Just as American consumers have demonstrated extraordinary resilience amid President Donald Trump\u2019s tariffs, foreign investors apparently have a strong stomach for market chaos.<\/p>\n
The most recent data from the Treasury Department<\/a> shows that foreigners plowed a net $311.1 billion into U.S. securities in May, a record high, after pulling out $14.2 billion in April.<\/p>\n \u201cAll this is notable because so many commentators prophesied the end of US\u00a0\u2018exceptionalism\u2019\u00a0after the turbulence of recent months,\u201d Robin Brooks, a senior fellow at the Brookings Institution, wrote Wednesday in a post titled \u201cUS exceptionalism roars back\u201d on his Substack<\/a>. \u201cThe reality is that markets are far more accepting of all the ups and downs than people realize. US\u00a0\u2018exceptionalism\u2019\u00a0is alive and well.\u201d<\/p>\n Meanwhile, for the 12 months through May, net foreign inflows neared their all-time high from July 2023, when they topped $1.4 trillion to mark the peak of the American\u00a0exceptionalism<\/a>\u00a0narrative in markets, he added.<\/p>\n The rebound in May signals a stunning turnaround from April, as Wall Street feared the end of U.S. supremacy in the global economy and markets<\/a>.<\/p>\n In the immediate aftermath of \u201cLiberation Day,\u201d the S&P 500 flirted with a bear market, crashing nearly 20% from its prior high while the Nasdaq<\/a> passed that threshold. <\/p>\n The 10-year Treasury yield initially plunged but then soared more than 70 basis points in just days as investors worried top U.S. debt holders would dump their holdings. <\/p>\n But a month later, the opposite happened.<\/p>\n \u201cThe hurdle for the US to experience genuine capital flight is high and certainly wasn\u2019t breached in April,\u201d Brooks wrote.<\/p>\n To be sure, the 10-year yield remains above its pre-Liberation Day level, and the dollar has suffered its worst first half in more than 50 years. <\/p>\n And while the S&P 500 and Nasdaq have retaken their prior records and continue to charge even higher, stock indexes in Europe and China are still outperforming<\/a> U.S. rivals.<\/p>\n Meanwhile, talks with Japan and trade partners have cemented tariffs rates that are higher than the initial 10% baseline. Negotiations with other countries are still ongoing, and failure to reach a deal could send tariff rates even higher.<\/p>\n Nevertheless, market veteran Ed Yardeni, president of Yardeni Research, was also heartened by the data showing record inflows into U.S. markets.<\/p>\n \u201cSo, we take comfort from the data that confirm that it is the bears on the outlook for a massive selloff in US bonds, US equities, and the US dollar who might be delusional, not us,\u201d he wrote on Monday. \u201cOur faith in the kindness of strangers has been validated by the latest\u00a0Treasury\u00a0data.<\/p>\n Just a few months ago, top names on Wall Street were sounding the alarm on Trump\u2019s tariffs and their long-term repercussions.<\/p>\n Citadel founder and CEO Ken Griffin warned in April that the country was eroding its \u201cbrand,\u201d<\/a> explaining that from American culture to its financial and military strength, the U.S. is an aspiration for most of the world.<\/p>\n \u00a0\u201cOn the financial markets, no brand can compare to the brand of the U.S. Treasuries\u2026 we put that brand at risk,\u201d he said, adding that it takes a very long time to remove the tarnish on a brand.\u00a0<\/p>\n In May, Mohamed El-Erian, chief economic advisor at\u00a0Allianz<\/a>, said the era of U.S. exceptionalism has \u201cbeen put on pause.\u201d<\/a><\/p>\n And last month, Deutsche Bank<\/a> said America\u2019s prized exceptionalism is the collateral damage<\/a> of Trump\u2019s tariff war.<\/p>\n \u201cOur outlook argues that the structural foundations of U.S. exceptionalism\u2014particularly the ability to finance itself cheaply via the dollar\u2019s reserve status\u2014have begun to erode,\u201d economist Jim Reid wrote in a note. \u201cSo we remain structurally bearish on the dollar and expect U.S. term premia to keep rising.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Just as American consumers have demonstrated extraordinary resilience amid President Donald Trump\u2019s tariffs, foreign investors apparently have a…\n","protected":false},"author":2,"featured_media":40984,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[4592,28,112,6480,5948],"class_list":{"0":"post-40983","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bonds","9":"tag-business","10":"tag-markets","11":"tag-stock","12":"tag-tariffs-and-trade"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/40983","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=40983"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/40983\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/40984"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=40983"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=40983"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=40983"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}