This piece smacks a bit of a zealot standing on the street corner proclaiming “the end is nigh”, again. But it is crucial to reiterate that the dollar shows a huge risk of declining in value. Potential decline presents an opportunity, a great opportunity for chain-based investors to sell or borrow US dollar stable coins and buy higher yielding emerging market short-term bonds.
The structural dangers of the US dollar are well known. Inflation is a threat due to oil prices, political uncertainty and confusion permeate the executive branch, debt/GDP at over 100%, and there is a war with Iran that seems like it will never end.
Foreign investors are expressing concern regarding the US dollar and dollar bonds; the 30-year bond is above or below 5% on any given day, with 5% being the highest level since 2007. In laymen’s terms, this means that bond investors will only lend long-term money to the US if the yield is high, expressing diminishing confidence and trust.
There are some like Liz Ann Saunders from Schwab (FT July 3, 2026) who argue in very plain terms for US dollar exceptionalism. Liz Ann highlights that despite all the problems it is still the reserve currency of choice, meaning the currency investors want to hold, or must hold.
OK, this may be the structural underpinning of the US dollar, but it does not mean that the Dollar cannot decline significantly in the near term? Aside from the fundamental weaknesses mentioned above, confidence in the US Fed is declining. Federal Reserve Chair Kevin Warsh kept interest rates unchanged when evidence supported an increase. At the same time, he has cut back on Fed communication and would like to see an opaquer US Fed. Finally, the influence of President Trump is an ever-present concern.
At the same time, Treasury Secretary Scott Bessent has signed off on US support to help Japan prop up the yen. Normally, this would involve selling US dollars and buying yen, but supposedly the selling has been absorbed by the euro. The US dollar market is untouched, for now. To use another country’s currency to implement your policy is unprecedented. It surely does not project currency strength. To really support the Japanese yen the US must use its currency, the dollar.
Using non-US resources to prop up Japan, carrying debt at over 100% of GDP, uncertainty regarding Fed independence are all reasons for investors to question US dollar exposure, near term at least.
In the past month the US dollar weakened against almost every Group of 10 currency. Given this trend, Etherfuse Mexican CETES at a 5.54% yield, and Brazilian Tesouros at 12.76% yield make sense. An investor can make a good yield and profit from US dollar weakness, before the end of dollar strength, which may be “nigh”.
This blog is for educational and informational purposes only, covering general market trends, industry developments, and asset features. Nothing herein is investment advice, a solicitation, or a recommendation to buy or sell any assets. Etherfuse and its guests may hold stakes in some or all of the assets discussed.
