'Bad news for Americans': New report flags 'early casualty' of Trump term
Investors are abandoning the dollar, according to Washington Post financial reporter David J. Lynch.
The dollar has lost nearly 10 percent of its value since President Donald Trump's inauguration, the Tuesday report said. About half of that decline came this month as Trump proceeded with his tariff plan.
"The weaker dollar — now near a three-year low against the euro — is bad news for Americans traveling abroad and could also aggravate inflation by making foreign goods more expensive. U.S. exporters, however, should gain," wrote Lynch.
Countries implementing tariffs typically see their currency value increase, but Trump's rollout was so sloppy it "left investors doubting the administration’s competence," he said.
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David Page, head of macro research for Axa Investment Managers in London, manages $1 trillion in investments. Speaking to Lynch, he said, “The administration’s approach to policy and its lack of transparency in terms of motivations have all led to a distinct sense of unease in financial markets. It doesn’t look like what we have been used to in terms of well-thought-out policy.”
Concerns like those sent investors racing away from U.S. securities and the dollar, Lynch wrote.
"Investors typically rush to buy ultrasafe Treasurys during a crisis, pushing their prices up and yields (which move opposite bond prices) down. Instead, at one point on Friday, the rate on the 30-year bond approached 5 percent, up from 4.4 percent one week earlier," said Lynch.
The dollar dropped simultaneously.
Some forecasters predict the U.S. economy "will nearly stall or slip into recession over Trump's tariffs," USA Today reported Monday.
Lynch noted that economists believe the widespread tariffs made a recession more likely, "which could hurt stock prices and prompt the Federal Reserve to cut interest rates."
He closed by saying it would make investing in the U.S. dollar "less appealing."