Investors are Flocking to the U.S.

May 18, 2018

The US dollar has surged in recent weeks.  The greenback is up nearly 4% since the middle of April.  Investors worldwide are attracted to the US by rising bond yields and a stronger dollar.  Recent data from Morningstar shows nearly $3 trillion is now invested in US fixed income funds and ETFs, this is the highest level in more than 5 years.  Analysts are reporting hedge funds, asset managers and other investors are piling into the US dollar.  Emerging markets are beginning to feel the crimp as cash flows tilt toward the US.  The Argentine peso is down about 15% this year, and Argentina’s interest rates hit over 40% this past week.  In Turkey, the lira has fallen 11% against the US dollar in 2018 and their benchmark stock market is down nearly 12% in the same time. Global emerging markets are still seen as strong by most analysts, but there is a gnawing worry that current cash flow trends may indicate trouble ahead.

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