Monetary Authority of Singapore's Insights on US Dollar and US Assets

Strategic Insights -

The Monetary Authority of Singapore has issued comments on the US Dollar and US assets by Mr Chia Der Jiun, Managing Director, Monetary Authority of Singapore. Mr Chia emphasized that the pricing and confidence in US Dollar and USD assets are influenced by both cyclical and structural factors. On the cyclical side, markets are pricing in slower growth, higher inflation, and uncertainty over the US fiscal trajectory. On the structural side, the US Treasury market is fundamental and systemic to the global financial system, and there is no alternative at this point.

Key Takeaways:

  • Mr Chia highlighted that the cyclical factors driving the pricing of US Dollar and USD assets include slower growth, higher inflation, and uncertainty over the US fiscal trajectory.
  • The structural advantage of USD assets is relatively stable for now, but could change depending on the fiscal trajectory and policies in the US.
  • The $28 trillion US treasury market is fundamental and systemic to the global financial system, and there is no alternative at this point.
  • Asian investors have an overweight exposure to US assets, with most of it being unhedged, which can lead to outsized reactions in the market.
  • Market participants are discussing rotation and diversification, with Europeans seeking positive stories about their region and Asian investors reevaluating their prospects following the suspension of tariff announcements.
  • The near-term market signals will be crucial in determining the continued stability of the outlook for USD assets.
  • The outlook for USD assets is relatively stable for now, but this could change depending on the fiscal trajectory and policies in the US.

Statistics:

  • The US treasury market is valued at $28 trillion.
  • The US Dollar has declined by about 6% this year.
  • The 30-year yields are climbing up to 5%.
  • 30% of Asian investors' exposure to US assets is unhedged.
  • The Sims has seen a 25% change in the ten year U.S.Tree’s yield over the last couple of months.

Sources:

  • [Bloomberg Live's YouTube channel]
  • [Qatar Economic Forum on 20 May 2025]
  • [The Strait Times, or any local Singaporean news source -- (date not provided)]