Kyle Bass foresees yuan weakening and potential for brief recession

Published 10/04/2025, 14:32
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Investing.com -- Kyle Bass, the founder and Chief Investment Officer of Hayman Capital, shared his views on the state of the US and Chinese economies in an interview on Bloomberg TV.

Bass stated that the US would be in a better place once its trade deals are finalized. He also mentioned that China's banking system is more levered than the US, indicating a higher risk profile.

The Hayman Capital founder also suggested that China's President Xi might start withholding antibiotics and rare earth minerals, without providing further details. Bass pointed out that China needs a strong yuan as it purchases a significant amount of goods in USD.

He expressed that China's economy is currently in a different place than the US. He also expects the Chinese yuan to weaken materially against the dollar, but did not elaborate on the timeframe or the reasons for this expected change.

Bass indicated that the tariffs implemented will have a slight negative impact on Texas in the near term. He emphasized that the US must maintain domestic production for the sake of its economy.

On the topic of tariffs, he also suggested that some may not be high enough, without specifying which ones. Bass mentioned the possibility of a brief recession as a necessary reset for future growth, but did not provide a timeline for this potential downturn.

He concluded by saying that he doesn't foresee a significant stagflationary move.

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