On Monday, the dollar index reached 99.6, marking its lowest point in three years. This decline resulted from continuous adjustments to the extensive tariff measures imposed by U.S. President Trump, causing both domestic and international investors to sell off dollar-dominated assets. Although the President temporarily exempted computers and consumer electronics from the latest set of reciprocal tariffs, he cautioned that new duties on these electronics and semiconductors are imminent.
The volatility in trade policy mirrors previous instances where the White House initially enforced stringent trade levies, only to later reconsider, thereby posing threats to crucial U.S. industry supply chains. This uncertainty prompted global investors to offload their U.S. asset holdings, causing equity sell-offs and a sharp drop in Treasury securities, which subsequently led to the tightening of swap spreads. Additionally, on the policy side, lower-than-anticipated consumer and producer price inflation figures have reinforced the forecast that the Federal Reserve will implement several interest rate cuts this year.
