Sevens, in its most recent report, argues that President Donald Trump - whether intentionally or not - has helped push the U.S. dollar to weaker levels, creating an added impulse toward what the firm calls a "run-hot" economic environment.
The consultancy states that Mr. Trump "sent the dollar to four-plus-year lows" after downplaying the currency's recent decline, a reaction Sevens interprets as signaling tolerance for, or encouragement of, further depreciation.
That currency move comes on top of policy measures that Sevens says were already contributing to firmer economic conditions. The firm lists several elements of administration policy - "tax cuts," pressure for "lower interest rates," sweeping deregulation and efforts to attract foreign investment - as forces that have been driving the economy hotter.
Sevens highlights the core downside of that mix: "ever-increasing amounts of money chase finite goods and services," which keeps prices elevated even as growth remains robust. The firm says a weaker dollar magnifies that dynamic through three principal channels.
- Imports become costlier. A softer dollar raises the domestic price of imported consumer goods in a country that still sources most of its consumer products from abroad, which boosts everyday prices.
- Multinational earnings receive a boost. U.S. goods and services become cheaper for foreign buyers when the dollar weakens, improving revenue and profit figures for multinationals; Sevens links this factor to recent strength in technology and consumer discretionary stocks.
- Real assets rise in value. A depreciating dollar tends to lift prices for gold, silver, oil and other commodities that cannot be devalued like a currency, pushing up asset prices in those markets.
On the scale of recent moves, Sevens cautions that the dollar's roughly 11% decline over the past year is "neither 'modest' nor 'orderly.'" While markets have so far absorbed that adjustment, the firm warns that a more rapid slide into the low 90s on the currency index could "start to rattle markets." Such a development, Sevens says, would intensify the run-hot mix of strong growth alongside persistently elevated prices.
In short, Sevens views the administration's stance and recent comments as contributing to a feedback loop that raises prices across imports, helps explain gains in multinational-heavy sectors, and supports higher valuations for commodities and other real assets. The consultancy warns that continued, sizable currency depreciation could unsettle markets and deepen inflationary pressures already present in the economy.