Casualties of the Trade War

Brian Smedley, head of the Macroeconomic and Investment Research Group, shares insights on the impact trade policy has on U.S. and global economic growth potential.

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October 18, 2019

 

 

Key Takeaways:

  • Trade war uncertainty has significant implications for the U.S. economy, not least because tariffs increase prices for consumers.
  • Trade war escalation has resulted in U.S. dollar appreciation, which tends to have a deflationary effect that can partially offset consumer price increases.
  • Trade war developments affect markets differently, but is generally negative for stocks, commodities, and corporate bonds, and positive for Treasurys.
  • The Fed is likely to try to combat any slowdown in the U.S. economy as a result of the trade war with more easing.
  • Coupled with the uncertainty likely to result in the 2020 election cycle, we believe investors should focus on capital preservation.


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