Tariffs, Treasury Yields And The U.S. Dollar: A Framework

2025-03-05 04:00:00 ET

Summary

• Tariff headlines continue to drive significant market volatility, with the potential long-term effects of the Trump administration’s proposed and imposed tariffs yet to be fully understood.
• We believe President Trump is focused on yields and is seeking alternative ways to lower interest rates given the weaker relationship between the federal funds rate and Treasury yields in this current cutting cycle.
• So far, 2024 rate cuts have had less of an impact on Treasury yields and the cost of borrowing for individuals and businesses than any other recent rate-cutting cycle.

By Michael Laskin & Michael Guttag

Tariff headlines continue to drive significant market volatility, with the potential long-term effects of the Trump administration’s proposed and imposed tariffs yet to be fully understood. As we attempt to separate the noise from the lasting impact of tariffs, we are watching the direction of the U.S. dollar and Treasury yields....

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