In this note, we take stock of the Supreme Court’s tariffs ruling and assess its near-termmacro and market ramifications.
MACRO – Assuming that 1) the IEEPA-Section 122 tariff swap will be fiscal-and trade-neutral and, 2) the market will refrain, for now, from front-running what might unfold once Section 122 tariffs expire, we do not expect the ruling to have a meaningful impact on our current macro baseline. Given the uncertainty, though, we will continue to monitor the situation and update it as needed. The first checkpoint will be at the end of March when fiscal data for March will provide preliminary evidence on whether the new tariff architecture will bring any fiscal slippage compared with the pre-ruling market baseline. In subsequent research, we will provide macro and market scenarios based on what could happen once Section 122 tariffs expire, as, by then, President Trump’s trade agenda will be on a collision course with the midterm elections.
RATES – We remain NEUTRAL but tactically lower the accumulation bar amid a slightly more constructive stance; strategically, the outlook continues to be uncertain and clouded by risks of fiscal slippage and economic overheating.
USD – Both our tactical (NEUTRAL) and strategic (SHORT) stances are unchanged. Yet, while more evidence is needed, we take the orderly response of President Trump to the ruling as a further sign that the political risk premium might be close to its peak, suggesting that a more constructive stance should not be ruled out going forward.
EQUITY – The Court’s decision is positive for companies’ profitability. Still, it brings increased uncertainty about possible future moves by the US administration. Given these risks, we maintain a tactical NEUTRAL stance and remain strategically OVERWEIGHT and buy the dips.
Fabio Fois
Head of Investment Research & Advisory
Chiara Cremonesi
Senior Rates Strategist
Investment Research
Cosimo Recchia
Senior Equity Strategist
Investment Research
Matteo Gallone
Junior Macroeconomist
Investment Research
Francesco Ponzano
Junior Equity Strategist
Investment Research
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