- President Trump’s tariff announcements have rattled the previously dominant US financial markets, putting pressure on Treasury yields amid fears of slower growth and rising inflation.
- Recently, the difference in yield that investors expect for holding Treasuries compared to swaps has increased significantly, signalling a perceived higher risk of holding Treasuries.
- The end of US financial market exceptionalism is by no means guaranteed, but we believe it is increasingly important to enhance diversification also in the sovereign debt space. In this regard, European government bond markets are a valuable option.
Until very recently, the US dollar (and US capital markets) seemed to reign supreme. The dollar has increasingly dominated as the currency of global transactions. Swift payments denominated in dollars rose from just over 30% of the total in early 2010 to an all-time high of 50.2% in January 2025. And more and more, US equity markets have been where the world stores its wealth. As a percentage of the global index, the MSCI US index rose from 37% in 1995 to 74% at the end of last year. Look more closely, however, and the dominance of US financial markets seems less assured. The US Treasury market, in particular, is showing signs of pressure.
You can now read the full whitepaper at the link below
