US Harvest Plan Bankrupt? Capital Exodus Feared
Throughout 2022, the US dollar launched a formidable offensive, rising from 95.62 at the beginning of the year to a peak of 114.79.
As the US dollar continued to appreciate, the currencies of other countries experienced significant declines. In this currency war and, indeed, a full-scale financial war, has the US dollar truly won?
Clearly, it has not.
Or rather, only the US Dollar Index has won; all other US dollar assets have lost.
Moreover, the alarm bells have already sounded, and the United States' plan to reap global profits may have already failed. What awaits the United States in the future is the challenge of how to clean up the aftermath.
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The global stock market in 2022 was a cacophony of voices, presenting a series of dramatic performances. Well-known events such as the Russia-Ukraine war and the gritted-teeth continuous interest rate hikes by the Federal Reserve have influenced stock fluctuations, with trends as volatile as an electrocardiogram.
The continuous rise of the US Dollar Index should theoretically attract a large amount of capital into the United States and into US stocks. With the push of funds, US stocks would also experience a significant increase.
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However, the actual situation was not the case.
The major global stock markets have all experienced a certain degree of decline, among which the Nasdaq Composite Index fell by 33.10%, becoming the main market with the largest decline.Shenzhen's Cheng Index in China fell by 25.84%, and European stocks, including those in Germany, France, and the United Kingdom, were also not spared, each experiencing varying degrees of decline.
The European stock market's performance is not looking good, mainly due to the energy crisis and other reasons. In the short term, it is difficult for the European stock market to recover quickly, and the hopes of investors are becoming increasingly bleak.
Among various data, the performance of the FTSE 100 index in the global stock market is worth looking at. For many years, it has been rare for the FTSE 100 index to outperform other stock markets. However, over the past year, the UK has managed to achieve a rare increase despite the overall downward trend of the pound, which is commendable.
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From the perspective of the stock market, the United States seems to have lost, but from the perspective of the foreign exchange market, the United States has certainly won. Unexpectedly, Russia is also a winner.
It is not difficult to see how big a game the United States has played behind the scenes, as if the United States is always present behind any event and conflict.
Whether it is the continuous interest rate hikes by the Federal Reserve or the Russia-Ukraine conflict and many other events, the dollar always seems to benefit.
Under the United States' manipulation, the dollar has continued to rise, and over the past one or two years, it has even seen an astonishing increase. However, the dollar then experienced a rapid decline and has recently fallen to 103.9, with the lowest point in the previous few days being only 103.38.
However, Russia, with its advantages in natural gas and oil, has received great support for the ruble exchange rate. Not only has it not depreciated, but throughout 2022, its increase has been second only to the dollar.
The data for other countries are not optimistic, with the Turkish lira even reaching an extremely low -20.08%, and the Australian dollar and euro falling by -6.24% and -5.83%, respectively.Due to the relatively moderate devaluation of exchange rates in most countries, the anticipated reaping plan by the United States has effectively gone bankrupt.
In the bond market, U.S. Treasuries also suffered a crushing defeat. The yield on 10-year U.S. Treasuries rose significantly from 1.5% at the beginning of the year to 3.8% by the end of the year, with a substantial drop in bond prices as a result. Concurrently, the continuous selling of U.S. Treasuries by overseas institutional holders led to a liquidity crisis for these bonds.
Regarding the U.S. real estate market, a noticeable decline in housing prices began in the third quarter of 2022, while the decrease in transaction volumes had already started as early as March. Recently, even though the Federal Reserve continues to raise interest rates, the U.S. Dollar Index has begun to turn downwards, which has already sounded an alarm for the United States: once the trend of dollar devaluation becomes irreversible, there will be a massive exodus of capital from the U.S. market.
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