President Donald Trump has renewed his defense of tariffs, claiming they are creating “great wealth” for the United States. However, market odds show investors still expect no near-term Fed rate cuts.
Tariff Optimism Meets Cautious Market Sentiment
Trump posted the statement on Truth Social, linking tariffs to stronger national security and improved economic performance. He also said the trade deficit has dropped sharply and that the economy is growing without inflation pressure.
Trump presented tariffs as a benefit to the economy of the country. His reasoning was that there is an increase in growth, economic confidence is picking up, and the United States is being respected once again in the world arena.
His statement follows a period where economic expectations keep defining financial market sentiment. Similar news also established that the U.S. government is planning to make new changes to the Trump tariff structure.
Based on market information, the mood is different. Polymarket odds of the January Federal Reserve decision showed a 14% chance of a rate cut. The chart indicates an 85% probability of the traders that the rates will not increase at the next meeting. With the odds of the deeper cuts being very low, it is an indication of caution than optimism.
Polymarket traders increasingly price in a no-change January Fed decision.Will Market Mood Influence Tariff Hopes?
Trade and output seem to be a win for Trump, but inflation risks and economic uncertainty seem to be high on the agenda of investors. Earlier on, the same kind of reaction occurred, as the crypto market shot up when Trump announced a $2,000 dividend tariff for eligible American citizens.
According to market expectations, the cost of borrowing will remain high in the long-run. This perception is an indication of the worries on cost stability and declining global economic growth.
The mismatch between the message Trump was communicating and the mood in the market is crucial. The themes highlighted in his statement are policy confidence and economic recovery. The market odds indicates that the policymakers and traders are still more interested in ease of financial conditions.
Analysts consider the expectation of rate-cuts as a real-time gauge of economic trust. Reduced odds of cuts can mean an assurance that inflation is under control. But, it can also mean that there are concerns about the stability of the economy. However, the present perspective is more pessimistic than optimistic.
Source: https://coingape.com/trump-says-tariffs-create-great-wealth-rate-cut-odds-collapse/
