Finshots Daily Are investors really moving away from US assets?
Apr 22, 2025
Examining the trends in foreign investment, the discussion reveals how investors remain hesitant to abandon U.S. assets. The complexities of divesting from the dollar showcase the challenges faced by those considering alternatives. The implications of a weaker dollar, particularly for countries like India, are explored, highlighting potential benefits and risks that accompany shifts in investment strategy.
AI Snips
Chapters
Transcript
Episode notes
Dollar Losing Safe Haven Status
- The US dollar is falling despite rising bond yields and higher tariffs, which usually strengthen the dollar.
- Investors are swapping US assets for alternatives like gold and foreign bonds, showing the dollar is losing its safe haven status.
US Bonds Under Pressure
- The massive US Treasury market is trusted globally because countries like China and Japan invest surplus dollars there.
- Rising US deficits and geopolitical concerns are causing investors to be spooked and sell bonds, raising yields.
Constraints on Selling US Assets
- Even if countries want to reduce US assets, they can't easily because exported dollars must be reinvested.
- Large-scale selling risks losses by devaluing bonds they still hold, so any move away must be gradual and selective.