JPMorgan: Crushing US Debt Unsustainable, Dollar Could Decline Long-Term

Patrick Thomson, CEO of J.P. Morgan Asset Management for Europe, Middle East, and Africa, stated at the International Capital Market Association conference held in London that the US dollar assets are likely to enter a long-term devaluation trajectory due to the climbing and unsustainable debt total in the United States.

As the world's largest reserve currency, the hegemonic status of US Treasury bonds is still solid, but the market is closely watching its fiscal balance, international trade, and long-term debt repayment capacity.

Looking at the short-term market performance, since the outbreak of the Iranian war in late February, the US dollar, with its traditional safe-haven property as a safe asset, has so far accumulated an increase of approximately 1.8%. However, Patrick Thomson emphasized that the strength of the exchange rate in the short term cannot offset the long-term erosion brought by deep fiscal structure, and the current fiscal policy dynamics in the United States are producing debt levels that cannot be sustained over a long cycle.

Faced with the expected long-term weakening of the US dollar, the long-term allocation direction of global risk-avoiding funds may undergo a systemic reshaping. The institution further pointed out that as investors' concerns about the US fiscal crisis intensify, the European market is fully capable of playing the role of a safe asset haven, thus becoming an important target for the transfer of global diversified fund flows.