FED: Powell Doesn't Sound Entirely Convinced About Looking Through Tariffs
Paraphrased remarks, from the Q&A following his Chicago Booth's 2025 US Monetary Policy Forum address. He does however point to cuts under the first Trump regime and emphasizes the need to take the totality of US policy changes into account.
- "The general thought is that if there’s a spike in prices that’s a one-time thing then it’s not appropriate to react to it and you look through those things if you can. In the context of tariffs, looking where forecasts are - everyone is forecasting some inflation effect from tariffs - it’s very likely that if tariffs are imposed [and there's a lot of uncertainty about details here] then the likelihood is that some of that will find its way to hit exporters, importers, the retailers and to some extent the consumers.
- Where we know it’s a one-time thing, the textbook would say look through it but we’d want to be sure of a couple things. If it turns into a series of things and the increases are larger that would matter. What really would matter is what happens to longer-term inflation expectations and the persistence of inflationary effects.
- Remember the current context that we’re coming off very high inflation and haven't fully returned to 2% inflation on a sustainable basis. Look back to 2019 with the tax cuts and jobs act, lower immigration and regulatory policy under the first Trump regime and we ended up cutting three times because growth weakened so much. There are many effects of a tariffs but as I've pointed out it's really the effect of the policies that matter, not just tariffs."
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: White House Press Conference Underway Shortly
White House Press Secretary Kaoline Leavitt is shortly due to brief reporters at the White House. LIVESTREAM
- The presser comes amid a rapidly evolving news cycle, beginning with a potential North American trade war on Monday and shifting to Gaza comments made by President Donald Trump at a press conference alongside Israeli Prime Minister Benjamin Netanyahu yesterday.
- Reporters are likely to probe Leavitt on China tariffs and an upcoming call between Trump and Chinese President Xi Jinping. Leavitt is also likely to field extensive questions on Middle East policy and Trump's executive order returning the administration to 'maximum pressure' on Iran.
- Leavitt may also provide clues on Trump's preferred option for legislating Trump's agenda ahead of a meeting with Senate Republicans at Mar-a-Lago on Friday.
EURUSD TECHS: Convincing Break of 20-Day EMA
- RES 4: 1.0594 Dec 9 ‘24
- RES 3: 1.0533 High Jan 27 and a reversal trigger
- RES 2: 1.0443 50-day EMA
- RES 1: 1.0442 High Feb 5
- PRICE: 1.0424 @ 15:52 GMT Feb 5
- SUP 1: 1.0272 Low Feb 4
- SUP 2: 1.0138 1.764 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0031 2.00 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 4: 0.9947 76.4% of the Sep 28 ‘22 - Jul 18 ’23 bull leg
The short-term EUR bullish cycle continued Wednesday, with price action gaining background support from the potential hammer candle formation posted in the reversal on Monday. However, additional reinforcing price evidence is required to signal a turn in the trend. MA studies are in a bear-mode position, highlighting a downtrend. 1.0386 (pierced) to 1.0443, the area between the 20-and 50-days EMAs, marks an important resistance zone. A clear break of it would be a bullish development.
PIPELINE: Corporate Bond Issuance: IBM, Pepsi Multi-Tranche Guidance Update
- Date $MM Issuer (Priced *, Launch #)
- 02/05 $5.5B #Republic of Poland $2.75B 5Y +75, $2.75B 10Y +105
- 02/05 $3B #UBS $1.5B PerpNC5.5 7%, $1.5B PerpNC10 7.125%
- 02/05 $2.5B #IDA 10Y SOFR+61
- 02/05 $1B #Citadel Finance 5Y +170
- 02/05 $1B *KFW 4% 2026 TAP SOFR+20
- 02/05 $500M #Healthpeak LLC 10Y +102
- 02/05 $Benchmark IBM 3Y +45, 5Y +60, 7Y +70, 10Y +80, 30Y +105
- 02/05 $Benchmark PepsiCo 2Y +22, 3Y +27, 5Y +40, 10Y +60
- 02/05 $Benchmark US Bancorp 6NC5 +80, 11NC10 +110
- 02/05 $Benchmark Citigroup PerpNC5 7.37%a
- 02/05 $Benchmark Pacific Life 5Y +80a
- 02/05 $Benchmark Minera Mexico 7Y +140
- 02/05 $Benchmark Republic of Turkiye 7Y 7.2%
- Expected Thursday:
- 02/06 $Benchmark IFC 4.5Y SOFR+36a
