Tariff Uncertainty Will Pass: Joseph Lavorgna

Joseph Lavorgna, chief US economist at SMBC Nikko Securities who was chief economist at the National Economic Council in Trump’s first administration, says the market turmoil over tariff uncertainty will pass soon as the president moves toward making with US trade partners.

Wall Street’s gyrations shook markets anew on Friday, with stocks wiping out losses to extend their best weekly gain since 2023. The rebound came after a selloff in longer-term Treasuries abated, following a few chaotic days that underscored fears foreign investors are beating a retreat from American assets.

Volatility shows little signs of easing as concerns that President Donald Trump’s fast-evolving trade policy is not only shaking the global economy, but threatening the US status as the world’s safe haven. The S&P 500 jumped about 1.5% on a report that a Federal Reserve official said the central bank is ready to help stabilize markets, if needed. US 30-year yields dropped, while still remaining higher by 45 basis points since last Friday.

“Markets remain emotionally charged,” said Mark Hackett at Nationwide. “Markets are still searching for footing amid unresolved trade tensions, earnings uncertainty, and macroeconomic headwinds. While this week’s gains are encouraging, they shouldn’t be mistaken for a clear turning point.”

Not since the Covid-19 pandemic has there been this little clarity on what the outlook for economies and earnings will look like, with China unleashing retaliatory measures and the US president pausing some levies only hours after they took effect. Investors should sell any stock rallies until the US and China de-escalate the trade war and the Fed steps in,  said Bank of America’s Michael Hartnett.

The Fed “would absolutely be prepared” to help stabilize financial markets if conditions become disorderly, Boston Fed President Susan Collins told the Financial Times. “Markets are continuing to function well” and “we’re not seeing liquidity concerns overall,” she said.

“Fed put in play. That should ease some anxiety for now,” said James St. Aubin, chief investment officer at Ocean Park. “The volatility itself is not a healthy sign. The sharp intraday rallies may seem comforting on the surface, but the whipsaws are a manifestation of overarching uncertainty.”

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