Where did the global capital money escape from the United States go

As global funds continue to flee from US dollar assets, investors are rushing to where to invest. Looking at the most obvious winners in the global capital market on Friday, the answer can be clearly drawn: Euro, Swiss Franc, Japanese Yen, gold

On Friday during the Asian session, as the US dollar index fell further after falling below the 100 mark, the crazy sell-off of US bonds continued to ferment in a week of brutal global tit for tat tariff policies, which intensified concerns about a deep economic recession and greatly shook investors' confidence in US assets.

At present, the yield of 10-year US Treasury bonds has once again risen to the high level of 4.45% touched on Wednesday, with a cumulative increase of about 45 basis points throughout the week, the largest increase since 2001. The rapid rise in US bond yields has been attributed by many analysts to large-scale asset selling, as hedge funds and other asset management companies divested from bonds due to margin requirements and losses. The market even speculates that foreign investors may be selling US bonds.

More and more analysts and investors also pointed out that the sharp sell-off of US treasury bond bonds and the weakness of the US dollar this week show that people's confidence in the world's largest economy, the United States, has been shaken.

Obviously, US assets are flowing out. Simultaneous declines in currency and bond markets have never been a good sign, "said Kyle Rodda, senior financial markets analyst at Capital.com. This is beyond the scope of economic slowdown and trade uncertainty

Chris Weston, research director at Pepperstone, also said, "A clear atmosphere of 'selling off the US' has spread throughout the market, with traditional safe haven assets being favored and the US dollar losing safe haven buying

Nomura strategist Naka Matsuzawa pointed out, "Investors now lack confidence in the United States, and I am deeply concerned about this - this is not only a vote of no confidence from US stock investors, but also a vote of no confidence from US bond market participants in the Trump administration and its policies

The 'Strongest' Euro

From the perspective of the foreign exchange market, it is not surprising that investors have turned to the Swiss franc and Japanese yen, the two major safe haven currencies, especially the Swiss franc, as the US dollar has significantly weakened in a safe haven environment. On Friday, the US dollar fell to its lowest level in 10 years against the Swiss franc at 0.8141; The US dollar fell to a six-month low of 142.87 against the Japanese yen.

Renowned economist Peter Schiff couldn't help but sigh, "I have never seen American assets suffer such a massive sell-off. The US dollar, bonds, and stocks have all been hit hard. I don't remember when the US dollar fell 3.5% against the Swiss franc in a day. America's ride on the global bandwagon is coming to an abrupt end. Fasten your seat belt

But in fact, in the foreign exchange market, the most severe blow to the US dollar on Friday, or the biggest benefit from this round of capital outflows from the US dollar, is not actually these two types of safe haven currencies - it is the euro. Historical statistics show that since the introduction of the euro at the end of the last century, the euro may have rarely shown such a strong performance against the US dollar

(The intraday increase of the euro against the US dollar ranks first among major currency pairs)

Market data shows that the euro rose to a high of 1.1386 against the US dollar during intraday trading, and has surged by over 300 points since Thursday. Similar sustained increases may have only occurred during the 2008 global financial crisis.

At the same time, for the euro this time, the changes in strength and weakness may no longer be limited to the level of foreign exchange speculation. In the bond market, a phenomenon that has never appeared since the introduction of the euro is that in the past five trading days, German bonds have outperformed US bonds by such a huge margin, and the premium of 10-year US bond yields over German bond yields is constantly increasing.

In fact, in the recent global bond market sell-off triggered by the sharp decline in US Treasury bonds, bonds of first tier European countries represented by German and French bonds have remained relatively strong. This is obviously related to their strong past safe haven aura. When investors think that US bonds may face risks due to the explosion of basis transactions, German bonds, the common "risk aversion second" in the field of treasury bond bonds, naturally become an alternative for many people.

(German bonds are highly sought after: yields continue to fall)

Interestingly, from the perspective of common interest rate spreads in the foreign exchange market, the widening interest rate spread between US and German bond yields should be detrimental to the euro. However, if funds flee the United States and flood into Europe due to panic over Trump's policies, the traditional logic of interest rate differentials does not seem difficult to break.

Considering that European stocks have always been one of the leaders in global stock market performance since the beginning of this year, the recent comprehensive outperformance of the US market in the European stock, bond, and foreign exchange markets undoubtedly makes European assets the first to "eat their fill" when US assets "fall"

This actually raises a topic for the future, whether the euro can take advantage of Trump's "reckless manipulation" and completely change its fate: sweep away the decline of the past decade or so?

Nomura Securities strategist Dominic Bunning recently stated that "the euro may be the main beneficiary of a slowdown or reversal in capital inflows into the US market, as these inflows mainly come from eurozone investors," adding that there may be a "structural restructuring" in the eurozone to support euro appreciation.

The 'most amazing' gold

Of course, while the foreign exchange market is abandoning the US and investing in Europe, a consistent theme in the global market over the past few years still holds: buying gold.

Driven by the inflow of safe haven funds, spot gold further hit a historic high during the Asian session on Friday, reaching a peak of $3220 per ounce.

On Wednesday and Wednesday, the gold price has just experienced the biggest two-day increase since the COVID-19 was blocked.

Joseph Brusulas, Chief Economist of RSM, a tax consulting firm, said, "The root cause of the global market shock lies in Trump's trade policies. People's credibility and confidence in the US system have been lost, and the behavior of the entire financial market reflects this

Liu Yuxuan, a precious metals researcher at Guotai Junan Futures, pointed out that "gold is currently the best investment target in the market. The unprecedented trade tensions have deepened people's distrust of the US dollar, thereby intensifying the demand for other safe assets

Valerie Noel, the head of trading at Swiss private bank Bank Syz, said before Trump's tariff suspension, "I think some countries are closely monitoring (US tariff policies) and may accelerate diversification from US assets

From the recent reserve situation of central banks around the world, increasing holdings of gold reserves has always been a major trend for central banks to achieve asset diversification goals. Trump's retrogressive tariff policies and the recent turbulence in the US bond market are clearly likely to further accelerate the speed of asset allocation transfer.

The data updated by the People's Bank of China earlier this week showed that as of the end of March 2025, the country's central bank's gold reserves were 73.7 million ounces, an increase of 90000 ounces from the previous month. This is also the fifth consecutive month since November last year that the People's Bank of China has increased its holdings of gold reserves.

Renowned economist Peter Schiff also expressed strong support for the prospects of gold again on Thursday. He pointed out that the deteriorating economic situation and stagflation prospects in the United States have created an attractive environment for gold investment. Given the strong gold price and the decline in oil prices, gold mining companies may also benefit from it.