Highlights

SGH reports are highly valued for helping clients understand and stay ahead of the news cycle on central banks and macro policy events that drive the global economies and financial markets.

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2025
June 10, 2025
SGH Insight
The Bank of Japan (BOJ) next week looks set to announce plans to slow tapering of its bond purchases for the upcoming fiscal year to mitigate ongoing disruption to its bond market.

The widely anticipated move at its June 16-17 meeting – part of a scheduled review of the BOJ’s tapering strategy from April 2026 onward – is intended to calm markets and ease yields in super-long Japanese Government Bonds (JGB) which have hit record highs recently and raised concerns over Japan’s deteriorating public finances.

Domestic Japanese media is tipping the Bank will halve the size of its quarterly reductions to 200 billion yen a quarter from 400 billion yen, beginning in April next year and running through March of 2027.
Market Validation
Bloomberg 6/17/25
The Bank of Japan unveiled a plan to step
back from the bond market at a slower pace from next year to
ensure market stability while sticking to a path of
normalization that includes the possibility of more rate hikes.
Governor Kazuo Ueda’s policy board stood pat on its
benchmark policy rate of 0.5% at the end of a two-day meeting
Tuesday. In a widely expected move the central bank said it
would ease the pace of its cuts to monthly bond purchases from
the next fiscal year to quarterly reductions of ¥200 billion
($1.34 billion) from the current ¥400 billion.
Read Full Report
May 29, 2025
SGH Insight
A surprise spike in Canada’s key underlying inflation measures have likely given the Bank of Canada (BOC) pause in contemplating whether to cut rates again next week even though the direction for short term rates remains down.
The reversal in prices complicates the BOC’s task to keep providing support to its softening economy and will test BOC Governor Tiff Macklem’s recent insistence that ultimately, the Bank must ensure confidence in price stability.

In our last report, (see SGH 5/6/25; “BOC: Trade Talks Keep Rate Cut In Play), we argued the Bank would need to ease another 75 bps this year to offset a potential recession and that remains our base case.

But the prospect of a near term June 4 cut looks iffy now given the inflation data and the Bank’s current strategy to be less preemptive with rate moves, less forward looking but pledge to act decisively once an economic direction is more obvious.
Market Validation
Dow Jones -- OTTAWA 6/4/25
The Bank of Canada on Wednesday left its main interest
rate unchanged, at 2.75%, saying the economy has softened but not
deteriorated, and inflation has picked up steam.

Bank of Canada Gov. Tiff Macklem said senior officials expect second-growth
output to be "much weaker" after a surprise 2.2% annualized increase in the
first quarter, which was buoyed by exports and inventories as companies rushed
to purchase goods to avoid tariffs. While there was a consensus among senior
officials on the central bank's governing council to keep the interest rate
steday, Macklem said officials also agreed that another rate cut might be
needed should the economy stall due to uncertainty fueled by U.S. trade
policy.
Read Full Report
May 23, 2025
SGH Insight
Markets have been slammed this morning by Trump’s threat to hike tariffs on the European Union to 50%. That tweet reflects intense frustration in Washington at the slow, combative, and lecturing tone from the EU on tariff negotiations. Here is the state of play, and at the end, a brief quick take on market implications.

We have repeatedly flagged the EU position on tariff negotiations as a problem, despite news articles touting optimism and so on.

Looking forward, and in the spirit of constructive feedback to European policymakers, we would suggest that the EU consider pulling a political heavyweight into tariff negotiations to reinforce the European Commission chiefs who have limited instructions, and in Treasury Secretary Scott Bessent’s words, suffer from “a collective action problem.”

The natural candidate for that would of course be EC President Ursula von der Leyen.
Market Validation
Bloomberg 5/26/25
President Donald Trump said he would extend the deadline for the European Union to face 50% tariffs until July 9 after a phone call with Commission President Ursula von der Leyen.

“We had a very nice call and I agreed to move it,” Trump told reporters Sunday at Morristown Airport in New Jersey on his way back to Washington.

Von der Leyen, who heads the EU’s executive arm, said earlier Sunday in a post on X that “Europe is ready to advance talks swiftly and decisively,” but “a good deal” will need “time until July 9.” That’s the date that Trump’s 90-day pause of his so-called reciprocal tariffs had originally been set to end.
Read Full Report
May 23, 2025
SGH Insight
In a classic central bank “catch 22,” the latest market ructions have stalled BOJ rate hikes for the time being, after the Bank warned earlier this month that global trade unrest and tariffs forced it to downgrade its growth forecasts for 2025 and 2026. On May 1, the central bank held rates unchanged at 0.5% and extended its timeline for hitting its 2% inflation “sustainably”.

But the BOJ will have to hike in the next few months. The steepening yield curve is tightening monetary conditions for the BOJ, at a time when households and firms already are under pressure from higher inflation and stubbornly stagnant real incomes. Market pricing is telling the BOJ that it needs to raise rates to contain inflation, even if that conflicts with Ministry of Finance’s (MOF) desire to minimize the cost of financing Japan’s debt.

That said, the BOJ will stand pat again at its June meeting and likely will want to see market liquidity conditions improving and a few better auction results before it will be willing to hike again.
Market Validation
Bloomberg 5/27/25
Bank of Japan Governor Kazuo Ueda gave the yen a boost by clearly indicating his intention to continue raising the benchmark interest rate if the economy improves as expected.
“We will adjust the degree of monetary easing as needed” to ensure that the bank achieves its sustainable price goal if incoming data give authorities greater confidence that their economic expectations will be met, Ueda said in a speech at an international conference hosted by the BOJ in Tokyo Tuesday.
The yen rose as high as 142.12 against the dollar shortly after his remarks.
Read Full Report
May 21, 2025
SGH Insight
Different ECB officials have differing views on where the neutral rate dividing line into accommodative territory might lie, with most estimates around 2%, and all can agree that it is a range and not a point estimate. But in the real economy, there is no data on the transmission and credit side to indicate that even the current 2.25% deposit rate level is restricting economic activity in any meaningful way.

In other words, the evidence reinforces that we are already in that neutral range. Under this setup, unless clearly needed, deeper cuts into a 1% handle would come with diminishing returns and take valuable policy space for a more significant downside demand shock should that materialize. Therefore, as things stand, the rate path from here should be seen as a one or two cut risk management exercise to mitigate a potential temporary undershooting of inflation, rather than a response to deeper slowdown and undershoot concerns which would necessitate more forceful easing.
Market Validation
Dow Jones 5/27/25
The European Central Bank is unlikely to lower its key interest rate below 1.5% or in large steps, its chief economist said in an interview published Tuesday.
The ECB last month lowered its key rate for a seventh time since June 2024 to 2.25%. Policymakers will meet next week and investors expect them to cut again, to 2%.
In an interview with German newspaper Frankfurter Allgemeine Zeitung conducted on May 20, Philip Lane said that further cuts are likely if policymakers see signs of a further declines in inflation, which has fallen close to the 2% target.
"If we see signs of further falling inflation, we will respond with further interest rate cuts--but the range of discussion is not that wide: no one is talking about dramatic rate cuts," he said.
However, Lane said there is a limit to how far the ECB would likely go in lowering borrowing costs to support the economy and lift inflation, unless there is a significant weakening of the eurozone economy.
"Rates below 1.5 per cent are clearly accommodative," he said. "Going there would only be appropriate in the event of more substantial downside risks to inflation, or a more significant slowdown in the economy. I do not see that at the moment."
Read Full Report
May 18, 2025
SGH Insight
The Fed remains in a holding pattern. The economy remains sufficiently strong that the Fed confidently believes it can hold policy steady until it assesses the impact of tariffs on inflation, data it doesn’t anticipate having until later this year. Optimally, the Fed hopes it can hold steady until it can fully assess the totality of policies pursued by the Trump administration. Given limited data between now and the July FOMC meeting, we don’t expect the Fed will be positioned to consider adjusting policy rates before the September FOMC meeting.
Market Validation
Bloomberg 5/19/25
Federal Reserve Bank of New York President John Williams said policymakers may need months to get a better understanding of the outlook for the economy.
“It’s not going to be that in June we’re going to understand what’s happening here, or in July,” Williams said Monday at a conference organized by the Mortgage Bankers Association. “It’s going to be a process of collecting data, getting a better picture, and watching things as they develop.”
Williams continued to stress that uncertainty was hindering not only policymakers, but also firms and households as they struggle to predict how tariffs and other policies from the Trump administration will reshape the US economy.
Read Full Report
May 14, 2025
SGH Insight
That US trade negotiators led by Treasury are not seeking currency pledges (even if currencies might be discussed) is also wholly consistent with what we heard and was publicly reported by the Japanese, to their surprise, after discussions with Treasury Secretary Scott Bessent.

Finally, this episode and subsequent clarification is also consistent with the following, that we wrote in a report on April 9:

While the 2018 landscape [of a rising dollar with tariffs] was markedly different than today, we expect Bessent will still want to disabuse the market of the notion that the administration is pursuing a “Mar-a-Lago” policy of significant devaluation of the dollar as outlined in a piece written by Stephen Miran, the now Chair of the Council of Economic Advisors, shortly before last year’s presidential election.

Now, Bessent has also noted, on many occasions, that there is no single “dollar” rate, and indeed the bilateral FX rates often reflect significant variances in economic, political, rate differential, and flow dynamics.
Market Validation
Bloomberg 5/22/25

US and Japanese finance chiefs confirmed
existing currency views and did not discuss foreign exchange
levels during a meeting in Canada, sending the yen briefly lower
as markets wound back expectations for a more aggressive stance.
Treasury Secretary Scott Bessent and Japanese Finance
Minister Katsunobu Kato “reaffirmed their shared belief that
exchange rates should be market determined and that, at present,
the dollar-yen exchange rate reflects fundamentals,” the
Treasury department said Wednesday.
Read Full Report
May 09, 2025
SGH Insight
The Reserve Bank of Australia (RBA) is on track to cut interest rates by another 25 basis points this month to 3.85%, providing support for the economy alongside fiscal relief promised by Prime Minister Anthony Albanese, who secured a second historic term last weekend.
Market Validation
Financial Review 5/20/25
The Reserve Bank of Australia has cut the cash rate to 3.85 per cent and
downgraded its key economic forecasts over concerns Donald Trump’s trade war
will cause consumers to save more and force businesses to rethink investment
plans.
Read Full Report
May 07, 2025
SGH Insight
Steady as She Goes
Bottom Line: The Fed is stuck in place until it has greater clarity on the impacts of tariffs and the direction of the economy. We think the Fed’s next move will be to cut rates, but it’s a timing game. The economy will likely continue to cool more slowly than market participants have feared. If that remains the case, the Fed will continue to delay rate cuts. From our perspective, it is more likely that a preponderance of evidence to support a rate cut can build by the September rather than July FOMC meeting. The Fed would also have the luxury of using Jackson Hole to reset the narrative ahead of any rate change. This could be shaping up just like 2024.
Market Validation
Wall Street Journal 5/12/25
A near-term cut to benchmark interest rates looks less likely after a thawing in trade relations between the U.S. and China.
-- There is now a 57% chance the Federal Reserve holds rates steady through its next two meetings, CME FedWatch data shows.
-- That's up from 40% as of Friday, according to the data, which is based on futures tied to the fed-funds rate.
Read Full Report
May 04, 2025
SGH Insight
As the Federal Reserve heads into its May FOMC meeting this week the economic outlook remains mired in uncertainty. The Trump Administration’s lack of clarity on both the timing and magnitude of trade policy changes is weighing on firms’ and households’ sentiment, raising their inflation expectations, and delaying their longer-term decisions. Still, the hard data, while backward looking, remains solid, leading to the tension or current disconnect with the deteriorating soft data. The Fed will not change policy rates at this week’s meeting as it faces the challenge of managing a shock that is pulling on both sides of its mandate.

We frequently get the question “will Powell kill June?” It’s rare that Powell explicitly prejudges a meeting outcome; he almost always leaves a caveat about the data. He could repeat Waller’s guidance about waiting for July tariff news, which by default would imply no June. Or Powell could say that participants did not discuss the timing of any potential rate changes, which would also suggest that the Fed did not intend to cut rates in June. Ultimately, regardless of the exact language, Powell will dissuade market participants from expecting a June rate cut.
Market Validation
Bloomberg 5/7/25
Federal Reserve officials held interest rates steady for a third-straight meeting and emphasized they see a growing risk of both higher inflation and rising unemployment.
“Uncertainty about the economic outlook has increased further,” the Federal Open Market Committee said in a statement Wednesday at the conclusion of a two-day meeting in Washington. “The committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.”

Bloomberg 5/7/25
The US dollar rose more than 0.4% to a session high and the Japanese yen fell close to 1% after Federal Reserve Chair Jerome Powell downplayed prospects of monetary easing.
BBDXY advanced as much as 0.43% and USD/JPY rose as much as 0.93% to a high of 143.78; both have since trimmed gains
Powell said in Q&A session that there’s no need to adjust rates “in a hurry” and the central bank doesn’t see progress on its price goals this year “if tariffs stay”
Read Full Report
May 01, 2025
SGH Insight
The details of tomorrow’s employment report could in the Fed’s eye sharply reduce chances for a June rate cut. As we have laid out in previous reports, Fed speakers have coalesced around a “hold steady” policy stance as rising risks to the inflation and employment sides of the mandate have an ambiguous impact on the appropriate path for policy rates. Fed speakers have implied they don’t expect to cut interest rates in the first half of this year, and Federal Reserve Governor Chris Waller offered unusually direct guidance about June by saying the Fed expects it needs to see the final tariff schedule before cutting rates and that will not arrive until July. That’s like saying “not June.”
Market Validation
Bloomberg 5/2/25
Treasuries fell after stronger-than-expected US employment data that showed tariff uncertainty has yet to materially hit the nation’s jobs market, prompting traders to trim bets on imminent interest-rate cuts.
The yield on two-year notes rose as much as seven basis points to 3.77% after non-farm payrolls rose 177,000, above all estimates compiled by Bloomberg. Traders cut bets on the Federal Reserve’s rate reductions, pricing in around 85 basis points of total easing this year, compared to around 90 basis points before the report.
Read Full Report
April 30, 2025
SGH Insight
Meanwhile, the BOJ, which began its two-day policy meeting on Tuesday, is all but certain to hold rates at 0.50% and downgrade its growth expectations due to tariff impacts on the economy. Governor Kazuo Ueda will deliver a press conference on May 1, when he is expected to emphasize that tariffs have clouded the outlook for future hikes.

While we continue to view the BOJ as likely to move rates higher this year, the Bank clearly has been sidelined for now.
Market Validation
Bloomberg 5/1/25
The Bank of Japan left its benchmark rate
unchanged while pushing back the timing for when it expects to
reach its inflation target amid intensified uncertainties due to
US tariff measures.
Governor Kazuo Ueda’s board maintained the central bank’s
policy rate at 0.5% at the end of the two-day gathering,
according to a statement, as expected by all 54 economists
surveyed by Bloomberg.
The BOJ said it expects inflation to be consistent with its
2% goal around the second half of its outlook period, which was
extended by a year to include fiscal 2027. The bank halved its
economic growth projection to 0.5% for this fiscal year in a
sign of heightened caution following the US levies.
Read Full Report
April 23, 2025
SGH Insight
The Trump Administration looks to be making some course corrections on trade, the Fed, and DOGE. These will help take some tail risk out of the economy, although with trade between the two economic giants crawling to a standstill the US and China need to move quickly on negotiations. While there were rumors last night of a scheduled call already for May between US President Donald Trump and China’s President Xi Jinping, we think these are well ahead of the news cycle and there needs to be progress on the technical levels before a call can take place. Directionally, however, it is pointing in the right way.

As a reminder, our core position is that the reciprocal tariffs will be largely rolled back though a 10% tariff baseline will stick and there will be additional tariffs on intermediate goods like steel and aluminum.
Market Validation
Bloomberg News 5/12/25

The US and China will temporarily lower tariffs on each other’s products, according to a joint statement released in Geneva, in a move to cool trade tensions and give the world’s two largest economies three more months to resolve their differences.

The combined 145% US levies on most Chinese imports will be reduced to 30% including the rate tied to fentanyl by May 14, while the 125% Chinese duties on US goods will drop to 10%, according to the statement and officials in a briefing Monday.

“We had a very robust and productive discussion on steps forward on fentanyl,” Treasury Secretary Scott Bessent said. “We are in agreement that neither side wants to decouple.”

The statement also said “the parties will establish a mechanism to continue discussions about economic and trade relations.”

The announcement represents a step toward de-escalating a tariff war that has led to an immediate slump in trade across the Pacific Ocean. The two countries had earlier reported “substantial progress” in their talks, which buoyed markets and helped Chinese stocks recoup their losses since President Donald Trump’s “Liberation Day” announcement of tariffs on April 2.
Read Full Report
April 21, 2025
SGH Insight
Finance Minister Lan Fo’an and Central Bank Governor Pan Gongsheng plan to go to Washington to attend the Spring Meetings of the World Bank and IMF and will also attend the meeting of BRICS Finance Ministers and Central Bank Governors. We note that US Treasury Secretary Scott Bessent has expressed [a] desire to talk to his Chinese counterpart during the Spring Meetings. It is certain that Lan and Pan both are not authorized to talk to the US on trade and tariffs but will bring back messages from the US side if the Trump side takes the initiative to talk.
Market Validation
Bloomberg 4/23/25
President Donald Trump said he plans to be “very nice” to China in any trade talks and that tariffs will drop if the two countries can reach a deal, a sign he may be backing down from his tough stance on Beijing amid market volatility.
“It will come down substantially but it won’t be zero,” Trump said Tuesday in Washington, following earlier comments from Treasury Secretary Scott Bessent that the standoff was unsustainable.
Foreign Ministry spokesman Guo Jiakun said “the door for talks is wide open,” at a regular press briefing in Beijing on Wednesday, reiterating that trade wars don’t have any winners. While Trump has repeatedly sought to get Xi on the phone, China wants the two sides to work out the contours of an agreement before the leaders speak.

Beijing has sent People’s Bank of China Governor Pan Gongsheng, his deputy, Xuan Changneng, and Finance Minister Lan Fo’an to Washington, which this week will host meetings of the World Bank Group and International Monetary Fund. That could create an opening for top Chinese and American officials to exchange views and open the door to trade talks.
Read Full Report
April 14, 2025
SGH Insight
China’s National Bureau of Statistics (NBS) will release Q1 2025 GDP data tonight US Eastern time, Tuesday morning local time with press conference to follow at 10:00 am. The release is expected by markets to register a solid 5.2% annualized growth rate, from 5.4% in Q4 2024 and 5.3% in Q1 2024.

As is customary, last Thursday, April 10, nine economic departments provided their own estimates for GDP to China’s State Council. These ranged from 5.0% to 5.4% and were clustered around 5.2% and 5.3%.

While these estimates are not typically perfect indicators for the actual data release, the NDRC, China’s economic planning agency, edged toward the higher side, at 5.3%, and we find it plausible that among other things the front loading of exports ahead of US tariffs may have helped boost the numbers to the higher side of the range.
Market Validation
Bloomberg 4/16/25
China’s economy showed surprising strength in early 2025 thanks to consumer subsidies and a rush of export shipments to beat tariffs, although an impasse with Donald Trump over the trade war is darkening its outlook and fueling calls for stimulus.

China’s gross domestic product grew 5.4% in the first quarter from a year ago, the government said Wednesday, more than a forecast of 5.2%. Both production and consumption indicated unexpected momentum in March, before massive US levies on Chinese goods kicked in this month.
Read Full Report
April 13, 2025
SGH Insight
The week begins with Federal Reserve Governor Chris Waller. Waller’s message of late has leaned dovish, focusing on his expectations for continued disinflation and eventually rate cuts. The March inflation data reinforces this view as it matches his suspicion that residual seasonality accounts for high inflation in January and February. Moreover, Waller has emphasized that tariffs are not inflationary though, importantly, he already conceded that the impact depends on size and implementation.

The Fed is locked in place. Fed speakers have stepped up the message that the focus now is on maintaining stable inflation expectations, and the underlying message is that effort could require rate hikes. At a minimum, the Fed doesn’t expect to change policy until the second half. Market participants, however, are not hearing that message yet; we think Powell will try to drive the point home this week. Volatile markets have not stopped the Fed from delivering that message. It’s looking like the Trump administration has ignited what amounts to an existential battle for a Fed that very well knows the mistakes of the 1970s.
Market Validation
New York Times 4/14/25
In a speech on Monday, Christopher J. Waller laid out two scenarios that may play out for Mr. Trump’s tariffs, which the Fed governor described as “one of the biggest shocks to affect the U.S. economy in many decades.” How these levies impact both inflation and growth will impact how soon the Fed can again lower interest rates.
If a recession appears to be taking shape, Mr. Waller said he would support the Fed cutting interest rates “sooner and to a greater extent” than initially expected.
The first scenario Mr. Waller laid out assumes that the average tariff imposed on U.S. imports remains around its current level of 25 percent for an extended period. The second assumes a more modest 10 percent universal tariff, as other levies are removed over time.
In both cases, Mr. Waller argued, the effects on inflation would not persist so long as expectations about future price pressures remained under control.

Bloomberg 4/16/25
Federal Reserve Chair Jerome Powell again stressed the central bank's focus on preventing potential tariff-driven price hikes from triggering a more persistent rise in inflation.
“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said Wednesday in the text of a speech prepared for the Economic Club of Chicago.
Powell said policymakers would balance their dual responsibilities of fostering maximum employment and stable prices, “keeping in mind that, without price stability, we cannot achieve the long periods of strong labor market conditions that benefit all Americans.”
The remarks reinforce a message Powell has repeatedly emphasized, including most recently on April 4: Fed officials are in no hurry to change the central bank’s benchmark policy rate.
As they seek greater certainty about how President Donald Trump’s economic policies, especially on trade, will affect the US economy, Powell and other Fed policymakers have expressed support for holding rates steady.
“For the time being, we are well positioned to wait for greater clarity before considering any adjustments to our policy stance,” Powell said.
Read Full Report
April 10, 2025
SGH Insight
According to Beijing, the head of China’s trade and economic team (at the director-general level) has already received a call from his counterpart on the US side to hold ministerial-level talks with the US. But Beijing has rejected talks for now, repeating China’s three-point position to the American counterpart.

Xi will pay a state visit to Vietnam, Malaysia, and Cambodia starting next Monday (April 14) with an intent to sign a series of economic, trade and investment cooperation agreements with the three countries.
Market Validation
CNN 4/11/25

As the rest of the world received a 90-day respite, Trump escalated tariffs on China, saying the US will now charge an extra 145% on all Chinese goods that arrive in the US. In response, Beijing ratcheted up its own tariffs on American goods Friday to 125%, and the country’s leader — who Trump is urgently working to engage — warned China was “not afraid” of a prolonged trade conflict.
In private discussions hours before China announced new retaliatory tariffs, the Trump administration warned Chinese officials against such a move, according to a source familiar with the discussions.
The Chinese were also told – once again – that Chinese President Xi Jinping should request a call with US President Donald Trump.

BEIJING - Reuters 4/11/25
Chinese President Xi Jinping begins a three-nation tour of Southeast Asia next week, his first overseas trip this year, aiming to consolidate ties with some of China's closest neighbours as trade tension escalates with the United States.

Xi will visit Vietnam from April 14 to 15, and Malaysia and Cambodia from April 15 to 18, state-run Xinhua news agency said on Friday, after the Chinese president pledged this week to deepen "all-round cooperation" with China's neighbours.
Read Full Report
April 09, 2025
SGH Insight
With the focus rapidly shifting to tax cuts, this 10% baseline will now provide Treasury and Congress some certainty around a floor for potential tariff revenue raise with which to push negotiations along between the Senate and House Republicans. As opposed to most media and Washington analysts, we expect these to proceed quickly.
Market Validation
Bloomberg 4/10//25
President Donald Trump’s drive to enact trillions of dollars in tax cuts and raise the federal debt is on track after he and congressional leaders successfully corralled House Republican lawmakers to approve a Senate-passed budget outline.
The 216-214 vote on the budget — which outlines the parameters for the tax cut and debt ceiling increase — was delayed a day so Trump and Republican congressional leaders could assuage a dissident group of conservative spending hawks pressing for deeper cuts in safety-net programs.
The president worked the holdouts by phone and in a White House meeting. House Speaker Mike Johnson held a press conference to declare himself “committed” to coming up with at least $1.5 trillion in spending cuts. And Senate Republican leader John Thune joined the speaker to announce “a lot of” Republican senators shared the goal, though he stopped short of a commitment.
It was enough.
With the budget approved, the way is open for a follow-on package to cut taxes by up to $5.3 trillion over a decade and raise the debt ceiling by $5 trillion, in exchange for $4 billion in spending cuts. Republicans can now pass Trump’s tax-cut agenda solely on GOP votes, bypassing the need for negotiations with Democrats.
Read Full Report
April 07, 2025
SGH Insight
Quick Follow Up
Bottom Line: This does not mean that we, or even Powell, think the next move will be a rate hike, and as we said last night, we wouldn’t advise anyone try to catch this falling knife. One of Powell’s goals at this juncture is to tamp down inflation expectations and provide the Fed more room to cut if (or when) the labor market turns. But we also think the takeaway is that the bar for cuts is higher than believed, which means conditions on the ground need to get decidedly uncomfortable to force a rate cut if inflation climbs as anticipated as tariffs pass through the economy.
Market Validation
Traders Trim Bets for Fed Rate Cuts to Three by 2026
By Kristine Aquino
Bloomberg 4/9/25
Traders have promptly scaled back their expectations for Fed rate cuts by early 2026, and now see three quarter-point reductions by then. Prior to Trump’s announcement of a tariff reprieve, there were at least four such moves fully priced in, so the market is clearly taking the news as a reason to believe there’s less urgency for policymakers to act to support growth for now.
Read Full Report
April 06, 2025
SGH Insight
Monday Morning Notes, 4/7/25
Powell can’t save financial markets alone here. Fiscal policy, especially ill-conceived fiscal policy, is a powerful force, a lesson learned in the wake of the pandemic. It will take a lot more than a 25bp or 50bp rate cut to fundamentally change the tide.

Financial markets need a substantial rehaul of President Donald Trump’s tariff strategy. The ball is rolling downhill now; haphazard, occasional tariff negotiations with small nations won’t be enough to stop it, nor can foreign governments trust the US to maintain any negotiated deal unless Congress takes back control of tariffs.

Over the weekend, however, the Trump administration dug in on its agenda. Still, it’s worth noting that in previous iterations of this cycle, Trump has often escalated and then backed down, except for tariffs on China.
Market Validation
Bloomberg 4/9/25
President Donald Trump announced a 90-day pause on higher reciprocal tariffs that hit dozens of trade partners after midnight, while raising duties on China to 125%.
The president’s about-face comes roughly 13 hours after higher reciprocal duties on 56 nations and the European Union took effect, fueling market turmoil and stoking recession fears. Trump came under massive pressure from business leaders and investors to reverse course.
“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately,” Trump posted Wednesday on social media.
Stocks surged the most since 2020 on Trump’s abrupt announcement, with the S&P 500 Index rising over 8%, with almost every company gaining, and the tech-heavy Nasdaq 100 jumping the most since 2008. Goldman Sachs Group Inc. economists rescinded their forecast for a US recession.
Countries that were hit with the higher, reciprocal duties that went into effect Wednesday will now be taxed at the earlier 10% baseline rate applied to other nations, with the exception of China, according to a White House official. Trump said that more than 75 countries had contacted his administration to negotiate on trade barriers and “have not, at my strong suggestion, retaliated in any way, shape, or form.”
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