What Trump Tariffs Mean for Prices & Fed Cuts Rates, but Mortgages Are Up?
Morning Brew Daily
Key Insights
Why did the Federal Reserve cut interest rates again?
The Fed cut rates to signal satisfaction with inflation returning to normal levels and to focus on the job market, aiming to keep unemployment low by lowering borrowing costs for consumers and businesses.
Why are mortgage rates rising despite the Fed cutting rates?
Mortgage rates are influenced more by Treasury yields, which reflect the general economic outlook. With a strong economy and potential inflation from Trump's policies, yields and mortgage rates remain high.
How might Trump's tariffs impact global economies?
Trump's proposed tariffs could significantly reshape global trade, affecting economies like Europe and China, which are major trading partners with the U.S. Tariffs would make foreign goods more expensive in the U.S., potentially hurting exports from these regions.
Why did private prison stocks surge after Trump's win?
Private prison stocks surged due to expectations of increased border security and more detainees under Trump's immigration policies, leading to higher demand for detention facilities and more funding for immigration enforcement.
Why did retail stocks like American Eagle and Crocs fall after Trump's win?
Retail stocks fell due to the threat of tariffs, which would increase the cost of imported goods from China. Retailers would either have to absorb these costs, denting profits, or pass them on to consumers, potentially reducing sales.
Chapters
- The Fed cut interest rates for the second time this year.
- Trump's policies could significantly influence the Fed's future decisions.
- The relationship between Trump and Fed Chair Jerome Powell is strained.
Shownotes Transcript