Macro Minutes
The Aftermath
Feb 4, 2025
Blake Gwinn, Head of US Rates Strategy at RBC Capital Markets, shares his expertise on the implications of recent US tariffs on Canada, Mexico, and China. The discussion highlights the Fed's cautious stance on monetary policy amidst inflation concerns and economic uncertainties. Gwinn delves into the currency fluctuations resulting from tariffs and the corresponding responses from central banks like the BoC and ECB. The conversation also touches on the delicate balance central bankers must maintain between tackling inflation and fostering economic growth.
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Quick takeaways
- The recent postponement of tariffs on Canada and Mexico has created market volatility, highlighting the uncertainty surrounding US trade policies.
- Central banks are adopting a cautious approach, with the Fed pausing rate cuts while monitoring global economic indicators influenced by tariffs.
Deep dives
Impact of Tariffs on Markets
The recent decision by the US President to impose tariffs on Canada, Mexico, and China has significantly affected financial markets, with a noticeable decline in risky assets and a stronger dollar observed. Although the tariffs on Canada and Mexico have been postponed, the uncertainty surrounding trade policies has already led to market volatility, including a firm bond market and changes in yield curves. The podcast discusses how these tariffs create instability, complicating long-term forecasts for markets and economic growth. The markets' reactions highlight the perception that the new tariffs could lead to detrimental economic consequences despite temporary reliefs.
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