US assets face foreign 'buyers' strike,' says Deutsche Bank

(Bloomberg) – Despite the past week market recovery, foreign investors remain ‘on a buyer strike on US assets’, according to Deutsche Bank AG. To get an almost ‘real-time’ window in how overseas investors have worn over the past few weeks, FX strategy head George Saravelos has looked at a variety of funds that take money from overseas and channel it in US stocks and bonds. The data shows a ‘sharp stop’ in the purchases of US assets by overseas buyers over the past two months, with no sign of a turnaround last week when the cloud lifted over the markets, Saravelos wrote in a note on Monday. “Our broad takeaway is that the flow testimony has so far continued on a very rapid slowdown in the US capital inflow and, in the worst case, the active analysis of US assets,” the report states. “Both interpretation is a challenge for the USD as a twin deficit currency.” The Deutsche Bank strategist was on the dollar for more than a year to February, especially against the euro. Since then, he has emerged as one of the most vocal bears and warned that the dollar is at risk of losing its status as the global reserve currency if the economic policy of President Donald Trump has caused investors to accumulate US assets over the past decade. Although the US has long been a magnet for foreign assets, the inflow has been particularly striking over the past few years, as US markets have been better than the rest of the world. The share of US assets in the possession of European investors fed to 20% in 2024, from about 5% in 2010, and according to the estimation of Deutsche Bank among the Japanese investors to 16% doubled. But the dollar dropped with US shares and Treasury after Trump announced his plan in early April to impose rates on trading partners. The rare simultaneous sale has expressed concern that foreign investors are withholding US markets. Saravelos said he investigated the daily streams in approximately 400 US -focused exchange -traded funds, along with the weekly data on a broader universe of closed and open investment funds. “Our conclusion from both statistics doesn’t look beautiful,” Saravelos wrote. The continued sale was the most important in the ETF data, where investors sold both shares and bonds, the report states. In the larger group of funds that Saravelos investigated-which included more slowly moving players and more outside Europe, it seemed like investors had stopped buying US shares, but were not net sellers. On the other hand, the data with effects showed ‘aggressive sale’. Saravelos revised his forecast for the dollar this month, saying Trump’s policy is reducing the appetite of foreign investors to finance the country’s trade and budget lack of trade. The strategist sees that by 2027 the US currency is dropping against the euro and 115 against the yen, of about $ 1.14 and 142 yen currently. More stories like these are available on Bloomberg.com © 2025 Bloomberg LP first published: 29 Apr 2025, 01:33 am Ist