U.S. Trade Surplus Countries: No Special Treatment?

March 31, 2025 9:04 AM UTC

Quick dilutions of tariffs or exemption will likely be slow in coming for countries that the U.S. has trade surpluses with, as the Trump administration are currently more focused on tariffs for tax revenue and trying to switch production back to the U.S. than trade deals.  Trade policy uncertainty

U.S. Fed's Daly - Two rate cuts this year still reasonable

March 28, 2025 2:38 PM UTC

Fed's Daly's is sticking to her view in line with the FOMC median, but some at the Fed have shifted.

Car Tariffs Then Lenient Reciprocal Tariffs?

March 27, 2025 8:59 AM UTC

   The 25% tariffs on cars underlines that tariffs are not just about getting better trade deals, but in Trump’s view raising (tax) revenue and trying to shift production back to the U.S. Combined with other tariffs being implemented, plus policy uncertainty, we see a moderate overall hit from t

U.S. Fed's Musalem - Warns tariffs may cause tighter policy

March 26, 2025 5:38 PM UTC

Musalem's tariff warning comes with a 4pm ET Trump announcement on auto tariffs awaited.

EMFX Outlook: Divergence versus the USD

March 26, 2025 9:16 AM UTC

EM currencies will be helped by the ongoing USD downtrend against DM currencies, but prospects also depend on relative inflation differentials versus the USD and starting point in terms of valuations.  The Brazilian Real (BRL), Mexican Peso (MXN) and Indonesian Rupiah (IDR) should all make modest s

U.S. Fed's Kugler - Slower growth, rising inflation, steady policy

March 25, 2025 1:05 PM UTC

Fed Governor Kugler sees worrying signals in data and backs steady policy for some time.

DM Rates Outlook: Policy Divergence

March 25, 2025 9:30 AM UTC

 •    2yr U.S. Treasury yields can step down with cautious  Fed easing on a modest/moderate growth slowdown and also if the Fed keeps an easing bias. 10yr U.S. Treasury yields can be helped by this easing and see a move down through 2025.  However, the budget deficit will likely be 6.5-7.0%

U.S. Fed's Bostic - Now sees one rate cut this year, rather than two

March 24, 2025 5:58 PM UTC

Tariff concerns appear to have moved Fed's Bostic in a more hawkish direction.

U.S. Outlook: How Much Damage Will a Trade War Do?

March 24, 2025 3:45 PM UTC

•    The U.S. economy, consumer spending in particular, ended 2024 looking healthy, but with inflation still above its 2.0% target if well off its highs. The Trump administration’s more aggressive than expected trade war has made a return to the inflation target more difficult and raised dow

Trump Product and Reciprocal Tariffs

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

Fed: Cautious Policy Due To Uncertainty

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

March 19, 2025 6:48 PM UTC

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

FOMC leaves rates unchanged, dots unchanged but skew more hawkish

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

Trump’s Policies and U.S. Equities

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

FOMC Preview for March 19: No change and few clear signals given exceptional uncertainty

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

Trump and Dollar Policies

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

U.S. Fed's Powell - Well positioned to wait for greater clarity

March 7, 2025 6:10 PM UTC

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

U.S. Fed's Waller - No March easing, but watching for signs of data weakness

March 6, 2025 8:50 PM UTC

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

U.S. Fed Beige Book Summary - Slowing growth, some uptick in prices

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. 

Trump Latest Thinking

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

U.S. Fed's Williams - Beginning to factor in tariff impact on prices

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.

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

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

U.S. Fed's Schmid - More cautious about inflation

February 27, 2025 2:36 PM UTC

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

U.S. Budget Proposal Shows Fiscal Policy Scope is Limited

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,

U.S. Fed's Bostic - Doesn't expect inflation progress to be a straight line

February 19, 2025 8:36 PM UTC

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

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

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

U.S. Fed's Daly - Stay restrictive until inflation declines

February 18, 2025 4:08 PM UTC

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

U.S. Fed's Logan - Wants caution on rates

February 14, 2025 8:06 PM UTC

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

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

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

Markets and Trump’s Early Days

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

Fixing The U.S. Trade Deficit

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

Congress Struggles Over Budget Bill

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

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

February 4, 2025 8:12 PM UTC

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

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

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

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

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

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

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

FOMC still data dependent in uncertain policy environment

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

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.

FOMC leaves rates unchanged, economic assessment more hawkish

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.

Trump and Markets

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

China/U.S. - Trade War or Trade Deal?

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

President Trump: Filling in the Blanks

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

Brazil Risk Premia and EM Debt

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