By Michael Zezas, Global Head of Fixed-Income Research
Not The Fiscal Policy You're Looking For
In our dialogue with clients over the past decade, we’ve often seen them project their greatest hopes and worst fears onto their expectations for the impact of US policy choices on the economy and markets. Understandably so, since over this period, public policy threatened and sometimes succeeded in causing durable disruption across the spectrum of taxes, trade, foreign policy, and many domestic and international institutions. Whether you saw value in these changes or not, it's hard to deny that policy uncertainty has been elevated. And we argue that in its first 100 days, the current administration has intensified this dynamic, with the market reaction to “Liberation Day” and ongoing tariff negotiations as Exhibit A (although it has since retracted substantially). Investors’ focus on US fiscal policy has risen and, again understandably, their assumptions reflect both great expectations and grave concerns.
