United States Archives

Bitcoin Surges Past USD 120,000 Creating New Record

Written by IntaCapital Swiss on July 16, 2025. Posted in News & Reports. Leave a Comment

On Monday of this week, Bitcoin blew past the USD 120,000 mark creating a record price and hitting a high of USD 123,205 (up 3.4%) before pairing early gains to trade around the USD 121,600 mark. On the back of this rise, and clinging to the shirt tails of Bitcoin Ether, the second largest crypto token, advanced beyond the USD 3,000 barrier whilst a number of other smaller coins such as Uniswap and XRP also joined the bandwagon. Experts suggest that investor demand has been fuelled by crypto week (14th – 18th July), a term coined by the House of Representatives. Indeed, the House will consider the Clarity Act*, the Anti-CBCD Surveillance State Act**, the Senate’s Genius Act***, as part of Congress’ effort to make America the crypto capital of the world.

*Clarity Act – The Digital Asset Market Clarity Act aka the Clarity Act, is a proposed US law designed to establish a comprehensive regulatory framework for digital assets, specifically clarifying the roles of the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) in overseeing these assets.

**Anti CBCD Surveillance State Act – This act prohibits unelected bureaucrats in Washington D.C. from issuing a CBDC (Central Bank Digital Currency), that undermines Americans’ right to financial privacy.

***Genius Act – This act refers to the Guiding and Establishing National Innovation for U.S. Stablecoins Act (a stable coin is a digital currency pegged one-to-one against a hard fiat currency, mainly the US Dollar) and is a piece of legislation aimed at regulating stable coins. The act establishes a comprehensive framework for stable coin issuance, custody, and use, including rules for issuers, custodians and digital asset service providers.

Analysts suggest that investor confidence is at a high and will probably stay there for a while especially as congress are considering the abovementioned bills. Post the election of Donald Trump for a second term in the White House, Bitcoin enjoyed a surge but then fell back trading either side of USD 100,000 for a number of months. The policies emanating from the White House did indeed have a negative effect on investor optimism regarding the President’s pro-crypto agenda, however, other U.S. assets that carry risks such as equities have now rebounded to just about their original highs, giving Bitcoin has once the impetus to move upwards.

Interestingly, institutional investors have also jumped on the Bitcoin bandwagon as confidence in the cryptocurrency has dramatically improved because despite the flip-flop chaotic trade policy of the current U.S. administration, Bitcoin has been steadily moving north. Since doubling in 2024 Bitcoin is up circa 30% since January 1st of this year, and last week investors piled into combined US Bitcoin ETFs with inflows of USD 2.7 Billion, furthermore the current rally has also been helped by crypto trades by the bears who all unwound their short positions last Friday. Data released showed those traders who were short of Bitcoin and had to unwind their trades, saw their positions wiped out to the tune of USD 1 Billion.

There are many in the Democratic party who oppose the introduction of the aforementioned bills to Congress, and Senator Elizabeth Warren last week made vocal her concerns regarding the package of bills, stating it could amount to an “Industry Handout”. She also noted that if passed into law, these bills could inject traditional cryptocurrency volatility into mainstream financial markets. Once upon a time, President Trump described Bitcoin as a “Scam”, but a complete U-turn showed him to be the biggest backer of the crypto world. His family are heavily invested in crypto world such as Bitcoin, Stable Coin crypto mining and sensationally the two meme coins $Trump and $Melania. He has promised to make America the crypto centre of the world, and it appears he will be living up to that promise.

Is the US Dollar Under Threat Due to the Policies of Donald Trump?

Written by IntaCapital Swiss on July 2, 2025. Posted in News & Reports. Leave a Comment

Donald Trump was inaugurated on Monday 20th January 2025, and since his elevation to the White House, the greenback has lost over 10% of its value against the Swiss Franc, Sterling, and the Euro. Global investors have been turning away from President Trump’s policies, and there is no better measuring stick for their renunciation of his policies than the US dollar. The last time the US Dollar fell so badly was post the Global Financial Crisis 2007 – 2009, when in 2010 the Federal Reserve in order to prop up the economy was excessively printing money.

However, this time around there is no global financial crisis; it is the policies coming from the White House such as expanded global tariffs, the on-going fight between President Trump and the Chairman of the Federal Reserve to push interest rates down, where Chairman Jerome Powell* refuses to budge. Furthermore, there are two further policies which are scaring investors such as the open legal warfare against those who stand up against his policies, and “the big beautiful bill” which has just passed the Senate 51-50, which many experts feel will add to an already massive deficit. These are just a few of the pillars that make up the current administration’s policy and according to the value of the US Dollar are driving global investors away.

*Jerome Powell and Tariffs – On Tuesday of this week, The Chairman of the Federal Reserve Jerome Powell noted that the FOMC (Federal Open Market Committee) would probably have reduced interest rates further without the White House’s policy of expanding global tariffs. He went on to say, “In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs. We think the prudent thing to do is to wait and learn more and see what the effect might be”.

Experts suggest that tariffs will put upward pressure on inflation and certainly slow economic growth, and the President continuing to flip-flop on the specifics of levies and halting progress on trade agreements has given much worry and uncertainty on the outlook of the US economy. However, having said that, recently released economic data shows that tariffs have yet to impact prices or the labour market with further data showing that job openings rose in May, the highest level since November 2024.

Interestingly, many market experts, traders, economists, and analysts suggest that Donald Trump and his colleagues are ambivalent to the fall in the US Dollar. When questioned as to whether they support a strong dollar, the answer is always inevitably “yes” but little seems to be done in halting the current decline. Analysts suggest the financial markets feel that the White House is happy to see the US Dollar slide downwards in order to boost manufacturing in the United States.

Such speculation has led some observers to suggest that the President is playing with fire as the cost of financing the government has exploded to over USD 4 Trillion as the budget deficit continues on its path like a runaway train. Financing mainly comes from overseas

investors, and when it comes time sell up and bring their money home, a sliding greenback means they lose money. This, some observers feel, could lead to a vicious cycle where global investors continue to pull their funds out of the USA driving up borrowing costs resulting in further declines in the US Dollar with further economic uncertainty and so on and so on. If overseas investors get a whiff that a declining greenback is government policy the results could be catastrophic for the US Dollar.

As the world’s reserve currency, the US Dollar is already on the decline because at the close of business 2014 data showed the greenback accounted for 65% of global foreign exchange reserves and as at close of business 2024 this figure stood at 58%. However, that said, swift data shows that as recently as August last year the US Dollar is used in 49.10% of global payments and as at December 2024 data shows that 54% of global traded invoices are transacted in US Dollar and 88% of foreign exchange transactions are done in USD Dollars.

Analysts agree that in the near future, the US Dollar will undoubtedly keep its status as the world’s reserve currency. However, if the US Dollar continues to slide it will come under severe pressure from foreign investors, and there are already mutterings coming out of the ECB (European Central Bank) that the Euro could, in a few years’ time, be in a position to take over the mantle of the world’s reserve currency. The US has amassed a debt pile of USD 29 Trillion (100% of GDP) and it’s not stopping, it has lost its last remaining AAA rating and the budget deficit over the past few years has increased to 6% of GDP. President Trump without a doubt will have some short-term problems coming his way, but will things have turned around by the end of his presidency, and what will his legacy be?

Major Victory for the Crypto Arena as Senate Passes Stablecoin Bill

Written by IntaCapital Swiss on June 19, 2025. Posted in News & Reports. Leave a Comment

On Tuesday 17^th June 2025, the United States Senate passed a bill (AKA The Genius Act) to create a regulatory framework for “Stablecoins”* in a defining moment for digital currencies in the crypto industry. The bill passed the Senate by a majority of 68 – 30 with a number of democrats joining most Republicans ensuring the bill was passed by a significant majority. The bill will now sit before a Republican controlled House of Representatives which will vote on its version of the bill before finally landing on the desk of President Donald Trump.

*Stablecoins – are a type of cryptocurrency designed to minimize price volatility by pegging their value to a stable asset such as a fiat currency which in this case is the US Dollar. Unlike other cryptocurrencies which historically and today can fluctuate wildly in price, stablecoins doctrine is to maintain a relatively stable value making them suitable for everyday transactions and a storage of wealth.

Stablecoins that are pegged to the dollar will have to hold dollar-for-dollar reserves in either cash, short-term US government debt (treasuries) or similar products that are easily convertible to cash, which shall be overseen by federal or state regulators, The crypto industry as a whole has waited years for yesterday’s vote, have literally spent hundreds of millions of dollars to elect a Congress that is crypto friendly, and the industry is posed to do more of the same in the 2026 mid-term elections.

Those in the stablecoin arena are hopeful that the recent legislation will ensure stablecoins sooner or later become a mainstream form of payment. Indeed, retailers have backed this bill because it is felt that stablecoins will provide a faster and cheaper way to process transactions as opposed to traditional banking products such as credit cards. However, in the banking world, the smaller banks have issued warnings that deposits may be drained plus a reduction in access to credit. Meanwhile larger banks are mulling over whether they should issue their own stablecoins will generate profits from reserves.

Senator Elizabeth Warren (Democrat and ranking member on Senate Banking) and a number of her colleagues argue that the bill does not go far enough to protect consumers in the event that issuers of stablecoin fail. They contend that in the event of a failure customers could well lose their money which could fuel demands for a bailout by the taxpayer, and Senator Warren went on to say the bill would “supercharge the value of Donald Trump’s corruption.

Elsewhere in the crypto world declines in cryptocurrencies were led by Solana and Ether falling by 7% and 8% respectively, while Cardano had fallen by 8.5% (all coins had rebounded slightly by C.O.B. on Monday) all reflecting growing concern over the escalating conflict in the Middle East. The sell-off in crypto appeared to be a warning to Bitcoin holders that the cryptocurrency is a haven from turmoil as it sank along with other coins when Israel launched airstrikes against Iran at the end of last week.

The Debanking Crisis and How to Rebuild Financial Confidence

Written by IntaCapital Swiss on June 5, 2025. Posted in News & Reports. Leave a Comment

A new financial phenomenon has in recent years swept through the financial world and it is known as “DEBANKING”. Debanking occurs when a bank, at any time and in any place, closes a corporate, personal, or private account – or refuses to open one – without warning or providing any plausible or straightforward reason. Banking clients may have been with their bank for a short period of time or may have been with them for years, but the client can wake up one morning to find they have no banking facilities.

This means no cash or debit card, no visa card, any banking facilities will have been cancelled, they have been financially frozen out of the system, and there is nothing clients can do about it; there is no recourse. What many citizens and corporates across the globe don’t know is that debanking is not just an internal compliance issue when fraud, money laundering, terrorist funding or other criminal or illicit activity is discovered. Indeed, the innocent, law-abiding (never even has a parking ticket) individuals or entities can be kicked out without any due process; there is no appeal.

A question many in the financial industry have been asked is “When did debanking start”? The answers are somewhat fuzzy, but in essence the concept of debanking, particularly in a political or disruptive motivated context, never really had a fixed beginning date. It is a theme or phenomenon that has occurred throughout history evolving over time but has gained much traction and press awareness in recent years. Indeed, a high-profile debanking event took place in the United Kingdom when in 2021 NatWest Bank debanked a senior British political figure, Mr Nigel Farage MP* leader of the Reform Party.

*Nigel Farage – Nearly two years after NatWest Group closed his accounts at their wholly owned private wealth subsidiary Coutts & Co, the then CEO Dame Alison Rose resigned. Although the bank said the account was closed due to Mr Farage accounts falling below the required thresholds, Mr Farage obtained a document stating that the bank were at odds with his political views. The case was settled privately where the bank paid Mr Farage an out of court settlement, but political motivation in the case was never proved.

The Farage case highlighted the problems innocent individuals and entities face in today’s banking world. In the United Kingdom alone, in 2024 circa 408,000 were closed without appeal as opposed to 45,000 in 2016 – 2017. The same is happening in the United States, Europe and elsewhere in the world. The main focus on account closures by banks are se workers, (legal in the UK), migrants, refugees, those with poor financial histories, the homeless, PEP’s (Politically Exposed Persons), small business and those with links to crypto, (especially prevalent int the United States in recent years).

To this end, IntaCapital Swiss SA Geneva, will be pleased to hear from any high-net-worth individuals who have suffered the ignominy of having their banking facilities removed without any reasons given, with absolutely no chance of appeal or access to a recourse process.

Trump’s Tariffs Hobble U.S. Markets Whilst European Stocks Forge Ahead

Written by IntaCapital Swiss on June 4, 2025. Posted in News & Reports. Leave a Comment

The week ending 30th May 2025 saw equities in Europe as a clear winner globally, whilst tariffs and trade wars initiated by President Trump have hampered and shackled the markets in the United States. Recent data released showed that out of the world’s ten best performing stock markets, eight can be found in Europe. Indeed, this year in US Dollar terms Germany’s DAX Index* has rallied in excess of 30% including such peripheral markets as Hungary. Poland, Greece, and Slovenia.

*The DAX Index – The DAX or its full name Deutsche Aktien index 40, is Germany’s benchmark stock market index, and reflects the performance of 40 of the largest and most liquid German companies trading on the Frankfurt Stock Exchange. It is a key indicator of the health of the German economy.

The European STOXX 600 Index* is currently beating the U.S. S&P 500 by 18% (reflected in dollar terms) which as data shows is a record, which experts advise is being powered by a stronger Euro and Germany’s strong fiscal spending plan both current and in the past. Market analysts with knowledge of this arena suggest there is more to come due to attractive valuations and resilient corporate earnings, which when compared to America’s which is being gripped by fiscal and trade debt, make Europe a safer bet.

*European STOXX 600 Index – This index is a broad measure of the European Equity Market. Based in Zug, Switzerland, it has a fixed number of components and provides extensive and diversified coverage across 17 countries and 11 industries within Europe’s developed economies, representing circa 90% of the underlying investible market.

Equity bull experts suggest that Europe is back on the investment map, with some investment managers saying that recently there has been more European interest from investors than there has been in the last decade. Bulls went on to say that this rally may well be self-feeding and if European stocks continue to rise, they will be likely to attract fresh investment from the rest of the world. Indeed, some analysts suggest that if the trend away from America continues over the next five years the European markets could expect an inflow of circa USD 1.4 Trillion (Euros 1.4 Trillion.) Analysts suggest the gains so far this year were the result of a proposal by the German government to spend hundreds of billions of Euros on defence and infrastructure with some economists suggesting that this will boost growth across the European bloc from Q2 2026.

Elsewhere, a slew of Europe’s peripheral markets have had performances that have made investors sit up. For example, Slovenia’s SBI TOP Index is, according to data released, the second-best performing stock market up 42% (in dollar terms) just behind Ghana’s benchmark the Ghana Stock Exchange GSE-CI, (tracks all the performance of all company’s trade on the Ghana Stock Exchange). Other peripheral stock exchanges that have done well are Poland’s WIG20) Index up 40% whilst the benchmarks in both Hungary and Greece are both up circa 34%.

Experts suggest that 2025 could be a good year for European Stock Markets as some professionals are already betting that European stocks will outperform their counterparts in America. President Trump’s tariffs, the loss of the country’s AAA status, looming trade wars, and the current fiscal deficit of USD 1.9 Trillion (and predicted to climb), are all factors as to why investors are turning their backs on the US markets. Whether this will last, we will have to wait and see if all of Donald Trump’s predictions come true. Meanwhile back in Europe data released show that corporate earnings are in the spotlight having risen 5.3% in Q1 2025 against predictions of a 1.5% decline, another reason to perhaps bet on Europe.

Has President Trump Triggered a Sell-Off of U.S. Dollar Assets by Asian Countries?

Written by IntaCapital Swiss on June 4, 2025. Posted in News & Reports. Leave a Comment

Analysts advise that many exporting Asian nations, especially those considered as powerhouses* are beginning to unwind their US Dollar holdings which today stands at circa USD 7.5 Trillion. President Trump’s economic policies have turned America from a safe haven to one of volatility and perhaps inevitably a certain amount of pain. These Asian exporting powerhouses have for many decades enjoyed a simple economic model – Sell their products to the United States and use the proceeds to invest in U.S. assets. However, experts advise that due to President Trump’s current strategies, this model, whilst not completely broken, is certainly creaking at the joints.

*Asian Exporting Powerhouses – China, Japan, South Korea, India, Vietnam, Singapore, Malaysia, Thailand, Bangladesh, Pakistan, Philippines, Taiwan, and Hong Kong.

This economic model is now facing its biggest challenge since the Global Financial Crisis of 2007 – 2009 with the underlying logic that created this model in disarray. Certain senior figures in this financial arena have already suggested that Asian countries due to a certain amount of pain have already begun to unwind their dollar positions. An example of such pain can be found in Taiwan where data shows that after President Trump announced tariffs on “Liberation Day” there was a big sell-off of the U.S. Dollar. As a result, Insurers in Taiwan announced just for April 2025 a loss of circa USD 620 Million, and when at the beginning of May the Taiwanese Dollar surged against its counterpart in America by circa 8.5% the same companies announced there were potential losses of circa USD 18 billion in unhedged American investments.

During the Biden presidency, data revealed that flows of capital from Asia to the United States had already receded from previous peaks. Analysts have announced that unwinding is accelerating with family offices freezing or cutting their investments, data from March 2025 confirmed that China had reduced their treasury holdings, and Japan’s largest life insurer announcing it is searching for alternatives to US treasuries. In Australia, UNISEP, one of the largest pension funds, announced it was declaring a cap on US investments, and so the list goes on. If the switch from holding US assets to doubting their reliability could experts advise, see circa USD 2.5 Trillion flow through global markets. Indeed, data released from the US Treasury confirmed that a combined net USD 172 Billion of U.S. bonds and equities were sold by Asian Nations in 2024 adding to the USD 64 Billion sold in 2023.

There are however a number of experts who disagree with the aforementioned, saying that in order for a decoupling from the United States investors need to know where to go suggesting that this is just a cyclical shift. These opinions appear to be in the minority and recent data shows that capital is already flowing into Japan. Experts now believe that policy volatility and tariffs under the Trump2 presidency is exacerbating the decoupling from the US Dollar. However, many investors still see US treasuries as a safe haven, especially as the dollar is still regarded as the world’s reserve currency. Only time will tell where the financial markets and the US Dollar stand by the end of the second Trump presidency. However, under the current circumstances the global mood towards President Trump, his tariffs, his flip-flops on economic policy, the loss of their AAA status remains cautious if not very negative.

Trump Reignites Trade War with EU as he Threatens 50% Tariffs on the Bloc

Written by IntaCapital Swiss on May 28, 2025. Posted in News & Reports. Leave a Comment

On Friday 23rd May, President Trump threatened to impose a 50% tariff on June 1st, 2025, on the EU (European Union) stating that current negotiations on trade between Washington and Brussels were going nowhere. President Trump has been complaining for a long time that the EU bloc has been unlawfully targeting U.S. companies with regulations and lawsuits, plus he feels that the Europeans have been deliberately taking their time over the current trade negotiations. Originally, on “Liberation Day” 2nd April 2025, the EU had been marked down for 20% tariffs, but were reduced to 10% until July 9th, to give enough time for trade talks to find common ground and a solution.

In response to the tariff threats by President Trump, the EU Trade Commissioner, Maroš Šefčovič, said “EU/US trade is unmatched and must be guided by mutual respect, not threats. We stand ready to defend our interests”. He went on to stress “the EU’s fully engaged, committed to securing a deal that works for both of us”. Many of the European governments reacted to the tariff threat warning that higher tariffs would indeed be damaging to both sides. Meanwhile, back in the Oval Office, President Trump also announced to reporters that new tariffs would be imposed unless EU companies moved their operations to the United States.

However, on Monday 27th May, following a phone call between the President of the European Commission Ursula von der Leyen and Donald Trump, where the EU signalled a more conciliatory approach by agreeing to accelerate trade talks, the President of the United States agreed to extend the 50% tariff deadline to July 9th, 2025. Experts suggest that one of the major roadblocks that face the EU is that they feel America is not making it clear exactly what they want, and they still do not know who is speaking for the President. EU Trade Commissioner Maros Sefcovic has spoken twice with U.S. Commerce Secretary with his statements adopting a more malleable tone, gone was the previous rhetoric of “we will defend our interest rates”.

After Trump’s announcement last Friday, the markets reacted with the usual predictability with the Nasdaq down 1%, the broader S%P 500 down 0.68%, the STOXX EUROPE 600 index down 0.68%, Germany’s Dax and France’s Cac 40 both ended the day down over 1.5%. The US Dollar took a beating again, down by as much as 0.8% on the Bloomberg Dollar Spot Index*, slumping to its lowest level since 2023. Experts suggest that the threat of punitive tariffs then removing that threat gives many investors and traders in the financial markets a lack of confidence in the Presidency translating to a lack of confidence in the greenback. Whilst many indexes recovered on Monday 26th May, the US Dollar continued its decline which not only included the slap happy way tariffs are doled out, but also Trump’s tax bill which is expected to add hundreds of billions to the federal deficit. Meanwhile data released from the Commodities Futures Trading Commission show hedge funds, asset managers and other speculative traders continued to bet against the US Dollar.

*Bloomberg Dollar Spot Index – This index is a benchmark that tracks the performance of the US Dollar against a basket of major global currencies. It’s designed to provide a

comprehensive view of the dollar’s strength by including currencies from both developed and emerging markets that are significant in international trade and liquidity.

A full-blown trade war between the EU and the United States is according to experts not in anyone’s interests. The repercussions to both protagonists’ economies would be negative and will undoubtedly have a downside effect on global trade as well. No matter what is currently being said, both the U.S. and the E.U. are miles apart in their negotiations, with President Trump having already rebuffed a trade deal from the E.U. last Thursday 22nd May. Despite improved rhetoric from both sides those close to the negotiations are fearful that come July 9th, 2025, a consensus may not have been reached.

United States and China Trading Update

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

Without a doubt, President Trump’s tariff war has severely disrupted trade between the two economic powerhouses, and nowhere else is this as dramatically highlighted as Apple’s iPhone and mobile devices, where shipments to the United States in April 2025 are down to levels not seen since 2011. Customs data revealed that Smartphone exports slid 72% or circa USD 700 Million in April, outpacing by a long way an overall drop in Chinese shipments to the U.S. of 21%.

Elsewhere in early May 2025, the busiest container hub in the United States, the Port of Los Angeles, saw a drop in shipments by circa 30% as the weight of Trump’s tariffs took their toll. Data released shows that retailers and importers were the most affected, especially those linked to China. Bilateral trade in 2024 between China and the U.S. was circa USD 690 Billion and investors feel that tariffs will significantly erode this figure.

Despite the temporary reprieve in tariffs between the two nations, data reveals that the trade war has left a deep unwelcome imprint on Chinese exporters with many looking to new markets away from the United States. Well known in the trade insurance arena, Allianz Trade having conducted a poll of Chinese exporters found 95% will or already are more determined than ever to double down on exporting their goods to non-U.S. markets.

China’s coastal city of Ningbo is host to China’s second largest port (Ningbo-Zhoushan Port) by cargo tonnage where local businesses, despite the de-escalation in tariffs still plan to reduce exports to the United States and “Go Global’. Senior experts and economists at the Economic Intelligence Unit confirmed this fact whilst also confirming Southeast Asia* remained the favoured destination among many businesses seeking to move production away from China.

*Southeast Asia – comprises eleven countries Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam. Note that many Chinese companies are somewhat wary of Vietnam with concerns over rising cost weighed against an attractive labour market. Indonesia appears to be the favoured destination.

Experts in the Sino – U.S. arena suggest that decoupling in the medium term seems to be the favoured outcome as Chinese exporters move away from the United States and American companies look to increase efforts to move production out of China with Apple already accelerating a shift in production to India. Apple was railed against by President Trump for not moving production back to the United States, experts close to the situation have said that scenario is unfeasible. The deal struck in Geneva between China and the United States brought tariff rates down to levels before the tit-for-tat tariff skirmish. But with time eating into the 90-day de-escalation agreement, the world will hold their breath whilst these two economic giants try and come to a sensible agreement.

Moody’s Downgrades the United States’ Sovereign Credit Rating

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

On Friday May 16th, 2025, the credit rating agency Moody’s downgraded the Unites States’ sovereign credit rating from Aaa (equivalent to AAA at Standard & Poor’s and Fitch) by one notch to Aa1 due to growing concerns over the nation’s USD 36 Trillion debt pile. Moody’s is the last of the three most important and recognisable rating agencies to downgrade the sovereign credit rating of the United States, with Fitch downgrading in 2023 and Standard and Poor’s downgrading in 2011. The United States has held a perfect credit rating from Moody’s since 1917, however the rating agency back in November when 2023 advised it might lower the U.S. credit rating when it changed its outlook from stable to negative.

The reaction from the White House was predictable, with spokesman Kush Desai saying, “If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded.” In another statement the White House advised that the administration was focused on fixing Biden’s mess. The White House communications director Steven Cheung also laid into Moody’s singling out their chief, Mark Zandi, who he said was a political opponent of President Trump, and is a Clinton donor and advisor to Obama. He went on to say, “nobody takes his analysis seriously and he has been proven wrong time and time again”.

Moody’s pointed out that in 2024, the government spending was higher than receipts by circa USD 1.8 Trillion, being the fifth year in a row where fiscal deficits have been above USD 1 Trillion. Debt interest has been growing year on year and eating into sizeable chunks of government revenue, with Moody’s pointing out that federal interest payments in 2021 absorbed 9% of revenue in 2021, 18% in 2024, and predict circa 30% by 2035. The GAO (Government Accountability Office), which is seen as an investigation arm of Congress has called the current situation unsustainable and went on to say that unless there is a change of policy debt held by the public will be double the size of the national economy by 2047.

After the announcement on Friday 16th, markets were unnerved on the following Monday morning, with stock markets recovering by the end of the day with experts confirming that markets had shrugged off the news, but some were advising that investors should be wary of complacency. However, some analysts advise the downgrade is a warning sign and may be the catalyst for profit taking after a huge run in the past month for equities. At the end of the day, United States Treasury Bonds are currently viewed by global investors as the safest investment in the world, and a downgrade by Moody’s is unlikely to stifle appetite for treasuries.

For most money managers and other global investors and market participants experts advise that the downgrade was probably seen coming for some time and lands in a market already wary of risks from tariffs and fiscal dysfunction. However, currently President Trump is pushing the Republican controlled Congress to pass a bill extending the 2017 tax cuts, a move some analysts predict will add many trillions to an already highly inflated government debt. However, hardline Republicans blocked the bill denuding deeper spending cuts. There was volatility in US Treasuries on Monday after the Moody’s announcement with 30-year treasuries breaking through the symbolic barrier of 5% (first time since October 2023) but slipped back to 4.937% by close of business. Experts suggest that the bond market had already priced in risk premium for government economic policy already in disarray, meaning Monday’s upward move in yields was just a knee-jerk reaction.

Despite the Recent Rebound, Will Investors in the Long-Term Continue to Dump Dollar Assets?

Written by IntaCapital Swiss on May 14, 2025. Posted in News & Reports. Leave a Comment

Although recent losses in US stocks have almost been wiped out, market experts believe that institutions such as pension funds and institutional money managers could in the long-term cut back on their massive exposure to US Dollar investments. Some investment bankers close to the action of certain money managers with trillions of dollars in U.S. Dollar asset exposure have started to cut back on these positions, mainly due to the fall out on the tariff war, flip flopping on policy, and Donald Trump’s continued attacks on the Chairman of the Federal Reserve, Jerome Powell.

Expert analysts advise that logically Europe is the current destination for the flight of capital from the United States, due to growth in the European economy being led by German spending in the defence sector and mixture of relatively cheap equity markets. Recently released data shows that in March 2025, the largest cut in history to U.S. equity allocations* with the shift out of the economy of the United States and into Europe was the sharpest since 1999. Further data released showed that in April 2025, outflows from ETFs (Exchange Traded Funds) domiciled in Europe that invest in U.S. debt and equities reached Euros 2.5 Billion, a level not reached since 2023.

*US equity allocation – refers to the portion of an investment portfolio dedicated to stocks of companies listed on U.S. stock exchanges. It’s a key component of overall asset allocation, which involves distributing investments across different asset classes like stocks, bonds, and real estate.

Although there have been recent gains by the US Dollar, overall, it is down 7% in 2025, with some institutions reporting spot transactions where institutional investors have sold the US Dollar and bought Euros on a sustained basis. One highly qualified and senior macro strategist in Europe announced that “If European pension funds were to reduce their allocations to 2015 levels, that would be equivalent to selling Euros 300 Billion in U.S. denominated assets. Some European pension funds have already started to trim their U.S. holdings position with Danish pension funds in Q1 2025 selling U.S. equities for the first time since 2023 and in the quarter Finland’s Veritas Pension Insurance Co reduced their exposure to U.S. equities.

Investors, analysts, economists etc, all talk about the cyclical effects in the various financial and commodity markets. What goes up must come down and vice versa. Remember the Global Financial Crisis of 2007-9 where liquidity completely dried up, banks were not lending to each other, investment bank(s) going bankrupt, bail outs of some of the largest financial institutions? Several years later everything it seemed was back to normal with the longest run of low interest rates seen for decades.

The point is whilst the United States is seeing massive outflows of capital in a reversal of the long-term trend where inflows were the order of the day where capital was attracted liquidity, market performance and economic growth. Some analysts advise that the current trend will only go so far given the liquidity and depth of the U.S. stock market and the circa USD 30 Trillion US Government Bond/Treasury market. Analysts report that many investors are sitting on the side lines wary of betting against the economy of the United States and its prospects for long-term growth.

Tag: United States