Daily Commentary

MarketMinder’s View: “De-dollarization” as described here means the world “cutting its reliance on the greenback, with the share of the dollar in global foreign exchange reserves declining from over 70% in 2000 to 57.8% in 2024. More recently, the greenback also saw a steep selloff this year, particularly in April, following uncertainty around U.S. policymaking. Since the start of the year, the dollar index has weakened by over 8%.” Handwringing over currency strength/weakness aside, the reason de-dollarization is a false fear: The US continues to make goods (or offer services) the world wants to buy. This includes financial services and assets. As an economist here says: “No other currency holds the same liquidity, depth of bond and credit market as the dollar, so it’s more a matter of a reduction in its reserve appeal, rather than losing its throne.” And as the article also notes, “the greenback’s use in trade and invoicing remains paramount in spite of the reduction in U.S. dollar exposure. As of April this year, more than half of global trade is still invoiced in dollar terms.” No one is forcing the rest of the world to use dollars! When it comes to foreign exchange, people are free to choose the currency that makes most sense to them. All the attention and headlines now signal more about how dour sentiment is at the moment than anything fundamentally earthshattering occurring. For more on de-dollarization from the last go around, please see our May 2023 commentary, “Deep Dive: Why We Think De-Dollarization Fears Are Faulty Logic.”

MarketMinder’s View: Please note, this inflation coverage mentions several specific companies, and MarketMinder doesn’t make individual security recommendations. Our focus is on the broader theme. As the headline implies here, widely feared tariff-induced inflation has yet to arrive—reality is turning out better than expected. Both headline and core (excluding food & energy) CPI rose 0.1% m/m in May, below consensus estimates. While year-over-year rates (2.4% and 2.8%, respectively) are running over 2%, CPI less shelter—mostly imaginary rent—was 1.5% (per FactSet). The actual prices people see economywide are cooling overall. Now, that doesn’t mean tariffs aren’t affecting businesses. As this article surmises, this is “perhaps because the most punitive levies have temporarily been on pause, or thanks to companies so far absorbing the extra costs or boosting inventory ahead of tariffs. However, if higher tariffs set in, shielding consumers from those costs will become more difficult, which is partly why economists expect firms to raise prices more meaningfully in the coming months.” That explains wary ongoing sentiment, but higher tariffs aren’t foreordained or even likely to fuel actual hot inflation, as today’s commentary explains, suggesting room for reality to improve more than most appreciate.

MarketMinder’s View: A plan for a plan is what the latest US-China trade “deal” amounts to, leaving investors little wiser than a month ago. For those keeping score, this keeps the Trump administration with 2 partial deals (the other with the UK) so far—a tiny bit short of its goal of 90 in 90 days. As this article relates: “Late Tuesday night, both sides said they’d agreed to a framework to actually implement what was originally agreed in Geneva ... [President Donald] Trump, in a Truth Social post Wednesday morning, said the U.S. would have 55% tariffs on China, while China would have 10% tariffs on the United States.” Whether the added “framework” makes an eventual deal more likely is anyone’s guess. In the meantime, tariffs remain higher than at the year’s start (but lower than immediately after Liberation Day), while trade policy is as mercurial as ever. China will allow critical mineral exports (like rare-earth magnets) to flow to the US, which in turn will let Chinese students stay in America. But again, that was the status quo few questioned before. So although agreeing to continue talking is better than escalating threats (and punitive actions), relief at trade relations’ simply not worsening doesn’t really count as a win in our book. And judging by markets’ muted reaction, meh seems about right.