Fed Signals & Tariff Tensions: Bond Markets Brace for Impact in 2025

Wall Street's crystal ball is fixed on the Fed again—will Powell pivot or double down? Bond traders are pricing in whiplash as tariff threats loom.

Decoding the Fed's poker face

Every twitch in the dot plot sends tremors through Treasuries. The street's betting on 2-3 cuts, but inflation's sticky shadow won't quit. Meanwhile, the 10-year yield's doing the cha-cha between 4.2% and 4.5%—classic Fed-watching limbo.

Tariff tremors hit portfolios

Trade war déjà vu? New import levies could rewrite the inflation playbook overnight. Smart money's already rotating into defensive plays—because nothing says 'stable returns' like geopolitical roulette.

Bottom line: The bond market's playing 4D chess with Fed speak while dodging tariff shrapnel. As usual, retail investors will get the memo...after the hedge funds have front-run the move. Some things never change.

Bond markets will be closely watching employment data this week says James Athey, senior fixed income portfolio manager, at Marlborough, for any signs of labour weakness, which could push the Federal Reserve towards earlier rate cuts. The PM shares his views on the lead drivers moving markets; the impact of headline volatility on directional flow, and the looming questions over tariff risks.

In this episode, Athey also unpacks where he sees growing investor complacency; the importance of prioritising liquidity in the current trading environment, and where he sees concerns rising over shifts in private markets.

https://vimeo.com/manage/videos/1097301665