Chicago Fed President Austin Goolsbee noted that the impact of tariffs has been milder than expected. He likened these tariffs to oil shocks, indicating potential stagflation concerns. The limited effect of the tariffs comes from their relatively low levels and specific exemptions. Goolsbee highlighted that uncertainty is present now and emphasized the need to watch soft economic data during this changeable period. He stated that there are no clear signals about interest rate changes at this time. Goolsbee’s comments hint at larger trends beneath the headlines about policy changes and economic data. When he compares import tariffs to past oil shocks, he raises concerns that go beyond inflation and growth; there is a troubling mix of both pressures arising simultaneously. This comparison, drawn from the 1970s, carries historical weight that markets generally dislike—specifically, the worry of slow economic growth alongside rising prices. However, things haven’t unfolded exactly as feared. The tariffs we see remain quite restrained by global standards, with enough exceptions to lessen their impact. It’s one thing to apply tariffs for strategic reasons; it’s another to keep them relatively low from a broader economic viewpoint. So far, the consequences appear manageable. That said, don’t treat this as a reason to relax. The focus on soft data is significant. These indicators—like surveys and sentiment readings—often reflect shifts in mood and expectations before these changes show up in more concrete data like GDP or consumer spending. When these measures start to decline or consistently rise, they often signal the next move in policy or pricing. The lack of a clear message about interest rates shouldn’t be seen as indifference from policymakers. Quite the opposite; it indicates how much they are considering incomplete signals. There’s hesitation—not from uncertainty, but from a careful approach to avoid overreacting to a trend that remains unclear. For those of us analyzing short-term trends and planning for longer-term scenarios, the implications are direct. Patience is necessary. Volatility pricing may not fully capture shocks caused by shifts in sentiment. These changes don’t always follow a trend but can switch rapidly. It may be wise not to assume that the relationship between economic data and market pricing will remain stable. We might begin to adjust our strategies alongside updated expectations, rather than waiting for signals from policy changes themselves. Anticipatory pricing often reacts faster than official statements during transitional times. Right now, there’s a notable gap between tangible data and future expectations. Being slow to adjust could be costly. It may be better to monitor how short-term instruments respond to changes in survey data instead of waiting for slower-to-release top-line figures. While fundamentals seem solid for the moment, upcoming volatility is rarely aligned with risk-focused news—especially when central bank communications lack clarity. Observing how pricing reacts to sentiment will likely provide more insight than waiting for speeches or meeting minutes. There’s no need to hurry, but there’s equally no room for complacency.

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