Global markets: Investors continue to flee the U.S. as analysts predict tariff-induced recession
Stock trading was thin over the Easter weekend as many global markets were closed for Good Friday and Easter Monday. But there was one obvious indicator of sentiment regarding the U.S. economy: The weakening dollar.
This year, the dollar has lost nearly 10% of its value against the DXY, an index of commonly traded foreign currencies, as investors pull away from U.S. economic uncertainty. The dollar has lost 9% of its value vs the British pound and 8% against the euro, year-to-date.
A big part of the dollar's losses come from the fear that the Trump Administration will take political control of the Fed. "U.S. National Economic Council Director Hassett said U.S. President Trump was investigating whether they could fire Federal Reserve Chair Powell. Investors seem less than happy with the idea of a politicized Fed—the US dollar and long-dated government bonds have weakened," wrote UBS's Paul Donovan in a note to clients this morning.
Mainland China's CSI 300 rose 0.3% Monday, in contrast will broad premarket drops in U.S. indexes.
Investors pulled their money out of U.S. assets after China threatened to retaliate against countries that made trade deals with the U.S. that hurt Chinese interests, deepening worries that the Trump administration's tariffs will unleash a full global trade war.
“China is determined and capable of safeguarding its own rights and interests," China's Commerce Ministry said in a statement .