Investing Insights Market Volatility: The Trade Deals That Could Calm Wall Street
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May 9, 2025 Dominic Pappalardo, Chief Multi-Asset Strategist at Morningstar Investment Management, sheds light on the turbulent intersection of trade deals and market volatility. He discusses how tariffs can ripple through the bond market and the implications of a potential U.S.-U.K. trade deal. Pappalardo explains how high tariffs and falling imports from China could impact the U.S. economy, as well as the effects of these tariffs on Hollywood films. He also weighs in on the declining U.S. dollar and its implications for investors navigating this chaotic landscape.
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Trade Deal Announcement Boosts Sentiment
- The announcement of a trade deal, even without details, sends a positive signal to markets and the economy.
- Market sentiment improves more from the confirmation of progress than the deal specifics.
China Key for Trade Calm
- China is the largest player in calming Wall Street through trade deals.
- The U.S. might strike deals with smaller countries first to pressure China in negotiations.
Impact of Tariffs on Imports
- Importers are front-loading shipments to avoid tariffs, which temporarily inflates imports.
- Prolonged lack of trade deal with China could cause shortages and higher prices as importers seek alternate suppliers.