Has Trump Headwind Eased? Wall Street Remains Skeptical: Continuing to Bet Against the Dollar and U.S. Stocks

TradingKey - A major reversal in U.S. President Donald Trump’s stance on high tariffs and his threat to fire Federal Reserve Chair Jerome Powell has slightly eased the "triple rout" of stocks, bonds, and the dollar. However, Wall Street remains unconvinced that confidence in the dollar has been restored: analysts continue to bet against the dollar and U.S. equities.

Following Trump’s announcement of significant tariff reductions on China and his statement that he does not intend to dismiss Powell, the S&P 500 rebounded by 1.67% on April 23, while the dollar index approached 100, and the 10-year Treasury yield declined.

However, this may not yet be the time to become more optimistic or to start buying dollar assets.

IG analysts noted, “I don't think you can ever get used to the sorts of haphazard and flip-flopping that we've seen. It's extreme.”

Jefferies Financial Group analysts stated that the golden era for U.S. equities has passed, and investors should prepare for further declines in U.S. stocks, bonds, and the dollar.

The firm explained that this is not just about the chaos caused by erratic tariff policies or the waning era of American exceptionalism leading to a potential U.S. economic slowdown. It also coincides with the rise of Europe, China, and India, which investors may consider when rebalancing their portfolios toward these markets.

Even as the dollar index rebounded over two days, institutions like Nomura Securities still believe that the dollar is likely to weaken in the long term.

Analysts at National Australia Bank (NAB) said that this week’s rebound in the dollar merely reflects a reduction in speculative short positions due to the news of Powell’s job security and some tariff reductions. This does not alter the market’s overall negative view of the dollar.

A Deutsche Bank report released on April 23 indicated that the dollar’s bull market has ended, and a prolonged bear market lies ahead. The reasons cited include declining global willingness to finance America’s twin deficits, peaking holdings of U.S. assets, and a growing preference among countries to use domestic fiscal space to support growth instead of relying on U.S. assets.