The July 2025 CAPIS Monthly Research Briefing featured insights from Markets Policy Partners (MPP), with co-founders John Fagan and Brendan Walsh unpacking current macroeconomic trends, tariff developments, Federal Reserve policy, and international dynamics. Read on for a recap of key moments from the conversation.
U.S. Trade Policy and Global Tariff Tensions
00:00 – Introduction and Overview
Ed O’Dowd introduces Markets Policy Partners and sets the stage for a timely discussion amid rising geopolitical and economic uncertainty. John Fagan previews a “hot summer for macro,” noting heightened unpredictability under the current administration.
02:32 – Tariffs on Mexico, EU, Canada and Copper Imports
Brendan Walsh outlines sweeping new tariffs set to take effect August 1, including:
- 30% tariffs on imports from Mexico and the EU
- 35% tariffs on Canadian imports
- A new 50% tariff on copper, aimed at boosting domestic manufacturing
He also details stalled progress with Japan and South Korea and the looming 2026 expiration of the U.S.-Mexico-Canada trade deal.
06:03 – China’s Leverage and Semiconductor Diplomacy
John Fagan explains China’s slow-roll negotiation approach, leveraging dominance in rare earth minerals and pushing back on U.S. restrictions around semiconductors. The prospect of a Trump–Xi meeting later in the year could signal a shift in U.S. trade posture toward concessions over confrontation.
Fed Policy, Rate Expectations and Political Pressures
09:52 – A Wait-and-See Fed Amid Conflicting Data
Brendan notes the Fed’s reluctance to act hastily as the CPI shows modest pass-through of tariff costs, while the PPI remains an unreliable gauge due to its domestic-only scope. The economy remains stable, but housing softness and political noise are increasing pressure.
11:40 – Market Rate Cut Expectations and MPP’s Outlook
John highlights how fed funds futures are pricing in two rate cuts for 2025. However, MPP expects only one—or none—by year’s end, citing continued economic resilience, high uncertainty, and inflation still above the Fed’s target.
14:08 – Housing Market as a Political Lever
Discussion turns to political pressure from housing-focused voices within the administration and on social media. Despite housing drag, broad-based economic strength argues against aggressive cuts.
Fed Independence, Fed Chair Powell and Political Strategy
16:50 – Can Trump Fire Powell?
Brendan and John discuss the legal and market implications of removing Fed Chair Powell. While the president can technically remove the chair for just cause, doing so could backfire politically and financially, spooking bond markets and damaging confidence in Fed independence.
22:00 – Budget and Legislative Outlook
With reconciliation and rescission tools in play, the administration is pushing for modest fiscal changes. A stablecoin bill is facing legislative hurdles. Tariffs and trade remain the primary focus for the summer.
Global Macro Trends: China, Europe and Japan
24:59 – International Outlook and Investment Implications
John offers a comparative global view:
- China: Muted growth and limited stimulus, but second-half concessions from the U.S. could create equity upside
- Europe: Tariff pressure has unified the bloc, prompting fiscal stimulus and potential market outperformance
- Japan: The yen remains weak and the BOJ unlikely to hike rates meaningfully, limiting enthusiasm for Japanese markets
Inflation, Interest Rates and Consumer Resilience
30:31 – Inflation Control as the Fed’s Top Priority
Audience questions focus on the Fed’s inflation mandate. MPP emphasizes that inflation uncertainty and tariff risk justify a cautious rate stance. If companies absorb tariff costs, the Fed can cut later—but not prematurely.
33:49 – Dry Powder in Consumer Lending
Discussion turns to how most homeowners and consumers are insulated from current rate levels due to refinancing during the pandemic. Lower rates in the future could unlock significant demand for borrowing in autos, housing and beyond.
35:13 – Final Thoughts and Next Market Research Briefing
Ed wraps up the call, inviting clients to connect directly with MPP and announcing the August guest: Katie Stockton of Fairlead Strategies.
Watch the full July 2025 Market Research Briefing (featuring Markets Policy Partners’ John Fagan and Brendan Walsh) below.