Archive

Tariff Transition Smoothing

• President Trump's tariffs embed structural cost pressures, compounding supply chain changes and creating a stagflationary shock central banks cannot offset.
• Potential retaliation risks raising inflation expectations, constraining the extent to which monetary policy can smooth transitional pains through temporary easing.
• We still believe any dovish policy imperative is likely to be short, shallow, and reversed, with central banks forced to remain flexible and focused on shorter horizons again.

By Philip Rush

HEM: Fear of Fear Itself

• Fear of tariffs and DOGE is depressing vibes in US surveys
• Resilient labour markets suggest dovish fear is overblown
• Underlying price and wage inflation remains too high
• Paused easing cycles do not resume without recessions
• Reversing unnecessary easing remains more likely in 2026

US Tariffs: No Fooling!

• The announcement of individual reciprocal tariff rates for US trading patterns on 2 April is rightly seen as a watershed moment for investors. Nevertheless, in a drive to re-industrialise America, it may well prove to be no more than the end of the beginning in a protracted trade war.

By Alastair Newton

PMI Spring Vibe Shifts

• A resurgence in the US and UK services PMIs seems inconsistent with renewed dovish pricing that assumes activity weakness. Vibes may be throwing surveys beyond reality.
• Labour demand growth seems to be trending close to supply, signalling monetary conditions close to neutral. That is broadly the story across a broad basket of countries.
• We still believe rate pricing is too dovish for the Fed and, to a lesser extent, the BoE. Noisy survey vibes and spurious assumptions of tightness are likely to be misleading.

By Philip Rush