scroll

USA and INFLATION

Advanced Search

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

Ask a question

The Latest Q&A

Question asked 05/07/2025

USA and INFLATION

Good Afternoon, I hope I'm not too late. Another general question if I may. "Trump’s ‘Big Beautiful Bill’ could trigger most inflationary era in half a century. The United States is careening toward what may be the most inflationary policy era in over 50 years, writes Nigel Green." Are the markets getting it wrong or the analysts? I think I'm getting some of Trumps "yips".

Answer

Hi David,

Trump may trigger inflation through his tax bill or tariffs, or both but while that is bad for bonds (yields/rates higher), its not necessary bad for all stocks/sectors.

Rate sensitive and growth like tech usually struggle with high inflation.
Stocks with real assets &/or exposure to commodities generally perform better.

We can speculate about the likely impacts, and Jerome Powell from the Fed has flagged these risks, but as we’ve seen in markets recently, many predictions around such things are hard to make ahead of time, and we think it’s best to take a wait and see approach to the data, and then make portfolio decisions on the back of that, rather than via speculation that is not based on evidence of even a clear understanding of rates and application of policies at this stage.

Latest Reports

Weekend report 26/07/2025

CORRECTWeekend Q&A: The ASX200 is feeling “soft” as we approach August & September

The ASX200 slipped 1% last week, eroding 40% of July's gains as the RBA took the shine off the local market even as global indices pushed to fresh highs, i.e. the US S&P 500 advanced +1.5% last week. The S&P 500 notched its 5th straight record weekly closing high, courtesy of more than 80% of the 169 S&P 500 companies that have reported to date have beaten Wall Street’s expectations. In Australia, it's been a more mixed and polarised affair on the reporting front, but with the “Big Four Banks” retreating on average close to 4% the ASX was always going to struggle to match its overseas peers.

Afternoon report 25/07/2025

The Match Out: Stocks end the week lower; Resources join Banks in the sell-off

The ASX put in a weaker session seeing sustained selling through the day, as softer iron ore prices weighed on the materials space. With heavyweight resources and the big banks down, the index was fighting a losing battle from start to finish, though we still managed to close higher for the week.