The President’s plan to make America great (again) is not going to see results without a pretty nasty fight. The announced tariffs take effect in 12 days. Other countries don’t like them, consumers are afraid of them, shipping companies hate them, and the stock market despises them. Economists are stumped; there is no consensus whether the increased costs of goods will be inflationary, or whether the slowing velocity of trade will cause disinflation. Politics is a nasty business, and has been since the dawn of time. Just ask Napoleon, or Hamilton.
The FOMC left the overnight rate unchanged this week and there’s an 86% chance they do the same at the next meeting in May. However, a lot can happen over the next 47 days that will sway the Fed’s decision. Next week for example, we’ll have GDP and PCE, both heavyweights in their own right, reporting. Some expect to see the GDP headline with a negative number, indicating a shrinking economy.
One thing is not shrinking, and that’s the egos of the various nations involved in the staring contest. I understand that each is concerned with self preservation; we all are, but working together amicably has proven far more productive time and time again than flexing and name calling ever was.
For now, mortgage rates are fighting to get down near three month lows.
