The Market Huddle Global Macro Strategist: “What Everyone Gets Wrong About the Fed”
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May 10, 2025 
Vincent Deluard, a Global Macro Strategist at StoneX, shares his insights on current market conditions amidst stagnating inflation and interest rates. He discusses the significant impacts of tariffs on economic indicators and investment decisions. Deluard also navigates the uncertainties of global economic growth while analyzing recovery patterns from historical market declines. He sheds light on bond yields, the weakening U.S. dollar, and the contrasting performances of European and Latin American markets, particularly focusing on the potential in Brazil.
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Fed's Cautious Inflation Stance
- The Fed is in a wait-and-see mode on rate cuts due to stagflation and sticky inflation.
- Yet, a surprising April rebound in the economy suggests consumers may power through despite tariffs and other headwinds.
Tariffs Fuel Inflation and Revenue
- Tariffs are now a significant government revenue source, expected to rise sharply.
- This shifts tax burden onto consumption, creating a double inflationary impact from tariff costs and currency depreciation.
Repeated Shocks Sustain Inflation
- Tariff-driven inflation is a one-time price level increase but inflationary shocks repeat endlessly.
- Central banks ignoring each shock may cause secular inflation, as seen in the 1970s.