Exchanges Macro questions and market strength
29 snips
Feb 18, 2025 
Jan Hatzius, the chief economist at Goldman Sachs, and Dominic Wilson, a senior advisor in Global Markets Research, tackle pressing economic questions. They discuss the impact of the administration's new tariff policies, revealing that growth and inflation expectations remain stable despite higher tariffs. The conversation dives into recent inflation data and its influence on the Federal Reserve. They analyze market resilience amid uncertainties and the implications of rising yields, and share insights on navigating payroll data challenges and future economic outlooks.
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Inflation Concerns
- Markets are primarily concerned about inflation, which recent data suggests is hotter than expected.
- However, core PCE inflation, the Fed's key metric, aligns with expectations and suggests catch-up inflation is slowing.
Market Reactions and Uncertainty
- Market reactions to tariff and inflation news have become more complex due to policy uncertainty and a less dovish Fed.
- This makes it harder for investors to maintain conviction, leading to a flattening equity uptrend.
Dollar Strength and Tariffs
- The strong dollar reflects the US economic outperformance, tariff policies, and tail risk.
- Further dollar strengthening depends on tariffs becoming more prominent, though significant weakening is unlikely.