Here’s What The Federal Reserve Is Looking For As Trump’s Tariffs Set In: Top Financial Analyst

12 hours ago

Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC Global Asset Management, joined Forbes Newsroom to discuss the Federal Reserve's potential response to Trump's tariffs rollout.

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Transcript

00:00Well, in mentioning the Federal Reserve, I'm thinking of President Trump's pressure on

00:05Fed Chair Jerome Powell to cut rates.

00:08So is this tariff announcement conflicting with his desire for lower rates?

00:15And could that conflict potentially have an effect on tariff policy as the reaction continues

00:21to unfold, in your view?

00:25Well, Maggie, I think that's a fascinating question, because right now, as you're looking

00:31at Treasury markets, and we're talking about inflation moving higher, you would not expect

00:37a rally in Treasury prices when this is the outlook that we are considering.

00:43Instead, we are seeing investors flocking to Treasury bonds as a safe haven.

00:51And we think that is really to do with growth fears.

00:55So right now, what's foremost on investors' mind is the growth concerns for the U.S. economy.

01:04And in that environment, you really want to increase your exposure to U.S. Treasuries

01:11as a way to protect your portfolios from that growth negative pressure.

01:18At the same time, once we believe there will be clarity over the coming weeks about the

01:23extent of the tariffs, the end state that we're dealing with, I think investors will

01:28start asking questions about the inflationary impact.

01:33And that could lead to a pressure on Treasury prices, upward yield pressure, as investors

01:40realize that Federal Reserve might not be in a position to cut rates, even in the face

01:46of a slowing economy.

01:48But for the time being, all of the focus is on growth.

01:52And that is the reason why Treasuries are rallying rather than investors pondering what

01:57kind of inflationary impact we will see over the months to come.

Here’s What The Federal Reserve Is Looking For As Trump’s Tariffs Set In: Top Financial Analyst

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