- The US dollar dropped almost 9%, year to date. The yields in the treasures remained high even when the stock market dropped – the opposite of what investors would expect. Some blame Japan and China for selling US bonds, which will hurt the dollar. Others believe that fence funds that are not motivated by leveraged positions in bonds can be blamed. But analysts and economists said Fate As long as the White House continues to develop economic uncertainty, everyone will escape the dollar.
The US dollar cost was ticked yesterday after President Trump made a U-turn and said he had no intention of shooting Jerome Powell, chair of the Federal Reserve. This is a rare piece of good news for “reserve currency” worldwide, whose value has fallen 9% year-to-date against the DXY index of foreign currencies.
It raised a question: who sells dollars – or selling possessions that drops the dollar – and why?
The initial suspicions targeted in Japan and China. After all, they both see their export markets that are hurt by Trump's trade war, and they are the first and second largest foreign holders of US wealth. Those countries are probably trying to send a message to Trump: Remember, you can hurt too!
However, resources said Fate That there is little evidence that either country is intentionally dollar tank.
And, it may be surprising that there is no great evidence that fence funds with liquidity issues suddenly forced to entertain US bets on US bonds, forcing recent sale that dragged the dollar with it, says these resources.
Rather, the blame depends on everything
Trump's economic changes have developed so much uncertainty around the world that investors in all properties-stocks, bonds, and money-are simply withdrawing from the US to some kind of certainty that reappears.
Japan sells a lot Everything Its foreign bond handling – this Dumped $ 20 billion Recently – “not only us wealth,” according to Oxford Economics lead analyst John Canavan. “Because the treasures form a lot of parts of foreign Japanese bonds, it is generally seen as a great proxy.”
But, he said, “It is unclear that China and/or Japan are responsible to the extent of the recent sale of the Treasury and volatility market. The evidence is difficult to arrive by either way.
Not the fence fund
Canavan is also not keen on the theory of fence funds.
“Early suspicions that a non -love of large leveraged trading basis is a significant factor that seems incorrect. Traders' data promises from the CFTC over the past two weeks have offered no evidence of any basis of unpleasant trade,” he said Fate.
His colleagues in Goldman Sachs, in part.
In a note to clients published on April 22, Analysts said Kamakshya Trivingi and Dominic Wilson: “We have not seen much support either 'foot' in markets or in data flows for the theories of significant foreign sale, even though there is more evidence that levered unwinds (especially the morals) can have a piece of money.
China and Japan really have an interest that does not sell US bonds because it only hurts their need for stable owners and will make their currencies increase, which will hurt their export markets.
“For example, get China,” Kevin Ford, FX & Macro strategist told Convera.
“As America's second largest foreigner after Japan, it holds nearly $ 780 billion in security security. As their market moves are closely watched, a massive sale-off seems unlikely, as it will boost the yuan due to rehearsal effects, and Beijing is currently keeping its money on the effects of tariffs.”
“Hedge funds, on the other hand, can add fuel to the fire. While the bond sell-off obtained momentum, margin calls can force funds to liquid the wealth to raise cash, especially users of trading bond-basis,” he said Fate.
Everyone wants to release hell
In fact, there is a simpler explanation: the dollar drops and yields to US bonds stays high because everyone – literally Everything On the planet – Wanted to release hell to Dodge City today.
This includes stocks, bonds, and money. With Trump's change through the time of trade policy and oppressing his central banker on a day -to -day basis, investors of all kinds simply limit their exposure to a country they now consider as a risk of owning rather than a safe shelter.
The US availability is still starting to show up on shipping routes. In tariffs that restrict trade, the number of “blank sailing” in the US of ocean cargoes has doubled since February, according to data monitored by Project44, a supply chain platform. Blank voyage occurs when a shipping line schedule a route and then cancels it completely or skip a port on that route.
“The East Coast is set to see a peak of 24 blank voyage in the last week of May, an increase of 100% since new tariffs began in February, with the West Coast near 21, or an increase of 31%,” the company said.
While shipping does not directly affect the dollar, it is – even – a visible symptom of a world that retreats from doing business in the US
Wedbush analyst Daniel Ives, who covers the tech market, has a name for it. In a note to clients dated on April 22, he called it “Sell America Trade.”
“This Tariff/Trade War is cutting US tech on the knee and helping Steamroll China Tech in advance,” he wrote.
And as long as the trade war continues, expect the dollar to continue to drop, according to Goldman Sachs.
“We believe that the re-imagination and reward of dollars assets has a room to run and expect the USD to extend its denial over time,” Goldman's Triives and Wilson said.
This story was originally featured on Fortune.com
