The Fall Of The Dollar And Bonds Worries The Markets

The volatility in April on the US financial markets is worrying global investors. Since the surprise announcement of new tariffs by Donald Trump on April 2, the S&P 500 has lost 5.4%. But it is mainly the signals sent by the bond market and the dollar that are raising fears of a deeper movement: an exodus of assets out of the United States.

Capital Exodus: The Dollar and Bonds in Free Fall

After the recent historic crash of the crypto market, it’s now the dollar’s turn. Traditionally considered a safe haven, the USD has reached its lowest level in three years according to the ICE U.S. Dollar Index, hitting 99.92. At the same time, yields on 10-year US Treasuries have jumped to 4.5%, reflecting a significant drop in demand for Treasuries.

According to Marco Papic, strategist at BCA Research, “investors are turning their backs on American assets.” This movement, which began well before the recent trade tensions, is accelerating. The American currency is losing ground against the yen, the Swiss franc, and the euro, indicating a structural loss of confidence.

George Saravelos of Deutsche Bank even mentions a “rapid dedollarization,” a questioning of the dollar as the world’s reserve currency. For the Minneapolis Federal Reserve, represented by Neel Kashkari, this drop in the dollar amid a trade war is unusual and indicative of a shift in investor preferences.

Chain Economic Consequences

Beyond the markets, the decline of the dollar impacts the real economy. American companies highly exposed internationally see their image deteriorating. Larry Fink, CEO of BlackRock, warns of a “growing discrimination” against major American brands.

The surge in bond yields, combined with the drop in the dollar, also increases the cost of servicing federal debt and limits Washington’s budgetary maneuvering room. On the horizon, the inflationary risk linked to tariffs complicates the Fed’s task, making any rate cut more difficult.

The dollar is falling, bonds are plummeting, and investors are reassessing the economic status of the United States. Despite the recent historic peak of gold at $3,360, the exodus of assets is no longer a hypothesis, but a reality in progress.