The US Dollar Is Still Dominant, Cantrill Says

Summary

PIMCO's Libby Cantrill discusses the US dollar after recent declines and comments from President Trump. She argues the dollar remains dominant and the world's reserve currency, with economic fundamentals limiting the sell-America trade. Still, she sees a nuanced picture, noting incremental client diversification away from US dollar asset overweight and opportunities outside the US. She highlights developed markets, high-quality emerging markets, and the rates market as areas of opportunity.

• President Trump said he is not concerned about the dollar's decline and accused Japan and China of devaluing their currencies.
• Cantrill says the strong dollar policy still exists and the dollar remains relatively strong historically.
• She says the dollar remains dominant and the world's reserve currency, not a big referendum against it.
• She sees limits to the sell-America trade due to deep liquid US Treasuries and a dynamic US economy.
• She notes PIMCO clients still have a large US dollar asset overweight and are diversifying incrementally.
• She sees opportunities outside the US in developed markets, high-quality emerging markets, and rates.
• She says politics is temporarily tail-wagging the economic dog.