Group 1 - Central banks have been selling U.S. Treasury bonds since March, indicating a reduction in investment in dollar assets, with an average decrease of $17 billion in U.S. Treasuries held by global central banks as of June 11, totaling a cumulative decline of $48 billion since late March [1] - The decline in foreign demand for U.S. Treasuries is unusual, especially as the dollar has weakened, which typically prompts central banks to buy more Treasuries [1] - Concerns have arisen regarding international investors' interest in U.S. Treasuries, influenced by U.S. trade and fiscal policies, leading to speculation about potential avoidance of U.S. assets by overseas buyers [1] Group 2 - Foreign investors have been significant buyers of U.S. Treasuries, with nearly all demand in the first quarter of this year coming from dealers and foreign investors, highlighting a concerning trend [4] - The weakening participation of foreign investors in recent 2-year and 20-year Treasury auctions raises alarms about future foreign demand, especially as global investors seek to reduce exposure to U.S. assets [4] - The current situation reflects a potential shift in asset allocation strategies among official sectors, moving away from dollar holdings [1][4]

Group 1 - The core viewpoint is that the dollar has become a crowded trade, indicating a high level of investment in dollar-denominated assets [1] - Large institutions do not perceive a "sell-off of the U.S." trade, suggesting confidence in the U.S. economy and its financial markets [1]

Core Viewpoint - The article discusses the recent fluctuations in the US dollar's value, attributing the decline to global investor sentiment and the impact of Trump's economic policies rather than direct actions from major foreign holders like Japan and China [1][2]. Group 1: Dollar Depreciation Factors - The US dollar index (DXY) has decreased by 9% this year, raising questions about who is selling dollars and the underlying motivations [1]. - Initial speculation pointed to Japan and China as potential culprits for the dollar's decline, but there is insufficient evidence to support this claim [1][2]. - Analysts suggest that the uncertainty stemming from Trump's inconsistent economic policies has led to a broad withdrawal of investors from the US market [2]. Group 2: Foreign Bond Sales - Japan has reportedly sold $20 billion worth of foreign bonds recently, but it remains unclear if this is linked to the volatility in the US bond market [2][3]. - There is no substantial evidence that hedge funds are behind the dollar's decline, as recent reports from the CFTC show no significant liquidation of leveraged positions [3][4]. - Both China and Japan lack a strong incentive to sell US bonds, as doing so would likely lead to currency appreciation and negatively impact their export markets [4]. Group 3: Global Investment Trends - A broader trend of investors seeking to distance themselves from the US market is evident, with many now viewing it as a risk asset rather than a safe haven [5][8]. - The shipping industry reflects this trend, with a significant increase in "blank sailings" to the US, indicating reduced trade activity due to tariff policies [5][8]. - Analysts from Goldman Sachs predict that as long as the trade war continues, the depreciation of the dollar is likely to persist, with ongoing reassessment of risk and return associated with dollar assets [8].

Core Viewpoint - The article discusses the decline of the U.S. financial hegemony, exacerbated by Trump's attacks on the Federal Reserve, leading to a loss of confidence in the dollar and U.S. Treasury bonds [1][2][4]. Group 1: Impact of Trump's Policies - Trump's recent criticisms of the Federal Reserve, including threats to dismiss Chairman Powell, have intensified trade tensions and prompted a reassessment of key assets supporting U.S. economic dominance [3][4]. - The so-called "Trump trade," which was initially seen as a boost to the "American exceptionalism," is now perceived as a "sell-off" of American assets, raising concerns about the role of U.S. households as the "last buyers" in the global economy [5][6]. - The shift towards protectionist policies under Trump has damaged the U.S. reputation, leading to a decrease in investor confidence and a reluctance to invest in U.S. assets [8][10]. Group 2: Market Reactions - Since April 2, the S&P 500 index has dropped nearly 10%, resulting in a market capitalization loss of approximately $4.8 trillion [10]. - The Bloomberg Dollar Index has fallen over 7% this year, marking the worst start since its inception in 2005, while U.S. Treasury yields have seen their largest weekly increase in over 20 years [11][12]. - The traditional relationship between the dollar and bond yields has weakened, indicating a general market aversion to U.S. assets and skepticism towards traditional safe-haven tools [11][13]. Group 3: Global Financial Landscape - Foreign investors hold approximately $19 trillion in U.S. equities, $7 trillion in U.S. Treasury bonds, and $5 trillion in corporate bonds, accounting for 20% to 30% of the U.S. market [7]. - Despite the current loss of confidence in U.S. credit, there are no viable alternatives in the market, as the euro lacks the necessary depth and political stability to compete with the U.S. dollar [14][15]. - Rebuilding trust in U.S. financial systems will be a long and challenging process, but no other country currently possesses the capability to replace the U.S. in financial markets [16].