Gold slips as dollar, Treasury yields tick higher

Gold prices eased on Wednesday as the dollar and US bond yields climbed, although concerns over the Trump administration’s fresh tariffs kept prices above the USD 3,000 per ounce level.

Spot gold was down 0.1% at USD 3,016.71 an ounce at 1:30 p.m. ET (1730 GMT). US gold futures settled 0.1% lower at USD 3,022.50.

The dollar index rose 0.4% against its rivals, making gold more expensive for other currency holders, while benchmark 10-year US Treasury yields inched higher.

“Gold remains underpinned by haven interest amid ongoing tariff uncertainties and geopolitical risks. Fresh record highs would bode well for the attainment of my next upside target at USD 3,150,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

US President Donald Trump said on Monday that automobile tariffs are coming soon, but indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.

“If the tariffs are not as serious as people are thinking, we could see a correction (in gold),” said Marex analyst Edward Meir.

Investors worried that Trump’s tariffs would stoke inflation and hinder economic growth are taking refuge in safe-haven assets like gold.

Gold, traditionally seen as a hedge against uncertainty and inflation, has risen more than 15% this year and hit an all-time peak of USD 3,057.21 on March 20.

Market participants now look forward to US personal consumption expenditures data due on Friday that could shed more light on US rate cut path.

“Tame PCE inflation would reinforce those dovish leanings and provide ongoing lift for gold,” Grant said.

The Federal Reserve held its benchmark interest rate steady last week but indicated it could cut rates later this year. Non-yielding bullion tends to thrive in a low interest-rate environment.

Minneapolis Fed Bank President Neel Kashkari said that while the US central bank has made a lot of progress bringing inflation down, “we have more work to do” to get inflation to the Fed’s 2% target.

Elsewhere, spot silver fell 0.3% to USD 33.63 an ounce, while platinum was down 0.1% to USD 975.17. Palladium rose 1% to USD 965.98.

(Reporting by Brijesh Patel and Anmol Choubey in Bengaluru, additional reporting by Ishaan Arora; Editing by Alexandra Hudson, Maju Samuel, and Vijay Kishore)

Oil settles up 1% on US crude and fuel stock draw, Venezuela supply worries

HOUSTON – Oil prices rose on Wednesday, buoyed by government data showing US crude oil and fuel inventories fell last week and by mounting concerns about tighter global supply following the US threat of tariffs on nations buying Venezuelan crude.

Brent crude futures settled up 77 cents, or 1.05%, at USD 73.79 a barrel. US West Texas Intermediate crude futures settled up 65 cents, or 0.94%, at USD 69.65 a barrel.

At their session highs, both benchmarks were up more than USD 1 a barrel.

US crude oil inventories fell last week as refiners kept ramping up production, while gasoline and distillate stockpiles also dropped, the Energy Information Administration said.

Crude inventories fell by 3.3 million barrels to 433.6 million barrels in the week ended March 21, the EIA said, a deeper draw than the 956,000 barrels that analysts had expected in a Reuters poll.

On Tuesday, trade in Venezuelan oil to top buyer China stalled after US President Donald Trump threatened tariffs on countries buying from Caracas. Days earlier, US sanctions targeted China’s imports from Iran.

On Monday, Trump signed an executive order authorizing blanket 25% tariffs on imports from any country that buys Venezuelan crude oil and liquid fuels.

“There is concern in the market about touching that oil so we could lose that supply,” said John Kilduff, partner at Again Capital LLC in New York.

“The discount on Venezuela’s exports could go up to 35%, and difficulties in commercialization could generate bottlenecks that could lead to production shutdowns amounting up to 400,000 barrels per day, more than half of Venezuela’s exports,” said Barclays analysts in a note.

Venezuela could potentially lose USD 4.9 billion in revenue, or over 10% of GDP, the analysts said. Oil is Venezuela’s main export, and China is already a target of US import tariffs.

Chinese traders and refiners said they were waiting to see whether Beijing would direct them to stop buying.

“Physical markets are tightening as flows are shifted due to the raft of US sanctions,” said Ashley Kelty, analyst at Panmure Liberum.

Last week, Washington imposed a new round of sanctions on Iran’s oil sales, targeting entities including Shouguang Luqing Petrochemical, an independent refinery in China’s Shandong province, and vessels that supplied oil to such plants.

“OPEC+ may be ramping up production in anticipation of potential US sanctions, helping to offset a loss of up to 1.5 million bpd of Iranian exports without destabilizing global oil prices,” said Jorge Leon, head of geopolitical analysis at Rystad Energy.

Capping oil price gains, the US reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington agreeing to push to lift some sanctions against Moscow. This offset some price support from the Venezuela situation, Capital’s Kilduff said, adding he expected to see more Russian supply on the market.

“Both China and India will likely turn to buy more Russian-sanctioned crude oil instead of more closely monitored and riskier Venezuelan crude,” said StoneX analyst Alex Hodes.

Kyiv and Moscow both said they would rely on Washington to enforce the deals, while expressing skepticism about the other side.

(Reporting by Georgina McCartney in Houston, Arunima Kumar in Bengaluru, Stephanie Kelly in New York, and Siyi Liu in Singapore; Editing by Sonali Paul, Kim Coghill, Jan Harvey, David Gregorio, and Nia Williams)

Yields inch higher on tariff exemption hopes, patient Fed

NEW YORK – US Treasury yields inched higher on Wednesday as investors weighed potential exemptions from US President Donald Trump’s tariffs and Federal Reserve officials signaled a patient approach to interest rate cuts.

Trump indicated on Monday that not all of his threatened levies would be imposed on April 2 and some countries may get breaks. This has given some reprieve this week to investors rattled by the expected inflationary impact and hit on US growth from aggressive US trade policies.

Still, uncertainty around US import levies gripped markets again on Wednesday as Trump prepared to announce tariffs on the auto industry later in the day.

“This psychological churn is, I expect, what we’ll see at least until that April 2 date, but probably even beyond, because there’s so many moving parts. We have all the macro data and we have all the tariffs uncertainty,” said Mark Hackett, chief market strategist at Nationwide.

Yields, which move inversely to prices and tend to rise on expectations of higher growth and inflation, edged higher, with the benchmark 10-year yields last at 4.34%, up 3-1/2 basis points from Tuesday. Two-year yields were last at 4.01%, one basis point higher.

St. Louis Fed President Alberto Musalem said on Wednesday the Fed had no urgency to cut rates given ongoing growth, and cautioned that tariffs could trigger more persistent price pressures. Minneapolis Fed President Neel Kashkari said the Fed should stay put amid continued policy uncertainty and the effect of tariffs on the economy.

“Markets are still trying to unpack … the fear of higher inflation related to potential tariffs, but the Fed is seemingly remaining patient because the data is not showing that high inflation yet, even though there’s so many expectations for it,” said Joe Bell, chief investment officer at Meeder Investment Management.

On the economic data front, the February reading of durable goods orders, released by the US Commerce Department on Wednesday, was stronger than anticipated. New orders for key US-manufactured capital goods unexpectedly fell in February.

Wednesday’s data followed the release of a Conference Board survey on Tuesday showing US consumer confidence plunged to the lowest level in more than four years this month, with households fearing a coming recession.

BofA Securities analysts said in a note on Wednesday that US Treasury yields remained stuck between two opposing themes: they have adjusted lower in recent weeks to account for heightened growth concerns stemming from tariff uncertainty. At the same time, economic fundamentals have held firm, and inflation risks remain high.

Portfolio reallocations in the last days of the quarter, when money managers adjust portfolios to account for the quarter’s moves in stocks and bonds, may have also added some selling pressure, said Tony Farren, managing director at Mischler Financial Group.

“That trade has started, it’s not something you can do just the last day of the quarter … you have to ease your way into it,” he said, talking about investors selling bonds for stocks.

The Treasury sold USD 70 billion in five-year notes on Wednesday in an auction to lukewarm demand. The 4.1% yield was marginally above market at the bidding deadline, suggesting investors demanded higher compensation to absorb them.

The bid-to-cover ratio, a measure of demand, was 2.33 times, the lowest since May 2024.

(Reporting by Davide Barbuscia; Editing by Sharon Singleton and Richard Chang)

Oil edges higher on tighter supply concerns

Oil prices climbed on Wednesday in early Asia trade on concerns of tighter supplies after US President Donald Trump threatened tariffs against countries importing oil and gas from Venezuela and after US crude inventories fell more than expected.

Brent crude futures gained 25 cents, or 0.3%, to USD 73.27 a barrel by 1214 GMT, while US West Texas Intermediate crude futures rose 28 cents, or 0.4%, to USD 69.28 a barrel.

On Monday Trump signed an executive order authorizing his administration to impose blanket 25% tariffs under the 1977 International Emergency Economic Powers Act on imports from any country that buys Venezuelan crude oil and liquid fuels.

Oil is Venezuela’s main export. China, already a target of US import tariffs, is its largest buyer.

The Trump administration also on Monday extended a deadline to May 27 for US producer Chevron to wind down operations in Venezuela.

The withdrawal of Chevron’s license to operate could reduce production in the country by about 200,000 barrels per day, according to ANZ analysts.

Also supporting prices, industry data showed US crude inventories fell by 4.6 million barrels in the week ended March 21, market sources said citing American Petroleum Institute figures. Analysts polled by Reuters were expecting a decline of 1 million barrels.

Official US government data on crude inventories is due on Wednesday.

Limiting oil price gains, the United States reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington agreeing to push to lift some sanctions against Moscow.

Kyiv and Moscow both said they would rely on Washington to enforce the deals, while expressing skepticism that the other side would abide by them.

(Reporting by Stephanie Kelly; Editing by Sonali Paul)

US stocks end higher as traders focus on tariffs, data

Wall Street stocks ended higher on Tuesday, with Apple rising and Nvidia dipping as investors assessed consumer sentiment data and bet on a more flexible trade policy stance from the Trump administration next week.

US President Donald Trump said on Monday that automobile tariffs were coming soon, while suggesting that not all proposed tariffs would be enforced in an April 2 announcement on which Wall Street is focused.

“I don’t expect that we’ll get the clarity that the market is hoping for, but investors are desperate for any sort of clarity on this front, and to the extent they’ll get some of it, it’s a huge day,” said Ross Mayfield, an investment strategist at Baird.

Weighed by worries that Trump’s tariffs would fuel inflation and hurt economic growth, the S&P 500 is down about 2% so far in 2025, and it is on track for its first quarterly loss since June 2023.

Ratings agency Moody’s said on Tuesday that the United States’ fiscal strength is on track for a continued multiyear decline as budget deficits widen and debt becomes less affordable.

Another report revealed a dip in consumer confidence, with the index falling to 92.9 in March – its lowest since February 2021.

Apple rose 1.4%, helping keep the Nasdaq in positive territory, while Nvidia slid 0.6%.

Tesla shares rose 3.45%, adding to a 12% rally the previous day. The company’s market share in Europe continued to shrink in February as sales of the all-electric car maker dropped for a second month, even as EV registrations overall on the continent grew.

KB Home fell over 6% after the homebuilder cut its full-year 2025 revenue forecast.

The S&P 500 climbed 0.16% to end the session at 5,776.65 points.

The Nasdaq gained 0.46% to 18,271.86 points, while the Dow Jones Industrial Average rose 0.01% to 42,587.50 points.

Of the 11 S&P 500 sector indexes, seven rose, led by communication services, up 1.43%, followed by a 0.98% gain in consumer discretionary.

Fed Governor Adriana Kugler said the central bank’s interest rate policy remains restrictive, but progress on bringing inflation back to the central bank’s 2% target has slowed.

New York Fed President John Williams said firms and households were “experiencing heightened uncertainty” about what lies ahead for the economy.

Among a cascade of economic indicators scheduled this week, focus will be on the personal consumption expenditures price index – the Fed’s preferred inflation gauge – due on Friday.

CrowdStrike gained 3.3% after brokerage BTIG raised its rating on the cybersecurity company to “buy” from “neutral.”

Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio.

The S&P 500 posted 11 new highs and 4 new lows; the Nasdaq recorded 42 new highs and 160 new lows.

Volume on US exchanges was relatively light, with 13.0 billion shares traded, compared with an average of 16.4 billion shares over the previous 20 sessions.

(Reporting by Pranav Kashyap, Johann M Cherian and Lisa Pauline Mattackal in Bengaluru, and by Noel Randewich in San Francisco; Editing by Maju Samuel and Matthew Lewis)

US dollar unmoored as traders unsure on tariffs

The dollar took a breather on Wednesday, with weak US confidence data and concerns about the effect of sweeping tariffs on US growth putting the brakes on a recent bounce.

The dollar reversed by about 0.5% on the yen overnight, crossing below 150 yen to sit at 149.95 early in the Asia session. The euro, which spent a week edging lower from a five-month high, has now steadied at USD 1.0789.

The euro and Russia’s ruble had no immediate reaction to US deals with Russia and Ukraine to pause attacks at sea and on energy targets, though wheat prices fell as the US said it will push to lift sanctions on Russian agriculture.

Nerves are focused on next week, when US President Donald Trump has threatened to impose – or at least provide details of – a messy round of tariffs on autos, chips and pharmaceuticals.

The trade-sensitive Australian dollar hovered just above 63 cents ahead of monthly inflation data that is likely to be sticky and to reinforce bets the central bank will be in no rush to cut interest rates.

The Aussie had little reaction to Tuesday’s federal budget, which promised tax cuts and extra borrowing to fund relief measures for voters ahead of a May election.

“The major driver of AUD/USD over the next few weeks, and possibly months, will be the new US trade policy and the response from foreign governments,” said Commonwealth Bank of Australia strategist Joe Capurso.

“If market participants are caught flat footed by larger than expected US tariffs and retaliation by other governments next week, AUD/USD can test USD 0.60 in coming weeks.”

The New Zealand dollar was steady at USD 0.5732.

Tariffs and threats of the duties have already driven counterintuitive moves in currency markets as concerns they may drive down US growth have confounded the assumption that the levies should be inflationary and drive up the dollar.

Overnight data showing US consumer confidence plunged to the lowest level in more than four years in March highlighted how the uncertainty is weighing heavily on households.

For the quarter, the dollar index – which had rallied strongly between September and January – is headed for a roughly 4% drop.

Sterling held steady at USD 1.2948 ahead of British inflation data and a budget update due later in the day.

(Reporting by Tom Westbrook; Editing by Jamie Freed)

US equity funds’ weekly outflows surge to a three-month high on tariff concerns

US equity funds saw the largest net outflows in three months in the week through March 19 on worries about the impact of US tariff policies and caution ahead of a monetary policy decision from the Federal Reserve.

According to LSEG Lipper data, investors pulled USD 33.53 billion from US equity funds during the week in their largest weekly net withdrawal since December 18, contrasting with USD 4.84 billion in net purchases the week before.

The Fed kept its benchmark overnight interest rate unchanged on Wednesday, and indicated that two quarter-point cuts were likely later this year, while also forecasting slower economic growth and higher inflation.

US large-cap funds saw USD 27.38 billion of net selling as investors ended a three-week buying streak.

Small-cap, multi-cap, and mid-cap funds also saw outflows of USD 3.48 billion, USD 1.42 billion and USD 1.09 billion, respectively.

Selling pressure in sectoral funds, however, eased to the lowest in three weeks as investors pulled out a net USD 1.35 billion, compared with combined net sales of USD 7.54 billion in the prior two weeks.

Tech, communication services, and healthcare funds led sectoral outflows, with net sales of USD 451 million, USD 230 million, and USD 227 million, respectively.

US bond funds, meanwhile, saw their first weekly outflow in 11 weeks, amounting to USD 513 million.

Investors divested general domestic taxable fixed income funds and loan participation funds worth USD 1.56 billion and USD 1.62 billion, respectively.

In contrast, short-to-intermediate government and treasury funds attracted a net USD 2.89 billion, the 13th weekly inflow in a row.

US investors, meanwhile, ditched USD 28.83 billion worth of money market funds after USD 13.43 billion in net sales a week ago.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru. Editing by Mark Potter)

Dollar ends week higher versus euro as traders book gains

NEW YORK – The dollar edged up against the euro on Friday, on pace for its first weekly gain this month, as investors booked profits from the euro’s recent advance ahead of the April 2 deadline for reciprocal US tariffs.

The euro was 0.3% lower at USD 1.08223, on pace to finish the week down 0.6%, its first weekly loss since February 28.

The dollar, under pressure this year from worries over the hit to US economic growth from the Trump administration’s trade policies, found some respite this week as the Federal Reserve indicated it was in no rush to cut interest rates.

The euro softened as investors booked gains, even as Germany’s Bundesrat, the upper house of parliament, passed a reform of the country’s borrowing rules and a 500-billion-euro fund to revamp its infrastructure and revive Europe’s largest economy.

“It’s really been a huge rally in EUR/USD this quarter … so, naturally, we’re seeing some profit-taking ahead of the April 2 tariff deadline,” said George Vessey, lead FX and macro strategist at Convera.

“Given the lack of reaction to the German Bundestag’s approval of the debt break constitutional change this week, perhaps we’re near peak optimism regarding the fiscal tailwind,” he added.

This week the Fed, Bank of England and Bank of Japan left interest rates unchanged as they assessed the economic impact of US President Donald Trump’s trade tariffs against global trading partners.

Fed policymakers signaled two quarter-point cuts later this year, the same median forecast as three months ago.

“We’re not going to be in any hurry to move,” Fed Chair Jerome Powell said, underscoring the challenge policymakers face in navigating Trump’s tariffs policy, and the potential impact on the domestic economy.

It remains an open question for the Fed whether tariff plans will lead to persistent inflation, with taxes on intermediate goods, retaliation by other nations, and other factors feeding into whether the central bank will have to respond, Chicago Fed President Austan Goolsbee said on Friday.

“While it is impossible to know exactly what the administration has in mind for its next move (never mind its next U-turn), our base case remains that tariff rates are likely to go up significantly and that this will drive a rebound in the dollar,” Jonas Goltermann, deputy chief markets economist at Capital Economics said in a note.

The dollar rose 0.3% to 149.21 yen.

On Wednesday, the Bank of Japan refrained from raising rates and warned
of heightening economic uncertainty in the wake of ramped-up US tariffs on trading partners.

Sterling was 0.3% lower at USD 1.293, a day after the BoE warned that investors should not assume further cuts were guaranteed, given the uncertainty hanging over the global and UK economies.

Bitcoin, the world’s largest cryptocurrency by market cap, was down about 1% at USD 83,973.

(Reporting by Saqib Iqbal Ahmed; Additional reporting by Kevin Buckland in Tokyo and Yadarisa Shabong in Bengaluru; Editing by Frances Kerry, Kirsten Donovan and Richard Chang)

Ten-year yields rise as investors weigh tariff impact

NEW YORK – The US benchmark 10-year Treasury yield rose on Friday but held in the relatively tight range it has traded in this month as investors balanced uncertainty over the impact of tariffs with the likelihood that the Federal Reserve will keep rates unchanged for the time being.

Investors are worried that tariffs will increase inflation in the near term while also weighing on economic growth. Federal government layoffs are also expected to lead to higher unemployment.

So far, however, the impact of the new policies has not been captured in the economic data. That is leaving market participants and the US central bank to largely adopt a wait-and-see approach to where interest rates should be.

There is lack of conviction in the market, said Molly Brooks, US rates strategist at TD Securities.

Fed Chair Jerome Powell on Wednesday described the uncertainty faced by Fed policymakers as “unusually elevated.”

Yields fell earlier on Friday before drifting back higher and adding to gains after US President Donald Trump said his top trade chief plans to speak with his Chinese counterpart next week.

Trump reiterated his plan to use trade levies to help narrow the US trade deficit with its main economic rival, but said there will be flexibility in tariffs. He plans to introduce reciprocal tariff rates on countries globally on April 2.

New York Fed President John Williams said on Friday that it’s too soon to determine the impact of tariffs on inflation, adding that there are rising risks to the economic outlook and the central bank has time to decide the direction of its monetary policy.

Chicago Fed president Austan Goolsbee also said that it remains an open question whether tariffs will lead to persistent inflation, with taxes on intermediate goods, retaliation by other nations, and other factors feeding into whether the central bank will have to react.

The bond market, meanwhile, has been boosted by the Fed’s plans to taper quantitative tightening, which will reduce the Treasury Department’s debt issuance needs, said TD’s Brooks.

The US central bank said on Wednesday that it will reduce the pace of the drawdown of its still-massive balance sheet, as it faces challenges in assessing market liquidity during an ongoing impasse over lifting the government’s borrowing limit.

Fed Governor Christopher Waller on Friday said he opposed the decision because the level of reserves in the banking system remains abundant.

The yield on benchmark US 10-year notes was last up 2.1 basis points on the day at 4.254%. It has held in a range between 4.106% and 4.353% since February 25.

The 2-year note yield, which typically moves in step with interest rate expectations, fell 0.7 basis points to 3.95%.

The yield curve between two-year and 10-year notes steepened by around 3 basis points to 30.3 basis points.

Germany’s Bundesrat upper house of parliament on Friday approved plans for a spending splurge that aims to revive growth in Europe’s largest economy and scale up the military, clearing the final hurdle for the historic policy shift.

The plan sent German government debt yields sharply higher when it was announced earlier this month and is acting as an upward pressure on government debt yields globally.

Traders are also watching to see if Russia and Ukraine will agree to a deal to end their war.

President Donald Trump said on Thursday the United States will sign a minerals and natural resources deal with Ukraine shortly and that his efforts to achieve a peace deal for the country were going “pretty well” after his talks this week with the Russian and Ukrainian leaders.

The Treasury will sell USD 183 billion in short- and intermediate-dated debt next week, including USD 69 billion in two-year notes on Tuesday, USD 70 billion in five-year notes on Wednesday, and USD 44 billion in seven-year notes on Thursday.

(Reporting By Karen Brettell; Editing by Toby Chopra and Diane Craft)

Investors draw transitory vs stagflation battle lines: McGeever

ORLANDO, Florida – The fate of US financial markets this year will largely depend on whether any tariff-fueled inflation turns out to be “transitory”, enabling the Federal Reserve to cut interest rates, or whether the central bank gets bogged down by the specter of “stagflation”.

The first scenario is the one Chair Jerome Powell outlined on Wednesday as the central bank’s “base case”, sparking a powerful rally on Wall Street and a sharp drop in Treasury bond yields. So it’s risk on, right?

Investors chose to ignore the second scenario, even though it is arguably the more obvious one to draw from the Fed’s revised economic projections.

Policymakers are now expecting higher inflation and meaningfully slower growth. The median interest rate ‘dot plot’ was unchanged from December, still pointing to two cuts this year, but there’s a shift underway – eight policymakers now think one cut or none at all will be appropriate this year.

So, risk off?

‘Team transitory’ may have stolen a march on ‘team stagflation’, but a lot of stars will need to align for it to emerge victorious over the long haul.

THE T-WORD

Many investors likely shuddered when Powell invoked the T-word on Wednesday, given the Fed has had to keep rates higher for longer precisely because the post-pandemic inflation surge wasn’t as transitory as Powell and then-Treasury Secretary Janet Yellen had claimed.

That said, Powell is correct that the inflation caused by President Donald Trump’s 1.0 trade war was transitory. Academic studies suggest the first-round impact of Trump’s 2018 tariffs added up to 0.3 percentage points to core PCE inflation, but annual core PCE inflation in 2018 never exceeded 2% and fell in 2019.

Still, the Fed’s credibility took a beating with the post-pandemic ‘transitory’ debacle, so Powell may be leaving himself and the institution open to further attacks if any future price increases prove to be stickier than bargained for.

This is a genuine risk because Trump’s proposed tariffs are of a whole different order this time around. A Boston Fed paper last month estimated that the first-round impact of tariffs could add between 1.4 and 2.2 percentage points to core PCE.

This would have a much deeper and longer-lasting impact on inflation. Fed officials are wary. Not only did they raise their median 2025 inflation outlook, but some also raised their 2026 and 2027 projections, and 18 out of 19 believe price risks are still skewed to the upside.

STAGFLATION SPECTER

It’s also worth noting that Fed officials lowered their growth projections significantly more than they raised their inflation outlook.

The 2025 growth outlook fell to 1.7% from 2.1%, and down to 1.8% for the next two years. Granted, that’s still decent growth and nowhere near a recession, but it would mark the first back-to-back years of sub-2% expansion since 2011-12.

Moreover, 18 out of 19 Fed officials see growth risks still tilted to the downside, compared with only five in December. Even if the Fed does cut rates, it is just as likely to be in response to the economy rolling over and unemployment shooting up than anything else. Would that be ‘risk on’?

While no one is talking about a return to the 1970s, stagflation risks are rising, which hugely complicates the Fed’s reaction function. The bar for cutting rates is getting higher, and it is difficult to see how this creates a positive environment for risk-taking – that is, unless team transitory emerges victorious in the end.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; editing by Diane Craft)

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