Tariffs’ Impact on Economy and Bond Markets

Michael Zezas and Michael Gapen discuss the economic impact of tariffs, particularly focusing on whether tariffs are pushing prices higher. They analyze recent CPI data, noting a modest increase in core goods prices, and debate whether this indicates a significant aggregate impact on the economy or if companies are managing costs in other ways. They also consider the potential effects on bond markets, discussing scenarios where weaker growth leads to lower yields and the Fed cutting rates, as well as alternative outcomes where growth ticks higher, potentially leading to a more hawkish monetary policy. They explore what investors should watch for, such as an AI productivity boom, that could lead to higher yields.