Unresolved questions over tariffs are keeping the outlook for interest rates and the global economy in flux, even as stocks and bonds show relative resilience against macro volatility. A US federal appeals court paused a ruling that invalidated the Trump administration’s April 2 tariffs last week, and negotiations over those trade duties are running up against a self-imposed deadline in early July. Facing tariff headwinds, the global economy will grow this year at its slowest pace since the pandemic, according to updated forecasts from the OECD. Sluggish growth and tame inflation prompted the European Central Bank to cut rates for a seventh straight meeting on Thursday. The Federal Reserve remains in a holding pattern, as officials measure the evolving risks to price stability and the labor market. In public remarks on Tuesday, Chicago Fed President Austan Goolsbee said he believes the central bank remains on course to lower rates if tariffs are ultimately less severe than initially thought. “If we can get past this bumpy period, the dual mandate looks pretty good,” he said.

Investors received mixed readings on US hiring this week. Job openings unexpectedly rose to 7.4 million by the end of April, according to the Labor Department. Yet payroll processor ADP said Wednesday the private sector filled only 37,000 new jobs in May, the lowest figure in more than two years. With the official labor report coming Friday, economists anticipate that jobs growth eased to 125,000 in May from 177,000 a month earlier. PGIM Fixed Income’s Weekly View from the Desk assesses productivity factors in the outlook for economic growth, the possibility of Fed cuts this year, and near-term market implications from perceived downside risks.