00:00Well, in mentioning the Federal Reserve, I'm thinking of President Trump's pressure on
00:05Fed Chair Jerome Powell to cut rates.
00:08So is this tariff announcement conflicting with his desire for lower rates?
00:15And could that conflict potentially have an effect on tariff policy as the reaction continues
00:21to unfold, in your view?
00:25Well, Maggie, I think that's a fascinating question, because right now, as you're looking
00:31at Treasury markets, and we're talking about inflation moving higher, you would not expect
00:37a rally in Treasury prices when this is the outlook that we are considering.
00:43Instead, we are seeing investors flocking to Treasury bonds as a safe haven.
00:51And we think that is really to do with growth fears.
00:55So right now, what's foremost on investors' mind is the growth concerns for the U.S. economy.
01:04And in that environment, you really want to increase your exposure to U.S. Treasuries
01:11as a way to protect your portfolios from that growth negative pressure.
01:18At the same time, once we believe there will be clarity over the coming weeks about the
01:23extent of the tariffs, the end state that we're dealing with, I think investors will
01:28start asking questions about the inflationary impact.
01:33And that could lead to a pressure on Treasury prices, upward yield pressure, as investors
01:40realize that Federal Reserve might not be in a position to cut rates, even in the face
01:46of a slowing economy.
01:48But for the time being, all of the focus is on growth.
01:52And that is the reason why Treasuries are rallying rather than investors pondering what
01:57kind of inflationary impact we will see over the months to come.
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