US stocks record highs, but economic outlook is unclear

After a tough start this year, U.S. stocks rebounded strongly, with interest rates still as always on the outlook for the world’s largest economy.

At present, economic modeling is very “very difficult” because “things are changing,” Atlanta President Rafael Postic told CNBC’s “Squawk Box Europe” on Monday, noting Canada’s recent walk to its digital service tax.

Market participants are also closely following the latest developments in U.S. President Donald Trump.Big, beautiful Bill“Which Critical obstacles to the Senate cleared over the weekend.

From an inflationary perspective, this means focusing on what businesses and consumers expect, and what actions they take to respond, Bostic continues.

“The story is that we’re really starting to hear clear signs of their expectation of price increases, but when the height of the event is still unclear,” he said.

More and more businesses are reporting that they may not reach the final strategy for tariffs until 2026, so their impact on growth and price increases may be much longer than I think many people would expect. ”

this The latest Fed “DOT episode”, The member’s expectations for rates show the various different prospects for the economy for the officials, and Postic said: “It really illustrates the uncertainty there.”

Fed Chair Jerome Powell Last Week Emphasize the need for monetary policy until The impact of tariffs on prices It was clarified, but the market then fixed their expectations within the lower Fed rate range. Data from CME Group’s FedWatch tool shows that by the end of this year, the probability of a one-third of the rate was reduced by 50%, and the probability of a greater 10% probability than the current 4.25%-4.45% is 3.25%-3.5%.

Gilles Moëc, chief economist at AXA Investment Managers Group, said on Monday that new interest rate expectations are a reaction to the latest round Trump’s attack on Powell. This once again raises the prospect of the U.S. president naming Powell’s successor in the near future to undermine his authority.

Trump has fiercely criticized the Fed’s interest rate, and his choice will support lowering even if most voters oppose it.

“Name the next president at the end of Powell’s term – achieving a much-published “Shadow Fed” scenario – could be a foreshadowing of lasting volatility and keeping foreign investors away from U.S. assets, Mott.

this S&P 500 closure High history Friday, returning from a low in early April, has dropped nearly 18% so far. The index records big fluctuations in the ongoing tariff story at the White House, with the latest chapter introducing Framework Trade Agreement Between the U.S. and China, this helped boost market sentiment last week.

USA Trade agreement with the UK Meanwhile, effective Monday, reducing tariffs on UK automotive and aerospace parts, but retaining a 10% benchmark responsibility on most commodities.

The two countries have not yet finalized an agreement on steel imports, Broader U.S. Steel Tariff Policy Keeping prices going up and getting frustrated elsewhere.

The White House still negotiates with many key trading partners, including Canada, the EU, Taiwan, Japan and India.

“At present, I think the market is very naive about what is happening in the trade side,” Bob Parker, a senior adviser to the International Capital Markets Association, told CNBC’s “Squawk Box Europe” on Monday.

“It’s easy for us to have a discussion at the end of the year, or it’s possible to enter 2026 because we all know that implementing a trade agreement is very complex and lengthy,” Parker said. “As we saw in Canada weekend, there is a great risk of a trade negotiation failure.”

He added that even The deadline for the agreement reached on July 9 has been extendedseveral incredible points could raise tariff levels.