Global Capital Flows Shift Amid Changes in US Trade Policies
Greg Jensen, CIO of Bridgewater Associates, warns that it is risky to be heavily invested in US assets as the market shifts. Key points include:
- The MSCI USA index's performance is declining compared to the MSCI World index, suggesting a recalibration in global capital flows.
- Cross-border economic surprise indexes indicate that while the US economy is underperforming, other economies are improving.
- Trump’s trade policies have prompted significant fiscal responses in Europe, including Germany's $500 billion investment in defense and infrastructure, leading to a rise in the euro/USD exchange rate.
- Japanese 30-year bond yields reached a 20-year high, indicating increased attractiveness of non-US investments.
- Jensen suggests that the last 30 years of marginal buyers of US assets may soon become sellers, driven by these global financial shifts.
This trend in global capital flow is still developing, with substantial changes taking time to manifest fully.