Richard Clarida

Secondly, there's a saying in baseball, sometimes you'd rather be lucky than good.

I think the other thing that happened is whatever headwind there might've been from tariffs counterfactually was offset by the buoyant CapEx spending, especially by the tech companies.

And the fact that the stock market is very optimistic on this story.

So that generates a wealth effect and an investment effect.

And then thirdly, US companies

uh absorbed more of the tariff hit in somewhat reduced margins and you know in the aggregate they did have that room profit margins have been very healthy and and they didn't pass it through the to the consumer and again of course we have the iepa decision the supreme court is about to uh release and that may further uh lead to lower adjust

Put it this way, I think if you calculate the tariff revenue we're collecting divided by imports, it's coming in at about 10%.

And Liberation Day was like 35%.

So that's sort of the order of magnitude.

Well, you know, we get paid to worry about it.

What we do observe, at least in the Treasury market, is the fact, which is really since the last Fed rate hike, which was two and a half years ago, 10-year Treasury yields have been in a pretty tight range, four and three quarters at the high end, three and three quarters at the low end.

Now, that...

Also, you also need to note that underlying real rates, which we can see from the inflation index bond market, are much higher than they were in 2019.

And so we're going to have a steeper yield curve than we did pre-pandemic, which is a good thing.

I think we're going to probably have elevated, somewhat elevated volatility relative to the decade before the pandemic in which rate volatility was suppressed through zero or negative.

Remember, at one point, I think in Europe, there was like $18 trillion of negative yielding sovereign debt.

So we do pay attention to it, but we think a lot of the repricing that needed to happen

because of the fiscal outlook, has basically already happened and is in the prize.

1991 is classic paper on game theory.

I just think we saw a little Waller game theory going on to say the least.