Global Macro

As a result of the punitive reciprocal tariffs announced on “Liberation Day’, we have downgraded US GDP growth forecast this year from 1.8% to 1.0%. The probability of a recession in the US is now raised to 40%, from 20 to 25% previously. Consequently, we now see the Fed making 3 x 25 bps cuts this year (from 1 x 25 bps cut previously), dropping the Fed Funds Rate to 3.75% (upper) by the end of the year. Uncertainty surrounding US trade and other policies remain exceptionally high.