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How Trump Tariffs and Fed Policy Shape Market Sentiment

How Trump Tariffs and Fed Policy Shape Market Sentiment

Published:
2025-05-07 10:47:02
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The Federal Reserve is poised to maintain interest rates at current levels, with market consensus placing a 95% probability on unchanged policy. Inflation remains marginally above target at 2%, while resilient labor markets afford policymakers flexibility. Trade dynamics—particularly the Trump tariffs and US-China negotiations—now loom as critical variables for future rate decisions.

Renewed Optimism surrounds ongoing trade talks, with Credit Suisse’s Ipek Ozkardeskaya noting potential upside for risk assets. The dollar’s muted response during prior tariff escalations suggests markets may already price in geopolitical risks, leaving room for asymmetric reactions to breakthroughs.

|Square

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