A rebound in Wall Street and in the dollar has not dissipated investors’ concerns about the ability of US assets to overcome foreign markets, with a new tariff save that affects the optimism of the market again after a series of commercial agreements achieved by the Trump government encouraged the confidence that the actions establish historical maximums.
The fall of the dollar, which has dropped around 8% this year in front of an important basket, and the growing fiscal deficit are shaking the conviction that the financial markets of the United States will offer higher yields to the world.
For more than a decade, the concept of “American exceptionalism” – the conviction that the democratic system of the United States more its huge and liquid capital markets offer unique rewards – has been little questioned by investors.
But the current uncertainty about tariffs is shaking trust. Although the agreements reached by Donald Trump with the European Union, Japan and South Korea have provided some relief, the president of the United States imposed elevated tariffs on Thursday night to dozens of commercial partners.
A shaking of the market earlier this year caused by the first Trump tariff ads caused a reevaluation. The position of the US market seems “a bit bruised,” said Lori Heinel, global director of State Street Global Advisors.
“Excess debt (government) makes it less attractive to have dollars based on dollars,” he added.
In a survey conducted at the end of May and June, the Coradata Market Research Consultant found that many institutional investors and consultants, who collectively supervise 4.9 billion dollars in assets, are reducing exposure to the US among respondents, 47% are cutting their long -term strategic assignments to US markets.
While investors have become more optimistic about the prospects for Europe, as well as for China and other emerging markets, optimism towards US markets is now lagged with respect to those regions. That, said Michael Morley, Chierting Us, a “massive change” of the attitudes of two years ago.
The last wave of tariff exports of dozens of commercial partners, including Canada, Brazil, India and Taiwan, made global markets fall on Friday.
The announced tariffs were “something worse than expected,” said Société analysts Générale in a note.
“The markets responded more negatively to the announcement of August 1 than to other news in the last two months, but the reaction was much less severe than April 2,” they said.
Investors began to reconsider their assignments after the tariff announcement of Trump’s “Day of Liberation” on April 2, reevaluating the attractiveness of the “USA” and worrying about a new recession.
Then, the Trump administration arrested tariff releases and subsequently began announcing agreements that limit tariffs to lower levels of what is initially proposed. The shares were recovered, with the S&P 500 that shot 27.2% from its closing of April 8 until its end of July 31, establishing a series of new records.
Core, however, found that 49% of institutions believe that markets are now too complicating with the impact of US tariffs.
You may be interested: Wall Street opens in red, weighed by Trump tariff changes and unemployment increase
No matter the Wall Street records, investors rethink the supremacy of the US market
The United States consumer prices increased more in five months in June, according to consumer price index data, suggesting that tariffs are promoting inflation. Other data point to a moderation in economic activity, and the growth of the second quarter was mainly strong because imports were weak.
Global MAN Group Asset Administrator, which manages approximately 193 billion dollars, distrusts American assets.
“This is an opportunity for investors to take some profits, rebalance and become neutral in the United States,” said Kristina Hooper, Estratega Mercado Chief of Man Group.
The status of the dollar as a global reserve currency may be in doubt as the United States loses the role of facilitator of free trade, said Thierry Wizman, a global currency strategist and rates of Macquarie Group, and added that the firm hopes to sell the dollar in any rebound.
After suffering its worst performance in the first semester since 1973 this year, the dollar registered its first monthly profits by 2025 in July, since investors regained confidence following the commercial agreements.
It also contributes to the reassessment of the supremacy of the US market the risk of monetary policy being politicized. Trump has repeatedly requested lower interest rates and threatened to dismiss the president of the Federal Reserve, Jerome Powell.
Meanwhile, a recently approved tax and expenses bill will add billions to government debt, exacerbating concerns about the long -standing deficit. Inverters are likely to respond seeking greater compensation for the risk of having long -term treasure values
“There is a very real risk that yields increase significantly due to the deficit,” said Hooper of Man Group.
For many, the buoyant EU stock market and the optimism surrounding the US technological sector have made it difficult to become bassist.
“The conclusion is that the United States has some of the most innovable and profitable companies in the world, and the deepest capital markets,” said Kelly Kowalski, head of Mass Mutual investment strategy. The anxiety for the disappearance of the preeminence of the United States is “exaggerated,” he said.
Concerns about a weaker external demand for US debt have decreased in recent weeks. After selling 40.8 billion net dollars in Treasury bonds in April, foreigners resumed purchases worth $ 146,000 million in May, according to the latest government data.
In addition, although European actions easily exceeded their US counterparts in March, that gap has been reduced with each new commercial agreement announced. At the end of July, the Stoxx 600 in Europe was more or less elbow with the S&P 500.
“The big factor in the room has nothing to do with policies, but with technology,” said Richard Lightburn, deputy investor director of the MKP MKP Capital Management Coverage Fund. “It still feels like an early entrance for the adoption and integration of AI.”
Anthony Saglimbene, Estratega Head of the Amerprise Financial Market, continues to recommend a slight overflowing of US actions in relation to other world markets. “Call it ‘exceptionalism’ or simply ‘clarity’. The macroeconomic environment in the United States is comparatively more stable.”
With Reuters information.
Subscribe to our YouTube channel and do not miss our content
