US dollar losses are accelerating in an ominous sign today. The latest leg lower came after the Dallas Fed manufacturing index fell to the lowest since May 2020.
The report was littered with angst about tariffs and uncertainty in the real economy. The market is weighing whether all the poor sentiment numbers are truly indicative of a looming economic slowdown and every data point like this undermines the bullish case, particularly after a big bounce in stocks and the dollar last week.
In the bigger picture, the market is struggling to understand the point of tariffs. Is it:
- To get better trade deals
- To raise revenue
It can't be both of those things and comments like this from Trump on the weekend emphasize the revenue side.
