Trump tax repatriation: Bullish USD, bearish dollar funding – Deutsche Bank

George Saravelos, Strategist at Deutsche Bank, suggests that a reform of the US corporate tax code is very high on Donald Trump’s agenda and with huge amounts of American corporate profits sitting offshore due to punitive repatriation rates, a potential change in policy could have material market implications.

Key Quotes

“While the notional amounts involved may be smaller than what is commonly assumed, we argue there would be material implications for both the dollar and particularly the cost of dollar funding. In the event the tax reform is permanent, it is the absence of a future pool of reliable dollar liquidity for European and other foreign banks that will likely have the biggest impact in particular.”