Goldman Sachs President John Waldron shared his insights on the recent changes in dollar holdings, emphasizing that the decline does not signal a mass exit but a return to normal levels.
Normalization of Dollar Holdings
In an interview with Reuters, John Waldron noted that the reduction in dollar assets is a form of 'lightening up' excess investments that were previously made. He clarified that this is not a mass reduction, but an appropriate response to changing conditions.
Impact of Tariffs on the Market
The escalation of trade relations, starting with the announcement of new tariffs by President Trump, caused significant fluctuations in financial markets. Waldron stated that investors began to rebalance their portfolios, with many exceeding normal dollar holdings by 10-30%.
State of Chinese Assets and M&A
Despite political disagreements, the demand for Chinese stocks and bonds remains stable. Waldron assures that American financial firms continue to operate effectively in China despite tariff pressures. He also noted that tariff issues are slowing down mergers and acquisitions, but nearly completed transactions may still go through.
John Waldron emphasizes that the current changes in investment strategies do not indicate significant issues, and he expects market conditions to stabilize with improved U.S.-China relations.
