Trump announces 25% tariffs on imported autos, which are expected to raise prices on cars in the US. “We’re looking at much higher vehicle prices,” said economist Mary Lovely, senior fellow at the Peterson Institute for International Economics. Roughly 45% of US-sold vehicles are imported, with the largest percentage coming from Mexico and Canada. The automakers that are most vulnerable are Volvo, Mazada and Volkswagon, which have the lowest share of their US-sold vehicles manufactured in this country, according to Wards Automotive and Barclays research.

St. Louis Fed president Alberto Musalem said inflation related to tariffs could be longer-lasting than expected. “I would be wary of assuming that the impact of tariff increases on inflation will be entirely temporary,” he said on Wednesday. “The direct price-level effects [of tariffs] are expected to have only a brief and limited impact on inflation, but the indirect effects could have a more persistent impact on inflation,”

US durable goods orders unexpectedly rose in February, driven by businesses that rushed to place orders for primary metals and fabricated metal products ahead of tariffs. “There is tremendous uncertainty coming from Washington, but companies are not just holding their breaths waiting for the other tariff shoe to drop, they are actively ordering up more equipment to beat the price increases once the trade war sanctions jack up the cost of the goods and materials they need to even higher levels,” said Christopher Rupkey, chief economist at FWDBONDS.

Worries about the outlook for the US economy are fueling bets on emerging markets. A measures of EM stocks is on track to set its best first quarter since 2019. “For the past few years, investors have piled into US assets and more-developed markets,” said Bob Michele, global head of fixed income at JPMorgan Asset Management. “Now, when you look at valuations, emerging markets look cheap.”

Fed funds futures continue to price in high probability that the central bank will leave interest rates unchanged at the next FOMC meeting on May 7:

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