At Any Rate US Rates -Trade policy, the Fed, and implications for rates markets
15 snips
Jan 24, 2025 Michael Hanson, a Senior Economist at J.P. Morgan Global Research, joins Phoebe White to dissect the latest shifts in U.S. trade policy under the new administration. They explore the potential repercussions of a 25% tariff on Canadian and Mexican imports, including GDP uncertainties and retaliatory risks. The duo also discusses the Federal Reserve's independence amid political pressures and its implications for inflation markets. Insights on yield curve dynamics reveal expectations of flattening as trade negotiations evolve.
AI Snips
Chapters
Transcript
Episode notes
Tariff Relief and Uncertainty
- Markets were relieved that no new tariffs were introduced on day one of the new administration.
- However, tariffs are still possible, with a potential new date of February 1st for those on Mexico, Canada, and China.
Trade Policy Uncertainty
- The new administration's trade policy is still unclear, with tariffs remaining a possibility.
- The focus is on concrete news, not rumors, and the baseline assumption is for non-extreme outcomes.
Potential Tariff Impacts
- A 25% tariff on Mexico and Canada could have a wide range of economic impacts.
- The impact depends on factors like industry exclusions, retaliation, and the overall trade relationship.