Soft Landing Still in Sight Despite Market Stagflation Fears, Says StoneX’s Rooney Vera

Key takeaways

• GDP growth is in line with potential and unemployment remains below the neutral rate, Rooney Vera says
• Still-high term premiums after the Liberation Day market scare in April with tariff revenues and trade deals are making institutional investors consider more than short term paper
• Political risks abound but there are opportunities in Latin America

Growth Cooldown, Not Crisis

Kathryn Rooney Vera doesn’t see “stagflation” yet although it is the new media darling catch phase. Speaking with Bloomberg Markets, the StoneX Head of Global Macro Strategy said the economy is losing some heat but still on track for a softer landing.

The numbers back her up, she argued. GDP growth is in line with potential, according to IMF revisions, and unemployment remains below the neutral rate she sees as inflationary. “I’m not at the point [of] call[ing] it stagflation,” she said, noting valuations remain just above her target but supported by the data.

Tariffs and Bonds Take Center Stage

Inflation remains on her watchlist. Economists had expected tariffs to push prices higher by late summer, but so far, that hasn’t happened. “The net drag on growth and inflation is less than markets feared,” she said, adding that tariffs are generating roughly $300 billion in 12 month run rate revenues.

Strains on the Consumer

Markets may feel calmer, but households are still under pressure. Rooney Vera described housing as “completely unaffordable,” in part due to inordinate government issuance pressuring the market and crowding out the private sector. She also flagged rising delinquencies across auto loans, student loans, and other forms of consumer debt.

“It’s not smooth sailing,” she warned. “Complacency is creeping back in, but the risks haven’t gone away.”

Political Risks Hit Colombia, Brazil Still Attractive Despite Trade Tensions

Political headlines in Colombia – including the assassination of a senator and presidential hopeful who spent months in critical care – have hit investor appetite for that country’s debt. Rooney Vera said security risks, compounded by the conviction of a former president, are weighing heavily on demand for Colombian assets.

Brazil and Mexico, she noted, are different stories. Brazil is benefiting from global trade shifts, while Mexico’s economy remains closely tied to the U.S. She expects the U.S. and Brazil will eventually reach a trade deal, especially if political change brings a more market-friendly administration. She also pointed out that while the U.S. has lost ground to China as Brazil’s top trade partner, it remains an important market.

“If you’re looking at emerging markets,” she said, “Brazil and Mexico deserve attention.”

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--- Written by: Andy Catsimanes

--- Expert: Kathryn Rooney Vera, StoneX Chief Market Strategist

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