Bloomberg Daybreak: Asia Edition Uncertainty Brews Ahead of Trump Tariff Rollout
Apr 2, 2025
David Finnerty, a Bloomberg FX and rates strategist based in Singapore, and Jeff Grylls, Head of EM Debt at Aegon Asset Management, delve into the uncertain landscape created by impending U.S. tariffs. They discuss how Asian stocks are reacting and the potential impacts on inflation and employment. The conversation highlights the fear of stagflation, the fluctuating Chinese yuan, and emerging markets' adaptation strategies. They also explore safe investment avenues as the economic climate grows increasingly volatile.
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Equity Market as Risk Barometer
- The equity market is a key indicator of risk sentiment, influencing other markets like currency and rates.
- Initial tariff announcements are just the first stage, with potential retaliation and escalation adding to market uncertainty.
Stagflationary Risks and Fed's Response
- Tariffs may raise both inflation and unemployment, creating a stagflationary challenge for the Fed.
- Market expectations for Fed rate cuts are rising despite inflation concerns, indicating a focus on supporting growth.
Currency Market Dynamics and Safe Havens
- The dollar and yen haven't seen typical safe-haven flows amid market uncertainty.
- The impact on the U.S. economy depends on the scope of tariffs and retaliatory measures, with potential implications for the euro and yen.