Bloomberg Surveillance De-Dollarization and Equity Concerns amid US-China Trade War
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Apr 11, 2025 
Savita Subramanian, Head of US Equity & Quant Strategy at Bank of America, shares expert insights on the inflation outlook and equity markets as tensions rise in the US-China trade war. She highlights an unexpected slowdown in inflation due to declining costs in several sectors, counterbalanced by concerns about tariff impacts on future rates. Their discussion encompasses strategies adapting to these shifts, emphasizing the necessity for investors to navigate the evolving landscape skillfully.
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Dollar Funding and Tariffs
- Higher U.S. tariff rates impact global dollar funding, as exporters might not receive dollar receipts.
- Record Q1 imports in America provide a healthier dollar cash pile for exporters, offering temporary relief.
China's Role in Treasury Swings
- It's difficult to confirm China's involvement in treasury swings without month-end data.
- However, central banks facing currency pressures often sell U.S. treasuries, which could explain some market activity.
Declining Dollar and Rate Cuts
- The declining dollar may allow Asian central banks more flexibility to cut rates.
- The trade war will likely cause a significant growth shock to both the U.S. and the rest of the world.