04/19/2026–the bond market is currently reacting to a mix of geopolitical shifts and steady economic data. In developed markets, short-term yields have dropped following hopeful news regarding US-Iran negotiations, though these rates are still catching up to the faster movements seen in energy prices. In the US, the labor market remains surprisingly strong and manufacturing …
The January employment report was a little messier than usual, but the underlying message appears to be that the labor market looks just fine. Nonfarm employment increased by 143,000 last month, a smidgeon below expectations but, big picture, reasonably close to the revised 166,000 average monthly gain seen in 2024. The unemployment rate slipped a …
Risks to the US outlook economic escalated materially over the weekend. President Trump’s executive orders threatening to increase tariff rates on imports from Canada (10% energy, 25% non-energy), China (10%), and Mexico (25%), are set to go into effect at 12:01 Tuesday morning. De minimis imports (under $800) would no longer be excluded from tariffs …
As widely expected, the Fed kept policy unchanged today with a 4.25 to 4.5% target rate. The decision was unanimous among the new set of voters for 2025. The guidance language was left unchanged as anticipated, and Chair Powell argued that both the economy and policy are in a good place now. With risks balanced …
The Employment Cost Index, matched our and consensus expectations with a 0.9% rise in the headline total compensation measure 4Q, or 3.6% at an annualized quarterly pace. This was slightly faster than the 0.8% q/q growth (3.2%ar) in 3Q24, but there has been a pronounced—if choppy—cooling in this measure since peaking at 5.5% in early …
Wages firm modestly in 4Q—ECI against cooling trend. Read More »
The announced pause in federal loan and grant program payments was rescinded on Wednesday, resolving the confusioncaused earlier in the week. This episode highlighted both the breadth and depth of these programs and their importance to the economic life of the American people. Publicly available data suggest these programs play a crucial role in the …
The implications of Trump 2.0 for Ukraine and European defense spending are being widely debated. 2025 financial support for Ukraine looks to largely be in place based on existing agreements. An important question, however, is how to scale up European defense production quickly enough to offset a potential shortfall in US military aid in 2025. …
Europe: defense and Ukraine support under Trump 2.0 Read More »
As broadly expected, the FOMC cut the target range for the fed funds rate by 25bp today to 4.25-4.5%, but as Chair Powell indicated at the press conference, policy is now entering a “new phase” where the Committee will move more cautiously. This hawkish tone was also reflected in other developments today, including the median …
US elections are an expensive undertaking. Political parties, individual campaigns, and political action committees (PACs) raise and spend money during each election cycle. Presidential elections further increase the total expenditure every four years. An under appreciated fact is that all this spending is reflected in the aggregate consumption data. Indeed, the significant fluctuations in election …
While the broader trade war (10%-20% tariffs on all US imports) will likely be put on hold, tariffs on China are expected to ramp up quickly. The average effective tariff rate on Chinese goods in the 2018-19 trade war was lifted from 3% up to 20%. We now expect this to be expanded to 60% …
