Breitbart Business Digest: The Dollar Is Still King

America Remains Global Capital’s Favorite Destination

The World Still Loves the American Economy

“The World Economy Is Becoming Wary of the U.S.,” the New York Times announced this week.

The subhead pins the blame directly on President Trump: “America’s position of global economic stability is starting to look shakier as the Trump administration piles on debt and doubles down on sanctions.”

“Global investors are balking at U.S. bonds. Talk of the dollar’s dwindling power is getting louder. Foreign governments are hauling their gold out of American vaults,” the Times trumpets.

This sounds ominous until you examine what the money is actually doing. Much of the supposed flight from America turns out to involve buying other American assets, adjusting to American trade policy, or acknowledging that no other country offers a credible replacement for the dollar.

Start with the claim that capital is “starting to seek alternative destinations.” We don’t want to be rude about this, but the Times is completely wrong. According to Treasury data released Wednesday, foreigners purchased a net $1.75 trillion of long-term American securities over the 12 months through July. That’s a significant increase from the $1.47 trillion in the preceding 12 months. Even more importantly, it is more than double the roughly $799 billion purchased in the equivalent period ending in July 2024, Biden’s final year in office.

If we decompose the foreign purchases, we see that this is far from a story of foreigners looking for “alternative destinations” to the United States. Instead, what we see is the rest of the world following the Trump administration’s policy of reprivatizing the economy. In the 12 months through July 2024, foreigners sold a net $151.5 billion of American stocks while purchasing $540.7 billion of Treasury notes and bonds, $306 billion of corporate bonds, and $103.4 billion of agency bonds. Global investors were losing faith in equities issued by the U.S. private sector, and Biden policies were pushing foreigners to buy government debt instead.

In the following 12 months, foreigners became net buyers of $598.1 billion of stocks, alongside $456 billion of Treasury notes and bonds, $341.1 billion of corporate bonds, and $73.4 billion of agency bonds. By the 12 months through July 2026, stock purchases reached $941.9 billion and corporate-bond purchases rose to $452 billion, while Treasury purchases slowed to $246.6 billion and agency purchases reached $114 billion. The progression shows foreign purchases increasingly directed toward private-sector securities, with total purchases of long-term American securities rising across all three periods.

In other words, what we’re seeing is that foreign investors are not balking at U.S. investments. They are rushing headlong to buy U.S. stocks and corporate bonds. This is a story about the world becoming more bullish on America, not balking.

Rising Treasury Yields Are a Sign of Confidence, Not Fear

What about Treasury yields? The 10-year Treasury’s yield recently climbed above five percent. The New York Times strangely claims that this is bad news, saying the rise has occurred “as investors nervous about the mounting national debt demand a higher rate of return for buying Treasury bonds.”

It’s hard to imagine how this interpretation of bond yields could be more wrong. In the first place, the timeline doesn’t make sense. The projections for national debt are not significantly higher than they were at the start of the year, when the 10-year yield was close to four percent. Why would investors suddenly get nervous about a debt path that has been clear for years?

What’s more, it gets the logic of bond yields totally backward. In the short and medium term, rising Treasury yields are typically a sign of economic confidence, while falling yields can be a sign of distress. The financial crisis and the pandemic sent yields plunging for years. What we’re seeing now is a return to non-crisis yields. The opposite of “nervous” investors.

While it is true that bond yields can rise if investors think higher debt will increase inflationary pressures and force the Fed to raise rates, that’s not what is happening now. If markets feared Washington would inflate away its debts, we should expect that fear to appear in inflation compensation. The inflation-adjusted yield on the 10-year Treasury reached 2.62 percent on Tuesday. The market’s measure of expected inflation over the next decade stood at 2.33 percent Wednesday. Real yields have climbed while inflation compensation has remained anchored.

In other words, the best explanation for rising yields is burgeoning optimism about growth and corporate profits. America’s investment boom creates profitable uses for capital, requiring Treasuries to offer investors a better return to compete. Investors shift their portfolios to take on more risk assets such as stocks and corporate bonds rather than risk-free Treasury securities. The Times itself acknowledges strong private investment in American markets and booming artificial intelligence infrastructure. Those facts explain why capital costs more. Investors have attractive things to finance.

The Dollar’s Reserve Status Is Rock Solid

The Times also tries to stir up concern about central banks holding fewer Treasuries and dollars. But this worry vanishes under the weight of reality. A New York Fed analysis shows that the decline in the dollar’s share of reserves was concentrated among a few large holders. Across the 62 countries with complete data for 2019–2023, active portfolio decisions actually increased dollar allocations slightly. A worldwide buyers’ strike is an extravagant description of that finding.

Mostly, it is China and Russia reducing their dollar holdings. The Russian reduction is obviously a response to the fact that sanctions imposed in retaliation for the invasion of Ukraine have cut Russia off from global trade and severely limited its access to dollars and dollar-denominated securities. China’s dollar holdings were largely a reflection of its predatory trade policies that were responsible for its enormous trade surpluses. Trump’s trade policies have resulted in China turning elsewhere to find buyers of its excess production. In other words, this isn’t a rejection of the U.S. but a result of U.S. policy.

The Trump administration’s efforts to shrink bilateral trade deficits will inevitably leave foreign governments with fewer surplus dollars to recycle into Treasuries. The tariffs and trade negotiations aim to reduce the imbalances that helped build those holdings. Less automatic official dollar accumulation is an expected consequence of that adjustment. Rather than a sign of American decline, it is a sign that our policies are working and foreign central banks are complying with our policy.

Norway supplies an especially comic example of the Times misinterpreting the data. “With the United States’ long-term fiscal situation looking shaky, some countries are starting to wonder if America is a wise investment. This month, Norway’s sovereign wealth fund, the largest in the world, said it planned to reduce its holdings of U.S. Treasuries as it looks elsewhere for stronger returns,” the Times claims.

Except that’s not what happened. The Norwegian fund’s managers proposed replacing some Treasuries with other bonds, including American mortgage securities, while leaving dollar exposure approximately unchanged — about 52.9 percent of the bond benchmark to about 52.5 percent. The proposal changes the investments held within the dollar market. Those mortgage securities are all backed by Fannie Mae and Freddie Mac, the government-sponsored mortgage guarantors that have been wards of the state since 2008. Their bonds are, for all practical purposes, just another form of Treasuries. The corporate bonds they could buy are bets on the strength of the U.S. economy. Norway isn’t looking elsewhere for stronger returns. It’s just looking for better returns inside the universe of American securities.

Gold vs. Euros and Yuan

Gold tells a similarly inconvenient story about the dollar’s competitors. Governments and central banks have been buying the precious metal. That’s because neither the yen, the yuan, nor the euro is a credible substitute for the dollar. That is a remarkable testament to America’s financial position: even as countries find dollar surpluses falling, they cannot find another government’s currency to hold in reserve.

What’s more, the Times’ specific claim that gold has “overtaken” official holdings of Treasuries is a price effect. The European Central Bank paper that supplies the comparison puts gold at about 27 percent of official reserves and Treasuries at about 22 percent when both are valued at end-2025 market prices. The same paper says this development largely reflects valuation. Restore gold to its end-2023 price and the ranking flips: Treasuries about 26 percent, gold and the euro about 16 percent each. Ounces rose. The share explosion is a $5,000 gold price.

Christine Lagarde, the head of the European Central Bank, announced a “global euro moment” in 2025. Really? The euro’s share of official foreign-exchange reserves was about 20.3 percent when she said it. In the latest prints, it is about 20.0 percent. Ah well. We’d say that the moment was nice while it lasted, but we cannot find evidence that it occurred at all.

Stablecoins, which the Times offers as a new way for adversaries to get around the American financial system, are a dollar product. About 98 percent of stablecoins are dollar-denominated—which requires the issuers to hold dollars, Treasuries, and similar safe U.S. assets. Stablecoins extend the dollar’s influence rather than replacing it.

King Dollar Remains on the Throne

Perhaps the goofiest part of the Times story is its attempt to paint the Treasury’s buyback program as a failure. The stated purpose of liquidity buybacks is to give investors a regular opportunity to sell older, less actively traded securities. Treasury Secretary Scott Bessent said this week the program is not quantitative easing and cannot set the equilibrium price of the long bond.

But the Times insists that the buybacks were somehow a secret attempt to manipulate the yield curve—and then announces that the mission the Treasury never undertook was a failure. In other words, the operation the Times treated as a failed rescue was a purchase of up to $6 billion in a market that trades about $1 trillion a day.

The New York Times imagines that Trump has abdicated global economic leadership or that the rest of the world is staging a coup. Nothing like that is happening. The dollar remains king.