Goldman Sachs CEO: Reducing holdings of US dollars is only to deal with "excess outflows of capital," investors are returning to neutrality instead of "massive selling."

Goldman Sachs CEO John Waldron said that recently investors have been reducing their holdings in US dollar assets, indicating that they are returning to a more neutral position on the dollar, rather than a large-scale "flight from positions." Waldron stated that some investors have returned to a more neutral position, where they are now holding 10%, 20%, or 30% more US dollar assets than before. In the initial months of the Trump administration, the financial markets experienced volatile changes, with Trump's announcement of retaliatory tariffs on April 2 prompting some investors to withdraw from US assets. Subsequently, progress was made in tariff agreements by the White House, leading to a market rebound. Waldron mentioned that investors have been optimistic about the US outperforming other regions in the world. He said, "In most cases, everyone is showing an increase in US asset holdings." However, Waldron noted that clients have been actively reconfiguring their foreign exchange investment portfolios following the tariff announcement. Waldron stated, "What we've seen since April 2 (reducing USD positions) is more of an outflow of excess funds rather than massive selling. Have markets shown higher volatility in US decision-making, so should we be decreasing our positions? We haven't seen that yet." Recent progress in US-China trade talks has stimulated a market rebound, pushing the US dollar higher, and both the S&P 500 and Nasdaq indices regained lost ground since President Trump announced comprehensive reciprocal tariffs on April 2 (dubbed "Liberation Day"). Waldron noted, "The market is relatively benign in the current situation." Waldron pointed out that there is demand from investors for purchasing Chinese stocks and fixed income products, and despite challenges, US companies are still able to operate in China. He mentioned that most companies are trying to consider how to address the impact of relatively higher tariffs from a cost standpoint. Waldron also highlighted that tariff measures have affected mergers and acquisitions, preventing new deals from taking place. Data from Dealogic showed that the number of announced global M&A deals in April fell to the lowest levels in over 20 years, which is an indicator of the health of the global economy. He said, "If you are in the process of doing a merger, just starting or in the process, you might put it on pause."