Bloomberg Surveillance Trade War Impact on Consumers
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May 28, 2025 Jordan Rochester, Head of FICC Strategy at Mizuho EMEA, dives deep into the ramifications of the trade war on consumers and financial markets. He discusses Japan's economic challenges and how a weak dollar influences U.S. investors. With insights on government spending trends and the Fed's upcoming policies, Rochester unveils the complex dynamics that shape consumer prices and goods availability amidst global trade tensions. His analysis provides a compelling look at how these factors will impact investors in the Pacific Rim.
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High Yield Bonds Attractive
- High yield bonds are attractive due to similar leverage and fundamentals compared to low-end investment grade bonds.
- Investors benefit from higher spreads and less duration risk amid growth concerns.
Fed Rate Cuts Unlikely
- The Fed is unlikely to cut rates this year given above-target inflation and reduced downside growth risks.
- Preemptive Fed action seems unnecessary without recession risks.
Foreign Investment Dynamics
- Foreign investors hold around 25% of U.S. corporate bonds but are unlikely to walk away.
- Marginal investment dollars may shift geographically due to rising yields abroad and fiscal stimulus overseas.