Kevin Hassett stated on CNBC that trade policy uncertainty is likely to be resolved by early April. He drew a parallel between this timeline and the resolution of the fentanyl crisis, suggesting progress in trade relations with Canada and Mexico.
He advised caution regarding recession discussions, predicting positive economic growth for the first quarter. Hassett mentioned that the current trade policy is beneficial, contributing to the rise in U.S. manufacturing jobs and signalled optimism about the overall health of the economy, noting declining 10-year yields. However, he acknowledged the decline of S&P 500 futures, which had fallen by 1.4%.
Economic Stability And Trade Relations
Hassett’s remarks imply that economic conditions may stabilise sooner than previously expected, with improvements in trade relations potentially easing uncertainties for businesses and investors alike. If his forecast holds, those engaged in markets sensitive to economic policy could find fewer unpredictable shifts ahead.
With recession fears often influencing sentiment, his perspective challenges notions of an approaching downturn. Growth in manufacturing employment supports an outlook of resilience, suggesting that broader economic activity has yet to stall. Lower 10-year yields reinforce this view, indicating expectations of continued monetary support or at least a lack of immediate tightening.
That said, the 1.4% fall in S&P 500 futures underscores persistent nervousness. Declines of this scale reflect shifting sentiment, often tied to concerns about valuations, liquidity, or geopolitical risks. If markets expected a swift return to stability, futures would likely show less volatility. While optimism over trade progress offers reassurance, recent price movements suggest not all investors share Hassett’s confidence.
Market Sentiment And Policy Impacts
In the weeks ahead, it will be important to assess whether incoming data aligns with Hassett’s predictions. If manufacturing jobs continue increasing and yields remain low, his stance will gain credibility. On the other hand, if growth figures disappoint or recession fears resurface in financial markets, it may indicate that his outlook was overly ambitious. Movements in futures will reveal whether traders believe stabilisation is near or if doubts persist.
Given the volatility, a measured approach remains key. Policy developments could shift expectations swiftly, and any unexpected changes in trade negotiations may lead to further adjustments in sentiment. If markets accept Hassett’s view, optimism may return, but a divergence between economic data and market reaction would suggest caution is warranted. Close monitoring of yield trends and futures activity will provide better insight into whether the recovery he envisions is materialising.
