Since US President Donald Trump announced what he called “Liberation Day” on April 2, which is represented in imposing large customs duties on dozens of commercial partners, a currency began to move coinciding with American stocks, in an unusual scene indicating developments that go beyond direct commercial concerns, leading to questioning the stability of the US dollar itself.
In an analysis published by writer Aaron Brown at Bloomberg Agency, he indicated that the market movement has passed three main stages since the announcement of the fees.
- Initially, the fear of chaos in the market and global trade was pushing investors towards digital assets such as Bitcoin, while stocks retreated.
- Then, with increasing fears of stagnation A possible global, prices have decreased by a sharp decline, despite the stability of the shares.
- Finally, after Trump partially retracted the customs escalation on April 9, it returned to form and the shares of the rise, which reflects the weak confidence in the value of the dollar itself.
Unusual interconnectedness between composition and shares
Bloomberg and Coin Market Cap data indicated that the training and Standard & Poor’s 500 index have moved since the middle of last week with a remarkable similar pattern, indicating that investors are establishing various financial assets from one angle: concern about the dollar.
“When Trump returned, it seems that the investors – in the coded stocks and currencies – decided that the dollar has become less valuable, so the assets rented them increased together,” Braun wrote.
He adds: “This is not the issue of the consumer price index or the exchange rate of the dollar against other currencies, but rather the feeling of investors towards maintaining dollars compared to other assets such as stocks and bitch.”
The greatest danger … loss of confidence in the dollar
The writer believes that customs duties constitute a factor that limits the value of money compared to concrete assets. The Americans buy less with their dollars, and foreigners are also affected by the corresponding fees. The interventions that hinder the freedom of markets reduce the attractiveness of the dollar as a global reserve currency.
In this context, the report indicates that a half -point in the revenue of treasury bonds for ten years since the beginning of April reflects the decline in foreign demand for American assets.
This leads to an internal transformation of government financing, at the expense of private investments.
Create a mirror of economic fragility
Although composition is often considered a haven for investors in times of crisis, the risk of global recession makes them vulnerable to severe fluctuations.
In the second stage of the crisis, it decreased by forming a significant decrease despite the stability of the markets, which reflects the fragility of the global economy in the post -pandemic stage, especially with the raising interest rates and recession expectations.
According to the writer: “The fear that customs duties would not cause them to stagnate themselves, but rather it may be sufficient to push the fragile economy to stagnation and deepen it.”
What next?
Brown believes that customs drama may last for months, if not throughout Trump’s second state. The current delay has eased the possibilities of recession or major international clashes, but it did not address the root causes.
The writer warns that markets may interact more quickly and more severely in the coming times, with the conversion of the economy to politics.
He said: “Why do investors worry about long -term economic effects, while the policies themselves may change or cancel the next day?”
The writer notes that political, not economic volatility, may be the main engine of market fluctuations in the next stage, unless Trump changes his style of managing financial and commercial files.
