The 'Sell America' trade was once the hottest topic in markets, but the data tells a different story. Over the past 12 months, foreign investors have poured a net total of more than $1.4 trillion into US assets, the dollar has returned to elevated levels, and American assets have once again become a key destination for global capital allocation.
For much of the past year, narratives like 'the end of American exceptionalism' and 'Sell America' dominated market discourse. There were widespread fears that former President Trump's tariff policies and controversies surrounding the White House's relationship with the Federal Reserve would prompt overseas investors to dump the dollar and US assets in favor of gold, commodities, and foreign markets.
This trend briefly materialized following the announcement of the 'Emancipation Day' tariff policy on April 2, 2025. However, as tariff concerns eased and recession risks diminished, market sentiment reversed course quickly.
Ed Yardeni, President of Yardeni Research, recently stated they have been skeptical of the 'Sell America' trade all along. "With tariff fears subsiding and recession worries receding, the 'dollar debasement' narrative has lost steam," he noted.
Data from the US Treasury Department shows that in the 12 months through April 2026, foreign investors were net buyers of over $1.4 trillion in US assets. The recent rally in the dollar to its highest level in over a year also reflects the renewed flow of global capital into American markets.
Rebecca Patterson, former Chief Investment Strategist at Bridgewater Associates and now a researcher at the Council on Foreign Relations, commented, "You may hate the US government, but if you like the opportunities presented by US companies, you're still going to invest here."
AI, Corporate Profits, and the Dollar Maintain Their Edge
Markets believe that the ongoing artificial intelligence investment boom and the superior growth prospects of US technology firms continue to attract foreign investment into US equities and the dollar.
Deutsche Bank data indicates that as of June this year, the US stock market still accounts for nearly half of the total global market capitalization. While markets in South Korea, Japan, and Europe have shown improvement over the past year, the overall returns from US equities over the past 15 years have significantly outperformed other major global markets.
Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset Management, pointed out that US companies generally maintain higher returns on assets, returns on equity, and earnings growth rates compared to their counterparts in regions like Europe and Japan.
Strong economic performance in the US continues to bolster market confidence. The Commerce Department reported the US economy grew at an annualized rate of 2.1% in the first quarter, with the Atlanta Fed projecting second-quarter growth to accelerate to 2.5%. In the first five months of the year, the US added an average of 114,000 jobs per month, exceeding the pace seen a year earlier. Marc Chandler, Chief Market Strategist at Bannockburn Capital Markets in New York, cited the resilience of the US economy as a key reason for the sustained capital inflows.
Debate over a potential erosion of the dollar's reserve currency status has not abated. However, the metrics tracked by Cembalest—covering the dollar's share in cross-border loans, international debt securities, foreign exchange trading, global foreign exchange reserves, international trade settlement, and Swift payments—show little significant overall change in recent years.
Data from the International Monetary Fund shows that while the dollar's share of global reserves has declined by approximately 3 percentage points since the end of 2020, the lost share has primarily shifted to 'other currencies,' with the shares of major competitors like the euro, yen, and pound sterling also declining.
Influenced by energy prices, tariffs, and AI-driven investment pushing up inflation, the Federal Reserve has recently signaled a more hawkish stance. Among the 18 members of the Federal Open Market Committee, nine anticipate at least one interest rate hike this year, with only one predicting a cut. Adam Turnquist, Chief Technical Strategist at LPL Financial, believes that the shift back towards a more hawkish monetary policy outlook is another significant factor driving continued capital flows into the US.
Long-Term Strengths Remain, But Risks Persist
Cembalest argues that in the absence of a clear alternative, the dollar's status as the global reserve currency is unlikely to change fundamentally in the near term.
In a report dated June 24, Deutsche Bank concluded that the US maintains its global leadership primarily due to a long-standing stable institutional environment, abundant energy and natural resources, a large unified domestic market, the world's leading capital markets, a mature financing system, an education and research ecosystem that continues to attract global talent, and a legal framework that encourages innovation and corporate restructuring.
The report highlighted that eight of the world's ten most valuable companies by market capitalization are based in the US. The 'exorbitant privilege' afforded by the dollar's reserve status continues to lower US financing costs, enabling the country to sustain fiscal deficits and trade imbalances over the long term.
Analysts noted, "Capitalism has always been a key driver of American success, but what has truly driven its sustained long-term success is pragmatism, not ideology."
US Treasury Secretary Scott Bessent recently stated that America's continued appeal to global capital stems from the world's deepest and most dynamic capital markets, the irreplaceable international role of the dollar, and an ecosystem that constantly fosters innovation. As market concerns over tariffs and policy risks have receded, the 'Sell America' trade is fading.
However, market participants caution that long-term challenges facing the US remain. IMF data shows the dollar's share of global reserves has fallen from over 66% to around 57% over the past two decades, with global central banks persistently increasing their gold allocations in recent years. Furthermore, the US's expanding fiscal deficits and public debt burden continue to be significant long-term risks monitored by foreign investors.
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