TechFlow, May 10 — According to the Financial Times, the world's largest financial institutions are reducing their holdings in dollar-denominated assets and increasing investments in European markets. Data shows investors are pulling out of U.S. stock and bond markets on a large scale. This long-term divestment trend is driven by political chaos in Washington, declining confidence in the Federal Reserve, and the latest round of tariff disputes initiated by Trump.
Since January this year, the U.S. dollar has depreciated over 7%. Traders are now watching for signs of capital shifting toward safer European investments such as German bonds. According to a Bank of America survey, investors cut their U.S. equity positions in March at the fastest pace on record, while shifting into Europe at the quickest rate since 1999.
Multiple national pension funds are leading this divestment wave. Finland’s Veritas pension insurer, Australia’s UniSuper fund, and Danish pension funds have all reduced their U.S. asset holdings. BNP Paribas’ strategy head stated that if European pension funds reduce their exposure to U.S. assets to 2015 levels, it would mean selling off $300 billion worth of dollar-denominated investments.
