% tariffs on Canada and Mexico, as well as additional 10% tariffs on China, Trump exceeded the expectations of many, including ourselves. The situation is fluid with Mexico (but not yet Canada) receiving a one-month delay, but the risks of a lasting trade war need to be seriously con

January 29, 2025

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FOMC still data dependent in uncertain policy environment
Paying Article

January 29, 2025 8:37 PM UTC

A more hawkish interpretation of the data in the statement appears to be more a justification for the FOMC’s decision to leave rates on hold at this meeting rather than a signal for a protracted period of steady policy. There is still scope for renewed Fed easing if either inflation or labor marke

U.S. Fed's Powell - Expects further progress on inflation
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January 29, 2025 7:58 PM UTC

Fed Chairman Powell's has downplayed what appeared to be a hawkish adjustment to the statement's inflation assessment.

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FOMC leaves rates unchanged, economic assessment more hawkish
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January 29, 2025 7:19 PM UTC

The FOMC has left rates unchanged at 4.25-4.5% as expected.  The statement has seen hawkish adjustments in its assessments of labor market conditions and inflation.

January 23, 2025

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Trump and Markets
Paying Article

January 23, 2025 2:16 PM UTC

Global markets will be driven by policies and current valuation in 2025, especially new Trump administration policies.  Trump could jawbone markets for a lower value of the USD and lower oil prices, which could have a temporary modest impact (joint US/Japan FX intervention is possible) but the stru

January 22, 2025

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China/U.S. - Trade War or Trade Deal?
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January 22, 2025 2:11 PM UTC

·       We see the April 1 review of the phase 1 U.S./China trade deal being adverse and President Trump’s carrot and stick approach leading to a 10% rise in tariffs on China imports by the summer.  We eventually see a phase 2 U.S./China trade deal being reached in Q4. The main alternative

January 21, 2025

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President Trump: Filling in the Blanks
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January 21, 2025 9:12 AM UTC

While the new executive orders from president Trump were focused on immigration and energy issues, the threat of 25% tariffs against Mexico and Canada by Feb 1 raises the stakes in North America negotiations in the coming weeks.  China tariff threats will likely become more concreate in Q1, though

January 20, 2025

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Brazil Risk Premia and EM Debt
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January 20, 2025 8:15 AM UTC

Brazil debt market has two domestic crises rather than a spillover from the U.S. in the form of inflation and fiscal policy. Very restrictive BCB policy can help produce some disinflation and we forecast 4.1% for 2026, which some allow some rate cuts in H2. Brazil risk premium will likely be reduced

January 17, 2025

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China: 5% for 2024 but Still Imbalanced into 2025
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January 17, 2025 2:15 PM UTC

  Though China hit the 2024 GDP growth target of 5.0%, monthly data shows the economy unbalanced.  Industrial production/exports and state investment support the economy, with residential property investment negative and consumption sluggish. With monetary policy ineffective, we see Yuan3-5trn fis

January 16, 2025

U.S. Fed's Waller - Previous hawk turning dovish
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January 16, 2025 3:21 PM UTC

While most Fed officials sound quite cautious, the formerly hawkish Waller is turning significantly more dovish.

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BOE QT: A Heavier Burden than Fed/ECB QT
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January 16, 2025 11:05 AM UTC

BOE QT is 3.4% of GDP and means the 2025 total funding is 8% of GDP, which helps explain part of the current pressure on gilt yields (here).  This pace is unlikely to change before the BOE review in September 2025, but the QT is partial monetary tightening and will offset some of 125bps of BOE rate

January 15, 2025

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FOMC Preview for January 29: A Cautious Hold
Paying Article

January 15, 2025 8:10 PM UTC

The FOMC looks set to keep rates on hold at 4.25-4.5% at its January 29 meeting. The statement is unlikely to give much away but the message is likely to be one of cautious optimism on inflation, suggesting further easing is likely but dependent on incoming data. Policy uncertainty under the incomin

U.S. Fed Beige Book Summary - Again a little more positive
Paying Article

January 15, 2025 7:09 PM UTC

The latest Fed Beige Book has a slightly stronger tone than that of December, which was more positive than that in October.

U.S. Fed's Williams - Trying to maintain supply-demand balance
Paying Article

January 15, 2025 4:10 PM UTC

Fed's Williams' tone remains reasonably balanced, though cautious given policy uncertainty.

U.S. Fed's Barkin - Cautious optimism, downplays long-term yield gains
Paying Article

January 15, 2025 3:41 PM UTC

Fed's Barkin has welcomed both the slower core CPI and lower unemployment rate. 

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U.S. Yields and an Equity Market Correction
Paying Article

January 15, 2025 8:15 AM UTC

Treasury yields look to have reached a level that the divergence in valuations means that equities are on the defensive. Unless U.S. Treasury yields come down then the S&P500 looks to be heading to 5400-5600 near-term.  This is most likely a correction given that the Fed is likely to still leave th

January 14, 2025

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U.S. Yields Drag Germany and France Higher
Paying Article

January 14, 2025 8:15 AM UTC

The EUR real exchange rate is well above the 2014 low, while ECB officials are guiding that more rate cuts are coming.  2yr German yields are unlikely to rise much further and will likely come back down in Q2 (here).  A January 30 ECB cut will likely build more easing expectations, though more of

January 10, 2025

U.S. Fed's Goolsbee - Dovish tone not representative of FOMC majority
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January 10, 2025 3:41 PM UTC

Fed's Goolsbee is sounding more dovish than most, but will have a vote in 2025.