Hedge Funds Offload Dollars via Citigroup After Supreme Court Overturns Tariffs
The Supreme Court struck down the administration’s most extensive tariffs, prompting Citigroup’s hedge fund clients to sharply increase net dollar selling through its FX desks. The surge in sell orders elevated spot trading volumes on Citi’s platform, potentially boosting FX trading revenues by expanding bid-ask spreads during the volatility spike.
1. Supreme Court Strikes Down Broad Tariffs
The Supreme Court invalidated the administration’s broadest tariff measures, removing duties on key imports such as steel and aluminum. The ruling reshaped U.S. trade policy and reduced tariff risk, driving immediate currency repricing across global markets.
2. Hedge Funds Increase Dollar Selling
Following the decision, hedge fund clients of Citigroup sharply ramped up dollar sell orders, with volumes on Citi’s FX desks spiking to three times the two-week average within hours. Clients cited anticipation of a weaker dollar as tariff pressures eased.
3. Impact on Citigroup’s FX Business
The surge in sell-side activity propelled spot trading volumes higher, widening bid-ask spreads and enhancing trading margins. Traders at Citigroup capitalized on the volatility, forecasting a modest boost to FX trading revenue for the quarter.