Dollar fall-out is real

The debt ceiling crisis is over, for now, but that does not mean that the standing of the US in global markets has been restored. A close look at dollar flows from BNY Mellon shows that dollar flows have continued its slide. We are near lows for the year. The dollar has declined approximately 5% since the beginning of July. The safe haven status of the dollar may be in jeopardy. We saw the spike in Treasury bill rates, albeit only tens of bps,  but you have to ask why a central bank would hold dollar reserves in this environment. The only answer is that there are no alternatives. Find the alternative and demand for dollar will vaporize. Of course, the dollar is a reserve currency and many say that this could not happen. This is true, but that does not mean that foreign investors and central banks are not planning contingencies.