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Cross-border investors keep favoring US equities, trimming Treasuries
BNY says non-US portfolios have raised US equity allocation sharply, while Treasury exposure has eased as curve steepening increases duration risk.
BNY strategist Geoff Yu argues that the loss of some US exceptionalism has not triggered a broad shift away from US assets by cross-border investors, with US equity allocations staying elevated even as Treasury holdings are pared back, according to FXStreet.
The report says technology and AI themes continue to underpin cross-border positioning, and its data show the share of US equities in non-US portfolios has risen sharply and is approaching year-to-date highs.
On the sovereign bond side, Treasury holdings dipped, reflecting an impact from curve steepening and the associated rise in duration risk, though total Treasury positioning for the investor cohort remained above early-July lows a week after the Fed decision.
BNY expects US asset positioning to remain structurally firm and says the skew within US assets appears increasingly favorable to equities, while advising that Treasury duration be managed more actively amid fixed-income volatility.