This should be clear to President Trump at the moment: may have high tariffs. Or may have low interest rates. But there can not be both.
The problem is that the Trump must both want, and he thinks that everything can provide good working conditions, floating with the tariffs, and they can provide good working conditions. At this point, Trump tested the maximum tariff and the markets responded with maximum results. An unanswered question will receive the results of Trump, ironically, iron, and the other basic parts of this agenda.
If not for Trump, investors will enjoy a sweet point in the markets and economics. The information previous to the economy of the tariff, the scourge of inflation last three years – growth and unemployment was on the way to close-normal levels. This would be “soft landing” that inflation was declining without the recession.
Read more: Latest news and updates about Trump’s tariffs
In March, inflation has dropped from 2.8% to 2.4% to 2% to the target of the federal reserve. “Before the tariff tantrum, both consumers and producer slowed down inflation trends,” Economist David Rosenberg would be a period that will cause rise in price on April 11. “
Reducing inflation or deflation lowers interest rates for several reasons. It gives more space to reduce short-term rates without worrying about stocking higher prices. Requires the long-term bondholders of the inflation award. You can also offer an economy of interest rates, which is a demand, credit and prices of cash prices, the price of interest rates.
Trump, on April 2, since the Trump has gone to the maximum tariff, the TWO has announced a double tax increase in imports of dozens of trade partners. Trump, at the same time, at the same time, the most Chinese imports of the Chinese import tariff raised to 145%. Interest rates, Benchmark, which jumped from 4.9% to 4.9% from 4.9% to 4.9% a week, continued to rise with treasury.
Great jump in a short time, saying something is broken. Economically, markets reduce the inflation of Trump tariffs, slow down the US economy and returning to the US assets, and other attractive other investments will be more attractive. The proportions to return investors to any other assets related to US treasury securities or the US economy must be higher.
Of course,, of course, as a real estate developer, wants the lowest interest rate as it depends on the loan. Happened Called to reduce prices in the Fed It can cause its tariffs as a way to prevent damage. In February, Trump’s Treasury Secretary Scott Bessent, “wants the president’s low prices” and specifically focused on the 10-year treasury, which determines the mortgage loans and other consumers and business loans.
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If Trump has never launched a trade war, there are low prices – and everyone who borrowed will benefit from them. “The problem is expected to be inflated by Trump’s tariff,” Yerdeni research wrote April 14th analysis. “This means that increasing inflation is likely to prevent any nutritional to prevent a recession.”
Markets have already shown that higher tariffs and low interest interactions are exclusive – the economy grows and occupies consumer expenses. So Trump has three options: Paste with tariffs and take higher rates, try to force the tariffs down, at least reduce tariffs or forcing tariffs.
If Trump changes his mind about tariffs, the markets would be cheering, but it seems less likely to happen. Trump can take higher rates and other negative results and it can eventually be. Now those who belong to investors, Trump will cause a decrease in something that can be worse than Trump’s protectionseve agenda.
One way of disputes with prices, the treasury department, as soon as 10 and 30 years of treasures, as soon as 10 and 30 years of treasures, would have to leave a less long-distance bond. Janet Yellen pushed the treasury debt to the treasury debt, which was awarded 20% to 22% of the Treasury Secretary, which will start starting in 2023. Bessent criticized the action of the action, but as the secretary of the treasury continued its policy. Increasing the part of short-term bill, it means that long-term bonds that come to the market. If the requirement for bonds remain stable, lower supply, bond prices will increase and interest rates will fall accordingly.
A more anxious scenario, the Fed chairman will fire Jerome Powell, and despite the inflation inflation, he would try to build a new chair if he wanted to cut prices. Some Trump critics think Completely preparing to do thisUsing Powell as a defective defective for rising rates, it takes more March orders to install someone.
Read more: $ 6 eggs and other inflation pain: Here’s where prices are increasing
Firing Powell can quickly withdraw from the markets that the markets trust in a central bank, even since they are seen economically makes a mistake. An affected affectionate affectionately fed to reduce short-term rates would probably worsen inflation fears, because the selfless does not pay higher inflation. Short-term and long-term rates are usually moving in the same direction, but if the short-term rate of the fed is still a higher inflation, long-term rates can still be higher.
The third way Trump can reduce long-term rates, it simply causes a decline, it can also happen to Trump. For example, after announcing the tariffs of Goldman Sachs, Trump 2, as more other predictions, many expecting Goldman Sachs, more than 2025, until the end of 2025, will slow down to the end of 2025.
In a recession, rising unemployment and lost salaries are generally caused by the student for spending and depression. This in turn, normally reduces prices and reduces inflation anxiety. When combined with short-term cuts, more long-term rates are more likely to bring in a zone that will probably make Trump-i happy
But Trump trumps trying to go there, unlikely, if he probably had never started the trade war, he probably gets a route to the discount rate. And a pleasant ride is not likely.
Rick is a high corneler for Newman Yahoo Finance. Follow him Bluesky and X: @rickjnewman.
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