Foreign investors concerned about the situation in the US – Natixis

To prevent a US financial crisis, foreign investors must have confidence in the US and buy financial assets issued in the country. However, foreign investors may be concerned about Joe Biden's economic programme, Donald Trump’s conflict policy and the negative effects of protectionism,  economic damage caused by a lasting health crisis and social and political tensions in the US.

Key quotes

“The programme presented by Joe Biden is not positive for financial markets: sharp increase in the minimum wage and therefore in inflation and in long-term interest rates, and therefore, in anticipation, sales of US bonds; sharp tax increases (on corporate earnings, household income, wealth and capital gains), which is negative for equity and corporate bond markets.”

“The growing tension between the United States on the one hand, and China and Europe on the other, as a result of Donald Trump's policies, is worrying investors. They have understood in particular that protectionism is negative for the United States: it triggered a decline in equity markets in late 2018 when Trump introduced multiple tariffs.”

“Non-US investors may also be concerned that a long-lasting health crisis in the US is going to worsen the US economy markedly: permanent loss of growth, persistently high unemployment and bankruptcies.”

“Social and political tension in the United States (between Republicans and Democrats, between the black community and the Republican right, etc.) may worry foreign investors.”