The empire of the "dollar" .. The Financial Times expects its collapse at the end of next year for these reasons

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The empire of the "dollar" .. The Financial Times expects its collapse at the end of next year for these reasons

19:26 - 10/07/2020

 

  

Information / follow-up.

The Financial Times expects the dollar’s price to collapse by as much as 35% of its value by the end of 2021.

The newspaper attributed the reasons to the collapse of domestic savings and a large current account deficit.

According to the figures, net domestic savings, saving by consumption for households, companies and the government sector, have returned to the negative territory for the first time since the financial crisis in the second quarter of 2020.

US net domestic savings of -1.2% in the second quarter was 4.1 percentage points lower than the first, the largest quarterly drop in records dating back to 1947.

Unsurprisingly, the current account deficit followed suit, pushing the current account deficit to -3.5% of GDP in the second quarter, 1.4 percentage points lower than that in the first period in the biggest quarterly decline on record.

The newspaper mentioned how the dollar index previously declined by 33% in 1970 and in the mid-1980s, and 28% between 2002 and 2012.

As for the Washington Post, it stopped at Trump's statement that the US stimulus talks had been postponed until after the presidential elections, which led to the decline of the Dow Jones Industrial Average by about 330 points, or by 1.2%.

With the approaching US presidential election, the bond markets in the largest economy in the world are witnessing a sharp decline in the yield curve on debt instruments, in an unmistakable sign that investors fear that the Democrats will win the upcoming elections.

A report published by the "Financial Times" newspaper indicates that the significant decline in the US bond yield curve anticipates the occurrence of a "blue wave" scenario, which is Biden's victory in the upcoming elections, and expectations of tough monetary policies by the Fed on the impact of the election results.

In Tuesday's trading, the yield on US 5-year bonds was below the 30-year yield level of about 1.27%, in the largest widening of the yield curve since 2016, amid a record wave of selling by investors for long-term bonds. 25 S.