Global investors are once again discussing the "Sell America" strategy following uncertainty created by US and Federal Reserve policies, pushing 30-year bond yields to their highest levels since 2550 while the dollar weakened.
On August 6, 2569, at 06.42:XNUMX a.m., Bloomberg News reported that Investors in bond and money markets worldwide are once again debating the "Sell America" strategy, or reducing their holdings of US assets. Following the economic policy decisions made by the US government over the past two weeks, uncertainty has been created, leading markets to question the direction of the U.S. economy.
The key factor began with Kevin Warsh, Chairman of the Federal Reserve (Fed), choosing to communicate with the market in a rather limited manner. This led investors to worry that the Fed might not be clear enough in controlling inflation, especially after the latest meeting where three Fed committee members voted in favor of an immediate interest rate hike.
Meanwhile, U.S. Treasury Secretary Scott Basen approved U.S. support for Japan in stabilizing the yen, marking the first joint currency intervention between the two countries in nearly 30 years. Although the operation uses the euro as an intermediary to avoid impacting U.S. bond markets, it adds pressure on the dollar.
Furthermore, concerns about the U.S. fiscal position, the trade war, and the prolonged conflict in the Middle East are all factors that could keep inflation high. As a result, some investors are reconsidering their investments in U.S. government bonds and the dollar, as they perceive increased uncertainty surrounding U.S. economic policy.
This is reflected in the financial markets, with the yield on 30-year U.S. Treasury bonds rising above 5%, its highest level since 2550, although it slightly retreated after the Fed meeting. Meanwhile, the dollar has weakened against almost all major G10 currencies over the past month, even though higher bond yields should normally support the dollar.
Rachif de Mello, Global Macro Fund Manager at Gama Asset Management. said The policies implemented by Bescent and Watch have had a significant impact on global markets, causing investors to begin reflecting policy risk in asset prices, including the US dollar and US bonds, viewing this as a “Trump Administration Premium.”
The "Sell America" strategy It gained popularity last April after President Donald Trump announced massive import tariffs, leading to a simultaneous sell-off of the dollar, US stocks, and US government bonds. Although the situation quickly resolved, it led markets to question whether the United States could indefinitely rely on the dollar's status as the world's reserve currency to cover its growing budget deficit.
However, the current situation is different from that time because the U.S. stock market remains strong, driven by technology stocks that pushed the S&P 500 index to an all-time high. Meanwhile, U.S. government data indicates that foreign investors held $9.4 trillion in U.S. government bonds as of May, a 4% increase from a year earlier, reflecting a degree of continued confidence in U.S. assets.
However, in the bond and money markets, some investors are concerned that if the Fed lacks a clear framework for controlling inflation, it could erode confidence in the bond market. Furthermore, if Japan needs to sell some of its more than $1 trillion holdings of U.S. government bonds to intervene in its currency, it could put additional pressure on the U.S. bond market.
Carol Lai, Fund Manager at Brandywine Global Investment Management. said The confusing nature of US policy is not conducive to the inflow of foreign capital, and the US government's support for a stronger yen further reinforces the view that the dollar is likely to continue weakening.
side Steve Brice, Chief Investment Officer of Standard Chartered Wealth Management. expected The dollar has the potential to weaken by another 3-4% over the next 12 months as various government policies and structural factors are undermining the strength of the U.S. financial markets.
While most analysts don't yet believe that the dollar's role as the world's primary currency is coming to an end, or that U.S. government bonds will lose their status as a safe-haven asset, many acknowledge that confidence in the exceptionalism of the U.S. economy is being increasingly questioned.
On the other hand, the U.S. Treasury Department recently revised its estimate of borrowing demand for the current quarter upward to $739,000 billion, while the term premium on 30-year Treasury bonds rose to 1.56%, the highest level since 2556, reflecting investors' desire for higher returns to offset long-term uncertainty.
Ronald Temple, Head of Market Strategy at Lazard. give an opinion that Confidence in the United States as a safe haven asset is shifting, and in the coming years, the dollar is likely to continue weakening once again.
refer : www.bloomberg.com
Read news related to The full US economic situation can be found here.
