Insights 
VT 
Chicago Fed President Austin Goolsbee observed the impact of tariffs has been less severe than initially expected. He compared these tariffs to oil shocks, suggesting stagflationary implications.
The muted effects of tariffs are attributed to their lower levels and certain exemptions. Goolsbee expressed concern over the current state of uncertainty, stressing the importance of monitoring soft economic data during this transitional period.
Interest Rate Signals
He concluded that there is no definitive signal concerning changes in interest rates at present.
Goolsbee’s remarks hint at a broader dynamic playing out beneath the more visible headlines of policy shifts and macro data. When he draws a parallel between import duties and prior oil shocks, the concern is not strictly about inflation, nor about growth, but a discomforting blend of both pressures appearing at once. That particular comparison—one rooted in the 1970s—comes with historical baggage that markets tend not to enjoy, namely the fear of stagnating output paired with steadily rising prices.
However, it’s clear that things haven’t followed that exact script so far. What we’re seeing is tariffs that are relatively restrained by international standards and contain enough carve-outs to blunt their bite. It’s one thing to implement duties for strategic purposes; it’s another to keep them as low-key as they currently are from a macro perspective. The fallout, so far, appears manageable.
The Need for Caution
But make no mistake—this isn’t a signal to sit back comfortably. The emphasis on soft data, especially at a time like this, is telling. These indicators—think surveys, confidence metrics, sentiment readings—tend to capture shifts in mood and expectation before they turn up in harder data like GDP or consumption. When these measures start slipping or rising steadily, they often queue up the next move in policy or price movement.
The absence of an explicit message on rates shouldn’t be treated as indifference from policymakers. Quite the opposite. It likely reflects the degree to which they themselves are weighing incomplete signals. There is hesitation—not from a lack of conviction—but from a deliberate effort to avoid overcorrecting into a trend that’s still unconfirmed.
For those of us parsing short-term momentum and managing longer-dated tail scenarios, the implications are pretty direct. Patience here becomes a method, not a posture. Volatility pricing may not fully account for shocks triggered by sentiment realignment. That’s something that doesn’t always trend but can switch on quickly. It may be prudent not to assume stability in correlations between macro data and price action.
We might start adjusting term structures in tandem with revised expectations rather than waiting for confirmation via policy moves themselves. Anticipatory pricing often outpaces policymaker statements during transition periods. Especially now, there’s an unusually wide gap between hard data and forward-looking expectations. Being too slow to recalibrate exposure could carry a cost. It may be better to observe how short-end instruments respond to every deviation in survey data, rather than waiting for top-line figures that are less timely.
Remember, even if fundamentals remain solid for now, forward volatility is almost never priced in line with risk-based headlines—especially when central bank communications themselves tilt toward ambiguity. Watching how pricing moves with sentiment will likely tell us more than waiting for speeches or minutes. There’s no need to rush, but there’s equally no room for autopilot.
