While Trump's tariffs will likely dominate the headlines, the economic week ahead will also focus on the inflationary impact of US import duties. We expect March's CPI (Thu) and PPI (Fri) to confirm our concern that higher goods prices will lift headline inflation measures quickly, preventing an easing policy response from the Fed. In other words, the Fed Put is likely on hold this year even if tariffs and uncertainty depress real GDP growth significantly.
The data out this week are likely to add to Trump Tariff Turmoil (TTT) fears and keep stocks on the back foot. We are lowering our range for the 10-year Treasury bond yield to 3.75% to 4.25% (from 4.25% to 4.75%) for the rest of the year as a result of TTT (chart).
