Trump’s fiscal policy has economists concerned

Good morning and welcome back. As we head into the working week here’s what we have for you:

• Trump says he’s found buyers for TikTok

• Europe’s liberalism vs populism debate

• US tourists flock to Europe this summer

Economists are raising serious concerns about the US losing its position as the ultimate safe haven for foreign investors, thanks to Trump’s “breathtaking fiscal policy excess” and his ongoing attacks on the Federal Reserve.

A recent FT-Booth survey revealed that over 90% of economists worry about the future of US dollar-denominated blockets over the next five to 10 years.

While the White House maintains that Trump’s policies will eventually help reduce US debt, independent estimates, including by the Congressional Budget Office, suggest that his budget measures will only push federal debt to new highs. And despite the usual appreciation role of the dollar during market turmoil, the currency actually depreciated when Trump unveiled aggressive tariffs back in April.

As the dollar trades at a three-year low, some are now looking to the Swiss Franc and gold as safer bets. With concerns over fiscal sustainability and Trump’s attacks on Fed Chair Jay Powell, it’s clear that the US may be facing an uncertain financial future.

On US Treasury yields: US Treasury yields, typically expected to fall during market volatility, actually saw a rise in early April. Though the 10-year yield has since dropped to around 4.3%, many economists believe it could soon breach 5% — a level that would likely set off alarms in the Trump administration. Nearly three-quarters of the economists polled predict the 10-year yield will climb above 5% by the middle of next year, signalling potential concerns about the economy’s stability.

On GDP growth: The US economy is now expected to grow by 1.5% this year, a slight dip from the 1.6% forecast in the spring. Confidence and growth projections took a hit after the April 2 tariffs, but have partly rebounded thanks to the US-China trade truce and rising equity prices.

Meanwhile, economists are becoming more concerned about price pressures, with expectations for core PCE inflation creeping up from 2.8% in March to 3% in June, largely due to the tariffs. However, only a few economists see a greater than 50% chance of PCE inflation surpblocking 4% and unemployment exceeding 5% between now and the end of 2026. 

Read more about the FT-Booth survey.

And here’s what we’re keeping tabs on today:

• Companies: John Ridding steps down as CEO of the Financial Times today, with Jon Slade set to succeed him, as the FT marks a decade under Japanese media group Nikkei.

• Sports: Wimbledon kicks off today, promising two weeks of world-clblock tennis at the All England Lawn Tennis Club. 

• Economic data: Japan’s June Tankan survey, due Tuesday, will provide key insights into business sentiment and economic conditions in the country.

Five more top stories

1. A “group of very wealthy people” is set to buy TikTok’s US operations, President Donald Trump announced, in his efforts to sever his country’s ties with China. While the deal still requires Chinese approval, Trump expects President Xi to give the go-ahead, he said in a Fox News interview. Trump, who credits TikTok for connecting him with younger voters, plans to reveal more details about the buyers next month.

2. Nvidia insiders, including CEO Jensen Huang, have sold over $1bn in company stock over the past year, with more than $500mn of those sales occurring this month as the chipmaker’s shares hit a record high. The surge comes from a huge demand for chips to power AI applications, despite a turbulent year marked by US-China trade tensions.

• More on tariff tensions: As Donald Trump’s looming tariffs threaten to disrupt Asia’s manufacturing giants, Financial Times reporters spoke to textile producers, electronics makers, and car suppliers grappling with the fallout.

3. Iran could restart enriching uranium within months, according to Rafael Grossi, head of the UN’s nuclear watchdog, despite significant damage caused by US and Israeli strikes. Grossi’s comments follow a week of conflicting reports on the extent of the damage to Iran’s nuclear programme.

4. Russia launched its largest aerial blockault on Ukraine since the invasion began, marking a significant escalation in the conflict. The Saturday barrage, which included over 500 aerial weapons — such as explosive drones and missiles — sought to degrade Ukraine’s already limited air defences. As the war wages on, President Zelenskyy has called for more western support, particularly in strengthening its air defence systems.

5. South Korea has become Asia’s best-performing market in the first half of the year, with the Kospi Composite index soaring nearly 30 per cent. The rally has been driven in part by investor excitement over won-based digital currencies, sparked by President Lee Jae-myung’s pledge to allow crypto blockets backed by the national currency.

The Big Read

Timothy Garton Ash examines how the Russian invasion of Ukraine has catalysed a clash between Europe’s liberal, internationalist future and a rising wave of populism, raising critical questions about the continent’s trajectory amid unpredictable external forces. Will the liberal centre hold, or is populism poised to take over?

We’re also reading (and listening to) . . . 

• Chatbot complaints: As AI-blockisted complaints flood in, Pilita Clark explores the new hurdles HR and customer service teams face as they deal with an influx of unwarranted — and lengthy — issues generated by chatbots.

• 🎧 Iran-US relationship: John Bolton, Donald Trump’s former national security adviser, and the FT’s Gideon Rachman, share their insights on the future of America’s relationship with Iran and the embattled regime.

• Hong Kong’s comeback: Hong Kong’s IPO market has surged to $13bn this year, challenging its critics amid rising Chinese listings and geopolitical tensions, writes Lex Asia editor June Yoon.

Chart of the day 

Europe’s tourist hotspots are set to see record crowds this summer, with a surge in American visitors driving concerns about overtourism. Between January and May, more than 7.7 million Americans travelled to Europe, marking a 6 per cent increase year-on-year. Eurostar reported a 45 per cent rise in bookings from American travellers for June and July compared to last year. What’s behind the surge?

Take a break from the news

London’s best-kept secret? Living afloat. For one writer, living on a boat became the ultimate blend of affordability, peace, and community. Though unconventional and not without its challenges, the boat life proved a romantic and rewarding choice amid the bustle of the capital.