Market Extra
‘If we do get an economic downturn, that will kill the inflation problem,’ one chief investment officer says
Last Updated: April 4, 2025 at 12:44 p.m. ET
First Published: April 4, 2025 at 12:37 p.m. ET
Amid what may end up being the worst two-day wipeout in U.S. stocks on record, the world’s largest and most liquid government-bond market is offering investors some reason for hope when it comes to assessing the likely fallout of the current trade war.
The takeaway is that U.S.-imposed tariffs and retaliatory measures by countries like China should result in only a short-term impact on inflation. This can be seen in falling yields across the Treasury curve as traders and investors around the world flock to safety, and in a drop in market-based expectations of future inflation in the coming years.
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