Investors and economists have suddenly come around to Jay Powell’s wait-and-see stance on interest rates.Credit…Brendan Smialowski/Agence France-Presse — Getty Images

Vindication?

In the span of 24 hours, the “buy America” trade is back on and the odds of a U.S. recession have dipped. And pressure on the Fed to cut interest rates has abated despite the uncertainty surrounding Tuesday’s Consumer Price Index report.

That has made Jay Powell one of the biggest beneficiaries from Monday’s U.S.-China tariff truce. The Fed chief may feel vindicated for holding steady on borrowing costs even as Wall Street second-guessed him and President Trump called him a “fool” for refusing to cut.

The markets have come around to the Fed’s thinking. Futures traders now see roughly two cuts this year. That’s down from five on April 7 and in line with the central bank’s March forecast that market watchers had widely questioned. Some economists see even fewer, especially with resurgent signs of inflation.

While many investors worry that Trump’s tariffs on Chinese imports may stick, the pause signals that such duties won’t be cripplingly high — and that the Fed won’t be forced to cut rates in an effort to bolster the economy.

At a U.S.-Saudi investment conference in Riyadh on Tuesday, Treasury Secretary Scott Bessent said there was momentum for forging more trade deals, including with Indonesia, South Korea and Taiwan. “At the end of the day, we will reach a satisfactory conclusion,” he said, adding that it could take longer to reach an accord with the European Union.

That said, companies aren’t taking their chances. They have begun frantically rushing their orders from China to take advantage of the temporary tariffs relief. “Ninety days is not a long runway for people in our business,” Gene Seroka, the executive director of the Port of Los Angeles, told The Times.