- We will be working to separate tariff from non-tariff inflation
- It’s too soon to say if it will be appropriate to look through the effects of tariff inflation
- It will depend on tariff inflation moving through quickly
- The base case is that tariff inflation will be transitory
- It will depend on inflation expectations being anchored
- There is some inertia in changing forecasts among high uncertainty
Team Transitory is re-assembling here. Gold is at a fresh record high, up $11 to $3045.
- We thing the right thing to do is wait for greater clarity about the economy is doing
- With the arrival of the tariffs, further progress on inflation will be delayed
That’s not great but the dollar is slumping anyway. Looking at the broader market moves, there was some real angst about a hawkish Fed priced in.
- It’s appropriate to wait for some clarity, the costs are low
- Overall labor market is in balance
- “If you look out 5 years or 5-year forward you will see that break evens are either flat or actually slightly down”
This article was written by Adam Button at www.forexlive.com.