Cross-border investors continue to hold significant allocations in U.S. equities despite a perceived decline in U.S. exceptionalism, according to FX Street. Geoff Yu from BNY highlighted that investors remain attracted to U.S. stocks, particularly those benefiting from technology and artificial intelligence themes.
At the same time, these investors are reducing their exposure to U.S. Treasuries. The steepening of the yield curve has heightened duration risk, prompting a shift away from longer-dated government bonds. This adjustment reflects growing caution about fixed income amid changing interest rate dynamics.
For Japanese market participants, this trend underscores the sustained global confidence in U.S. equity markets, which could influence portfolio strategies and currency flows given Japan’s close economic ties with the United States.