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Should the US dollar really be unchanged?
Everyone knows the US fiscal story.
Huge deficits. Rising debt. Growing interest costs. Relentless Treasury issuance.
That's not new.
What's new is the accumulating evidence that some of the world's largest pools of capital are starting to behave differently.
The Dutch central bank has moved 86 tonnes of gold out of its US and Canadian holdings, citing geopolitical uncertainty and diversification.
Central banks continue accumulating gold, while 74% expect the dollar's share of global reserves to decline over the next five years.
Norway's $2.3tn sovereign wealth fund is considering changes that could materially reduce its Treasury holdings.
Amundi, Europe's largest asset manager, has encouraged investors to diversify away from US dollar assets.
Investors are increasingly buying dollar bonds from the EIB and KfW as alternatives to Treasuries.
Alphabet just raised A$5.5bn in Australia, attracting more than A$18bn of demand.
And perhaps most interestingly, the US 10-year term premium has roughly doubled over the past year.
None of these observations proves that confidence in US assets is breaking.
But collectively, they're getting harder to ignore.
Yet despite all of this, the broad US dollar is almost exactly where it was a year ago.
Why?
Because the other side of the ledger remains enormously powerful.
The US continues to outperform the rest of the world in attracting capital. Its equity markets, technology sector, economic growth and deep capital markets continue to generate extraordinary demand for US assets.
That flow doesn't need to reverse for the dollar story to change.
It just needs to dry up at the margin.
That's what I'd be watching. Not whether foreigners suddenly sell America. Not whether the dollar loses reserve status.
But whether the exceptional flow of global capital into the US starts becoming a little less exceptional.
If that happens while the term premium continues to rise, an unchanged dollar may become increasingly difficult to justify.