Minneapolis Federal Reserve President Neel Kashkari said Friday recent market trends show investors are moving away from the U.S. as the safest place to invest while President Donald Trump’s trade war escalates.
With Treasury yields rising and the U.S. dollar sagging against its global counterparts in recent days, the trends are running counter to what you might normally see, the central bank official said during a CNBC “Squawk Box” interview.
“Normally, when you see big tariff increases, I would have expected the dollar to go up. The fact that the dollar is going down at the same time, I think, lends some more credibility to the story of investor preferences shifting,” Kashkari said.
The 10-year Treasury yield has surged this week after Trump announced his intention to slap a 10% across-the-board tariff against U.S. trading partners and threatened to impose even harsher select levies before backing down Wednesday.
At the same time, the greenback has slumped more 3% against a basket of global currencies, with moves potentially signifying a turn away from safe-haven U.S. assets.
“Investors around the world have viewed America as the best place to invest, and if that’s true, we will have a trade deficit. So now one of the ways that expresses itself is in lower yields across asset classes in America,” Kashkari said. “If the trade deficit is going to go down, it could be that investors are saying, OK, America no longer is the most attractive place in the world to invest, and then you would expect to see bond yields go up.”
Kashkari noted, however, that he is seeing “stresses” but not significant dislocations in market functioning.
Kashkari does not vote this year on the rate-setting Federal Open Market Committee but will vote in 2026. He noted that his focus in the current environment is on keeping inflation expectations anchored, echoing other policymakers’ statements that rates are unlikely to move until there is clearer visibility on fiscal and trade policy.
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A tugboat pushes a barge near the U.S. Steel Corp. Clairton Coke Works facility in Clairton, Pennsylvania, on Sept. 9, 2024.
Justin Merriman | Bloomberg | Getty Images
President Donald Trump said Friday that U.S. Steel and Nippon Steel will form a “partnership,” after the Japanese steelmaker’s bid to acquire its U.S. rival had been blocked on national security grounds.
“This will be a planned partnership between United States Steel and Nippon Steel, which will create at least 70,000 jobs, and add $14 Billion Dollars to the U.S. Economy,” Trump said in a post on his social media platform Truth Social.
U.S. Steel’s headquarters will remain in Pittsburgh and the bulk of the investment will take place over the next 14 months, the president said. U.S. Steel shares jumped more than 24%.
President Joe Biden blocked Nippon Steel from purchasing U.S. Steel for $14.9 billion in January, citing national security concerns. Biden said at the time that the acquisition would create a risk to supply chains that are critical for the U.S.
Trump, however, ordered a new review of the proposed acquisition in April, directing the Committee on Foreign Investment in the United States to determine “whether further action in this matter may be appropriate.”
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The night the United States Institute of Peace (USIP) was taken over, March 17th, staffers from Elon Musk’s Department of Government Efficiency (DOGE) walked round its headquarters smoking cigars and drinking beers while they dismantled the signage and disabled the computer systems. The takeover of the USIP building in Washington, DC, earlier that afternoon was one of the more notable moments of President Donald Trump’s revolution in the capital, because the think-tank is not actually part of the executive branch. The Institute’s board and president, George Moose, a veteran diplomat, were summarily fired. He and other senior staff were ultimately forced out of the building at the behest of three different police agencies. Then a DOGE staffer handed over the keys to the building to the federal government.
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