Investors could exit tariff purgatory only to enter a capital controls inferno
My latest opinion piece for Reuters is available online. It is a bit of a follow-up piece on my last one about the weakening dollar and whether this is a significant shift in global demand for dollars or just a rebalancing. It is also a bit of a ‘fear what you wish for’ note on what could happen if we get another panic reaction to tariffs, should Donald Trump decide to return to higher tariffs.
Investors could exit tariff purgatory only to enter a capital controls inferno: Klement
April 29 - Investors are currently in tariff purgatory, as they anxiously eye the end of the 90-day ceasefire in President Donald Trump global trade war. Tensions have eased in recent days, but if this pause expires with few substantial trade deals, markets could panic again, potentially forcing the U.S. to consider introducing capital controls.
Read the full piece here: https://www.reuters.com/markets/us/investors-could-exit-tariff-purgatory-only-enter-capital-controls-inferno-2025-04-29/
One comment only: convenience yield is not the same as credit quality - convenience yield is a service flow one gets from holding a safe and liquid asset. Markus Brunnermeier has a nice video where among other things he explains the distinction.