Deutsche Bank Warns of Potential US Capital Conflict
- Lyla Velez
- June 1, 2025
- Uncategorized
- 0 Comments
Key Points:
- Saravelos warns fiscal changes may trigger capital war.
- 100 basis point yield reduction feared.
- Global capital inflow risks could affect market stability.
Deutsche Bank’s head of FX research George Saravelos warns of a potential “capital war” due to US fiscal changes proposed by former President Donald Trump, impacting global markets.
The warning from Deutsche Bank signals a growing concern over US fiscal policies that could transform trade tensions into a capital conflict, affecting international investors.
Deutsche Bank cautioned that Trump’s Section 899 could harm foreign investment appeal in US assets. Saravelos noted potential yield reductions by 100 basis points, complicating financing.
“We see this legislation as creating the scope for the US administration to transform a trade war into a capital war if it so wishes, a development that is highly relevant in the context of today’s court decision constraining President Trump on trade policy.” — George Saravelos, Head of FX Research, Deutsche Bank
Global markets, particularly US Treasuries, face risks from these policies. Crypto markets haven’t shown direct changes, but BTC and ETH may see buyers’ interest if capital inflows decline. Foreign investors’ returns on US assets are at stake, alongside potential implications for market stability.
No significant crypto project leaders or governmental bodies have commented. However, historically, macro-economic shifts have influenced digital asset preferences, offering potential for increased stability-seeking crypto investments. These fiscal shifts could reshape foreign investment dynamics, historically leading to increased digital asset consumption, such as BTC and stablecoins, when faced with financial uncertainties.
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