July 17, 2024 14:15 GMT
GLOBAL MACRO: TDS See Trump WH Triggering Higher Inflation, Lower Growth
GLOBAL MACRO
- TD Securities writes that Trump’s policy mix proposals present the most meaningful implications for the US economy, while Biden’s present the status quo. They see immigration as having the largest impact on the US economy, followed by potential tariffs, with deficits likely to rise regardless of who wins in November.
- They see Trump’s immigration plans pushing inflation sharply higher in 2025, and growth lower across 2026, and assume the Fed’s initial response would be to stay patient and postpone rate cuts over H1’25, before resuming cuts “rapidly” in Q3’25.
- In the event of a ‘Red Wave’, TDS see a continuation of a bear steepening effect on the Treasury curve, eventually giving way to bear flattening. On FX, they see a Trump victory as likely USD bullish, as tariffs undermine global confidence.
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