The Volatility in April on the US Financial Markets Is Worrying Global Investors

After the recent historic crash of the crypto market, it's now the dollar's turn

April saw a troubling increase in volatility in the US financial markets, catching the attention of global investors. Following the surprising announcement of new tariffs by Donald Trump on April 2, the S&P 500 experienced a 5.4% decline. However, the signals from the bond market and the dollar are what truly sparked fear among investors, hinting at a deeper movement—an exodus of assets out of the United States.

Capital Exodus: Dollar and Bonds in Free Fall

After the recent historic crash of the crypto market, it’s now the dollar’s turn. Traditionally considered a safe haven, the USD reached its lowest level in three years according to the ICE U.S. Dollar Index, hitting 99.92. At the same time, yields on 10-year US Treasuries surged to 4.5%, indicating a significant drop in demand for Treasuries.

According to Marco Papic, strategist at BCA Research, “investors are turning their backs on American assets.” This movement, which began well before the recent trade tensions, is accelerating. The American currency is losing ground against the yen, the Swiss franc, and the euro, suggesting a structural loss of confidence.

George Saravelos of Deutsche Bank went so far as to speak of a “rapid dedollarization,” a questioning of the dollar as the world’s reserve currency. For the Minneapolis Federal Reserve, represented by Neel Kashkari, this decline in the dollar amid a trade war is unusual and signifies a shift in investor preferences.

Chain Economic Consequences

Beyond the markets, the decline of the dollar has implications for the real economy. American companies with strong international exposure will see their image tarnished. Larry Fink, CEO of BlackRock, spoke of a “growing discrimination” against major U.S. brands.

The surge in bond yields, coupled with the drop in the dollar, will also increase the cost of servicing federal debt and limit Washington’s budgetary maneuvering room. On the horizon, the inflationary risk linked to tariffs complicates the Fed’s task, making any rate cut more difficult.

The dollar is falling, bonds are plummeting, and investors are reassessing the economic status of the United States. With recent reports of gold hitting a historic peak at $3,360, the exodus of assets is no longer an hypothesis, but a reality in progress.