“The Sell America Trade”: Who is behind the sinking of the US dollar?

• The US dollar is down approximately 9% per year. Even as the stock market declines, the Treasury yields remain high. This is the opposite of what investors usually expect. Some people are blaming Japan and China for selling US bonds, but that would hurt the dollar. Others believe that hedge funds that unlock bond leverage positions may be responsible. But analysts and economists say luck As long as the White House continues to create economic uncertainty, everyone is going to run away from the dollar.

After President Trump made a U-turn, yesterday he said the value of the US dollar was engraved and that he had no intention of firing Federal Reserve Chairman Jerome Powell. This was unusual good news for the global “reserve currency,” which has dropped 9% from the beginning of the year against the DXY index of foreign currencies.

It raises the question: who sells dollars, or why do they sell dollar-driven assets?

The first suspicions targeted Japan and China. After all, they both see their export markets being damaged by Trump’s trade war, and they are the first and second largest foreign holders of the US Treasury. Perhaps those countries were trying to send a message to Trump. Don’t forget that we can hurt you too!

However, according to sources luck There is little or no evidence that either country is deliberately defending the dollar.

And perhaps surprisingly, there is not much evidence of that A hedge fund with liquidity issues was suddenly forced to rewind levered bets These sources say that US bonds are forcing a recent sale of dollars.

Rather, the responsibility lies with everyone else.

The economic declaration that changes Trump’s chops creates global uncertainty as investors in stocks, bonds and currencies (all assets) are simply withdrawing from the US until some certainty reappears.

Japan sells a lot all Holdings of that foreign bonds – We dumped 20 billion dollars Recently, according to John Canavan, lead analyst at Oxford Economics – “not just US finance.” “The Ministry of Finance is generally considered a good agent as it accounts for the majority of Japan’s foreign bonds.”

However, he said, “It is not clear that China and Japan are responsible for the recent scope of the Ministry of Finance’s selling and volatility. Both methods make evidence difficult.

It’s not a hedge fund

Canavan is also not keen on hedge fund theory.

“The early suspicion that rewinding large-scale leverage-based trading was a key factor appears to have been wrong. Trader data commitments from the CFTC over the past two weeks did not provide evidence that trade was affirmed,” he said. luck.

His colleagues at Goldman Sachs agree in part.

In a memo to clients issued April 22nd, analysts Kamakchatelievy and Dominique Wilson said:

China and Japan actually have a vested interest in not selling US bonds. Because it undermines the need for stable assets and drives the export market upwards.

“Take China, for example,” says Kevin Ford, Combana State Forex and macro strategist.

“As the second largest foreign creditor in the United States after Japan, the Treasury securities hold about $780 billion. Their market movements are closely monitored, but it appears unlikely that they will strengthen the yuan due to their own influence.

“On the other hand, hedge funds may have added fuel to the fire. With bond sales gaining momentum, Margin Call could have forced the funds to raise cash, especially those who are adopting bond transactions,” he said. luck.

Everyone wants to take hell out of the dodge

In fact, there’s a simpler explanation. Because the dollar is declining and everyone has the yield on US bonds – literally everyone On the Planet – I want to take hell out of Dodge City now.

That includes stocks, bonds and currency. As Trump changes his mind into trade policy time and bullies his chief central banker every day, investors of all sorts are simply limiting exposure to a country that he now considers as a risky asset rather than a safe haven.

This aversion to the United States began to appear on transport routes. The trade-limiting tariffs have doubled the number of “blank voyages” by marine cargo ships to the United States, according to data tracked by supply chain platform Project44. Blank sailing occurs when a transport line schedules a route and cancels it completely or skips a port for that route.

“The East Coast is scheduled to see a peak of 24 blank sails in the last week of May, with a 100% increase since new tariffs began in February, and the West Coast is lagging behind at 21 or 31% increase,” the company said.

Shipping does not directly affect the dollar, but it is – undoubtedly a visible symptom of the world withdrawing from doing business with the US

Daniel Ives, a wed analyst covering the high-tech market, even has that name. In a note to a client dated April 22, he called it “selling American trade.”

“This tariff/trade war brings our technology to our knees and supports Steamroll China Tech in the future,” he writes.

And, according to Goldman Sachs, we hope that the dollar will continue to decline as long as the trade war continues.

“We believe there is room for rethinking the risk and compensation of dollar assets, and we hope that the US dollar will extend the decline over time,” Goldman’s Trivedy and Wilson said.

This story was originally introduced Fortune.com