Core Viewpoint - The US dollar is regaining its status as a highly attractive investment asset, contrary to previous concerns about its future due to "sell America" sentiments [1][3] Group 1: Dollar's Investment Appeal - A simple strategy involves borrowing low-yield currencies (like yen or Swiss franc) and investing in dollars, potentially yielding higher returns than European stocks [1] - Despite a nearly 7% decline in the dollar index this year, it has rebounded about 3% from September's lows, partly due to arbitrage trading [1] - JPMorgan's strategist Yuxuan Tang asserts that the dollar will remain a high-yield currency, maintaining a strong position from both trend and yield perspectives [1] Group 2: Impact of Arbitrage Trading - The attractiveness of dollar arbitrage strategies is amplified by significantly reduced dollar volatility, partly due to a prolonged US government shutdown [3] - As investors seek higher returns elsewhere, liquidity tends to increase, driving up high-risk asset prices, although this trend can reverse quickly with market volatility [3] - The S&P 500 index has risen over one-third since its April low, with European and Chinese stock indices also experiencing significant gains [3] Group 3: Comparative Returns and Risks - Investors in Chinese stocks see annualized returns of only 0.23% for each percentage point increase in volatility, while low-risk arbitrage trading yields 0.54% [5] - The potential risks of dollar arbitrage trading include a sudden drop in short-term interest rates, which could diminish its advantages [5] - Deutsche Bank's Jacky Tang notes that the dollar remains an attractive arbitrage asset, although uncertainties exist regarding the Federal Reserve's future interest rate decisions [5][6] Group 4: Long-term Outlook - For investors looking to maintain dollar arbitrage strategies into 2026, there is optimism as US inflation reached 3% in September, above the Fed's 2% target [6] - Wells Fargo's strategist Aroop Chatterjee indicates that as long as the macroeconomic and financial environment remains stable, dollar arbitrage trading may continue to be appealing [6]