Former U.S. Treasury Secretary Lawrence Summers warns that the U.S. Dollar may no longer be the sanctuary that investors from across the globe once counted on.
What Happened: While speaking on The Call, a podcast by the U.S. Chamber of Commerce last week, Summers pointed to the recent shift in market correlations as evidence of trust erosion in American assets, with investor psychology around it fundamentally changing.
“If you look at the pattern,” Summers says, “they’ve gotten much more like the emerging market pattern than they have like the traditional American pattern,” citing the example of Latin American countries.
Historically, any spike in global uncertainties led to a rise in U.S. Treasuries and the dollar, as investors fled to safety. Things are different this time around, as all asset classes start dropping in …