Archive

May 20, 2025
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Trump Doctrine: All Talk And No Trousers

  • Despite the frenetic activity in the international arena that we have seen from the US in recent weeks, whether in trade or diplomacy, showmanship continues to trump substance, thereby posing real risks for policymakers and investors alike.

By Alastair Newton

May 14, 2025
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USD Bears Broke The Bandwagon

  • Investors ask whether threats to the USD’s reserve currency status are resting or dead, whereas we wonder if it was ever alive. Commentators routinely overextend narratives.
  • The USD share of allocated FX reserves is already trending downward. A potential acceleration from smaller deficits and higher tariffs would partly offset the impact.
  • Fuller hedging of USD asset holdings abroad may have already reached its limit. We still see more attractive mispricing elsewhere, such as excessively dovish rate curves.

By Philip Rush

April 14, 2025
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US Tariffs: Of Words And Bonds

  • Although Donald Trump’s U-turn may allow time for the conclusion of bilateral trade negotiations with some US partners, neither China nor the EU is likely to strike an agreement imminently, especially now that America’s vulnerability to the bond market has become all too clear.

By Alastair Newton

April 03, 2025
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US Tariff Impact Estimates

  • New US tariffs ignored any notion of reciprocity, reaching shockingly substantial sizes. However, the UK was relatively fortunate in landing on the 10% minimum rate.
  • Repeating 2024’s imports would raise $577bn in tariff revenue, which is worth ~3% of consumption. 70% pass-through to prices would add 2% to the level over 1-2 years.
  • Negotiations need to conclude rapidly to avoid these front-loaded price rises. The EU’s likely retaliations would magnify its pain, but the US is the biggest stagflationary loser.

By Philip Rush

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