More On Inflation & Bonds

Tariffs are stagflationary, but consensus expectations may be overestimating the inflationary impact and underestimating the downside risks to growth. We evaluate the disinflationary forces that may counterbalance tariff-included price increases. … Also: The bond market’s recent volatility may reflect a fundamental reevaluation by investors at home and abroad regarding the safety of US government debt. The continued decline of the dollar and appreciation of haven assets in Europe support this argument, while the impact of levered Treasury trades unwinding appears to be less significant.