Equity Research

Fed officials have recently highlighted the risks from tariffs to both sides of their mandate and said that they intend to wait for further clarity. We expect Chair Powell to repeat that message at the May FOMC meeting this week. While the FOMC appears to be setting a higher bar for rate cuts than during the 2019 trade war, we do not think that high inflation would deter it from cutting if the unemployment rate begins to trend higher as the tariff shock hits the economy.

NTD appreciated 6% vs. USD since May 1st, and 10% since the end of Mar. Given Taiwan lifers' large holding of USD-denominated assets, especially US bonds, and their asset/liability mismatch, investors have raised questions on the impacts of the FX move for life insures. In this note, we address the key investor questions on Taiwan lifers' exposure to FX movements.