Inside Markets — Fuel for Bull Market

For now, trade/tariff concerns only look like the supply of pessimism that bull markets use as fuel. Recall the Fed’s Q1’25 z-1 report (measures asset balances) estimated U.S. consumer cash (checking, savings, money markets) at a record $4.6T. The overall macro environment remains favorable given easing financial conditions from a weaker dollar, narrowing credit spreads, subdued inflation and lower interest rates. It’s likely markets will look through a tariff-related growth slowdown/inflation uptick in H2’25 given fiscal and monetary support into next year. Consider that 1-year forward OIS rates are currently priced at 3.35%, which is a full 100 bp below current rates.