Foreign Capital Flows to U.S. Stocks Exceed Treasury Purchases, Weakening Dollar's Safe-Haven Role

According to Deutsche Bank's latest report, foreign capital inflows into U.S. stocks now exceed purchases of U.S. treasuries, signaling a shift that erodes the dollar's traditional safe-haven status. Deutsche Bank strategist Mallika Sachdeva noted that while U.S. technology leadership continues attracting global investment to equities, weakening demand for American government debt—driven partly by shifts in U.S. foreign policy—is changing the dynamics that have long supported the dollar. Stock fund flows are typically short-term and volatile, whereas treasury purchases have provided stable, long-term support. As this mechanism weakens, the dollar faces increased currency volatility, particularly if Asian currencies—which Deutsche Bank identifies as undervalued—undergo valuation corrections.
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