Catenaa, Wednesday, March 12, 2025– US President Donald Trump’s tariff and other policies have increased the probability of a US recession as the markets unwind on their higher growth expectation, Standard Chartered said.
Kaushik Rudra, Global Head of Fixed Income Research and Head of Asia Research at Standard Chartered, said that although they expect a growth in the US economy, the probability of a recession has increased now from where it was earlier.
“That’s what the market is responding to- the market was too priced expecting higher growth from Trump policies and there has been an unwinding of that,” he said.
During the month period that ended on Tuesday, The S&P 500 has fallen by 8.18%, Dow Jones Industrial Average by 7.09% and Nasdaq by 11.24%
He said it is also the reason feds which priced one rate cut earlier this year, are now pricing it 80 bps meaning more than three rate cuts. “which is seems like a very big swing,”
The market has priced 80 bps of easing this year, up from 40 bps just a couple weeks ago. The upcoming March meeting still shows a very small chance of a cut but the subsequent meeting on May 7 meeting is now above 50%.
Rudra said that US tariffs will obviously be inflationary and higher inflation is not going to be good for the US as Biden was outvoted mainly due to higher inflation.
Trump has put tariffs on Canada, Mexico, China, steel, aluminum — with plans for more to possibly come on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber and computer chips — would amount to a massive tax hike.
Rudra noted that the US should come out with better deals with countries on tariffs, and these deals shouldn’t come at the expense of US growth, manufacturing and competitiveness.
