The growing rethink of the extent foreigners want to hold US dollars/Tariffs, inflation/BoJ does as expected

If there is an inflation stat that would most quickly reflect the price impact from tariffs it would be today's import price data for May. But, also of importance is to see what the US dollar weakness is doing in terms making imports more expensive.

As the US dollar still can't get out of its own way and is hovering around the weakest level since March 2022, a pretty interesting Bloomberg News article was out yesterday titled "Many Exporters No Longer Want Dollars, US Bank Executive says." Now, the article is long on anecdotes with no hard figures but it still reflects what is possibly a game changing moment where foreigners re-access the extent to which they want to own the US dollar (on top of the rethink that is going on globally as to the level of US assets foreigners want to own after piling in over the last bunch of years).

The piece says, "When Paula Comings, the head of currency sales for US Bancorp, talks to US importers, she increasingly hears the same message: Their foreign counterparties no longer want to be paid in dollars. Instead, they ask for settlement in euros, Chinese renminbi, the Mexican peso and the Canadian dollar, looking to limit their exposure to further swings in the greenback." Comings said, "A lot of clients previously were reluctant because dollars were sacred in the eyes of the supplier. Now the vibe from the overseas vendors seems to be, 'Just give us our currency.' "

Here's an example given, "A lumber company from the Midwest now converts its US cash into euros before paying for hardwood imports from Europe - a change from its previous practice of simply sending dollars. The move was spurred in part by a 2% discount offered by its European supplier for making payments in the single currency."

A few more, "Another client, a homeware retailer that imports from China, renegotiated its terms with suppliers and plans to settle its next bill in yuan. A third customer, a US food company sourcing equipment from Italy, agreed to pay its dues in the common currency, causing it to receive a more favorable rate on a purchase worth 400,000 euros."

Finally, a quote from Karl Schamotta, chief market strategist at cross border payments firm Corpay in Toronto, "The change is difficult to quantify in real time, but in markets from East Asia to Latin America, a growing number of exporters are opting to denominate contracts in euro, yuan, or even local currencies."

Major global sea change going on as 'times they are a changin'.