Williams describes unusual April 2025 dollar depreciation alongside rising Treasury yields and falling equities.
“Amid elevated uncertainty in U.S. trade policy last April, we observed unusual price action: the dollar depreciated while Treasury yields rose and equities declined.”
Williams estimates effective tariff rates at 15-20 percent, with receipts rising from 2.25 percent to 10 percent by July.
“By comparison, net tariff receipts as a share of imports rose from about 2-1/4 percent in the first three months of the year to around 10 percent in July.”
Williams expects trade and immigration policies combined with uncertainty to weigh on growth.
“But based on what the data tell us today, I expect the combined effects of trade and immigration policies and associated uncertainty to continue to weigh on growth.”
Williams notes unusual April 2025 dollar weakness alongside rising yields and falling equities, diverging from typical flight-to-quality patterns.
“This garnered attention from market participants as it diverged from the typical “flight to quality” flows observed during risk-off episodes, in which the dollar tends to appreciate and Treasury yields tend to fall.”