Federal has cut interest rates hard since September, but...
... borrowing costs for Uncle Sam and everyone else have stayed elevated.
Cynics have warned for decades that the US could lose the backing of reserve managers, and for decades they have been largely wrong.
It takes only a small reduction in the dollar slice of global reserves to hit prices and keep borrowing costs unusually high, the researchers said.
Katie Martin Financial Times 8 February 2025
https://www.ft.com/content/5d697901-af9e-43da-909c-6f9e0f963bcf
A ‘reverse conundrum’ and foreign official demand for US Treasuries Rashad Ahmed Alessandro Rebucci / 15 Jan 2025
This may, they wrote, “reflect waning foreign official demand for dollar-denominated safe assets, possibly driven by geopolitical concerns including fear of sanctions and asset freezes”.
https://cepr.org/voxeu/columns/reverse-conundrum-and-foreign-official-demand-us-treasuries
The end of the dollar’s exorbitant privilege
https://englundmacro.blogspot.com/2020/10/the-end-of-dollars-exorbitant-privilege.html
https://englundmacro.blogspot.com/2025/02/det-ar-dollarn-bakom-allt-monetary.html
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