Deutsche Bank warns: Overseas investors continue to withdraw from US assets, challenging the status of the US dollar.

Deutsche Bank pointed out that although the market has warmed up in the past week, foreign investors are still cautious about US assets. In order to almost real-time grasp the recent dynamics of overseas investors, George Saravelos, head of foreign exchange strategy at Deutsche Bank, researched the inflow of funds into various funds, which attract funds from overseas and then invest in the US stock and bond markets. According to a report released by Saravelos on Monday, data shows that the pace of foreign buyers purchasing US assets has "slammed on the brakes" in the past two months, even though the market haze slightly lifted last week, there is no sign of improvement. The report believes that from the current situation of fund flows, the inflow of US capital is either slowing down rapidly or US asset investment is shrinking significantly, both of which pose a challenge to the status of the US dollar as a twin deficit currency. It is reported that for more than a year until February this year, Saravelos has been bullish on the US dollar, especially against the euro. However, since then, he has become one of the representatives of bearish sentiment on the US dollar, warning that if the economic policies of US President Trump cause investors to sell off US assets accumulated over the past decade, the US dollar may lose its global reserve currency status. For a long time, the US has been a "strong magnet" for foreign capital, and in recent years, with the US market outperforming other regions globally, fund inflows have become more significant. Deutsche Bank estimates that by 2024, the proportion of US assets held by European investors will double from around 5% in 2010 to 20%; and the proportion of US assets held by Japanese investors will double to 16%. However, since Trump announced plans to impose tariffs on trading partners in early April, the US dollar has fallen along with the US stock and bond markets. The rare simultaneous selloff has raised concerns in the market about the mass exodus of foreign investors from the US market. In order to more timely grasp the relevant trends, Saravelos studied the daily fund inflows of about 400 ETFs focused on the US and registered overseas, as well as more comprehensive weekly data on closed-end and open-end investment funds. He said that from these two indicators, the situation is not optimistic. The report stated that the continuous selling phenomenon in ETF data is particularly prominent, with investors selling in both stock and bond markets. When examining a broader range that includes more actions from slower and more non-European funds, investors have stopped buying US stocks, but have not yet become net sellers. In the bond market, there is a trend of "intense selling". This month, Saravelos lowered his US dollar forecast, believing that Trump's policies have weakened foreign investors' willingness to finance the US trade and budget deficits. The strategist predicts that by 2027, the euro to US dollar exchange rate will drop from the current approximately 1.14 USD to 1.30 USD, and the US dollar to Japanese yen exchange rate will rise from the current approximately 142 JPY to 115 JPY.