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JPMorgan still forecasts economy to contract even as tariff bite decreases - MarketWatch

1. New tariffs reaching 125% may deter purchases from China significantly. 2. JPMorgan forecasts a potential contraction in economic activity later this year. 3. Effective U.S. tariff rates may range from 12% to mid-20% depending on Chinese imports. 4. Fed delays rate cut expectations to September, impacting market sentiments. 5. ES00 futures indicate potential losses after a prior rally.

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FAQ

Why Bearish?

The increase in tariffs, particularly punitive rates, could negatively impact consumer spending and economic activity, reminiscent of prior trade tensions that led to market pullbacks.

How important is it?

With trade policies impacting consumer behavior and potential interest rate decisions, there's a significant correlation with market movements.

Why Short Term?

The immediate market reaction is evident with ES00 futures down; these effects may stabilize as the Fed responds.

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