Wealthy Families Pull Back From the Dollar as US Markets Set Records and War Debt Climbs

Two developments at the top of the global financial system point in opposite directions. Together they describe a single situation. American stock indexes are climbing while the world's largest private fortunes reduce their exposure to the currency those stocks are priced in.

A survey by the Swiss bank UBS, reported by Reuters and summarized by the Russian business outlet BFM, found that nearly half of the family offices it polled now consider themselves overexposed to the US dollar across asset classes. About two-thirds expect confidence in the dollar as the world's reserve currency to weaken over the coming year. Family offices are the private investment firms that manage the wealth of single rich families. The bank said they plan to add emerging-market equities and infrastructure and, for the first time, to build positions in the Asia-Pacific region. The original Reuters account is carried by Investing.com.

That caution contrasts with a market that, by conventional measures, looks confident. The Dow Jones Industrial Average, an index of thirty large US companies, closed above 51,000 on May 29. The broad S&P 500 index finished its ninth consecutive week of gains, and the technology-heavy Nasdaq Composite rose roughly 8 percent over the month, supported by spending on artificial intelligence. The US Dollar Index, which measures the dollar against a basket of other currencies, sat near 98.85.

Economists who favor sound money (a stable currency backed by hard assets) read this directly. When investors move into both equities and hard assets at the same time, with gold trading near $4,535 an ounce per Indian market data, the shared driver is not optimism about growth but distrust of the currency. High nominal prices can reflect a currency that is losing value rather than genuine gains in real worth.

The government's fiscal position deepens that distrust. BFM, citing US Treasury figures, reported that the federal debt has risen about $406 billion since the war with Iran began, with roughly $100 billion of that spent directly on military operations. Independent estimates compiled by Linda Bilmes, a public policy professor at Harvard, put the daily cost near $1 billion to $2 billion, and the total US national debt has passed $39 trillion. The yield on the 10-year US Treasury note, the benchmark for government borrowing costs, has climbed toward 4.58 percent from about 4 percent before the conflict.