IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/35466.html

What Do Asset Prices in April 2025 Say About Demand for the Dollar?

Author

Listed:
  • Rohan Kekre
  • Moritz Lenel

Abstract

We interpret exchange rate and yield curve responses to the April 2, 2025 U.S. tariff announcement through the lens of an equilibrium model capturing the portfolio balance mechanism. Disciplined by price elasticities from QE announcements, a 3-12% decline in the demand for dollar bonds (relative to annual U.S. GDP) accounts for the dollar depreciation and rise in dollar yields during this episode. News of a gradual rebalancing out of dollar bonds is consistent with immediate price impact since asset prices are forward-looking. Lower dollar bond demand was accompanied by higher risk aversion, which explains the cross-section of responses across currencies.

Suggested Citation

  • Rohan Kekre & Moritz Lenel, 2026. "What Do Asset Prices in April 2025 Say About Demand for the Dollar?," NBER Working Papers 35466, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35466
    Note: AP EFG IFM ME
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w35466.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:35466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.