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cover of episode How the Strength of the U.S. Dollar Impacts Your Investment Portfolio

How the Strength of the U.S. Dollar Impacts Your Investment Portfolio

2025/6/17
logo of podcast WSJ Your Money Briefing

WSJ Your Money Briefing

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Derek Horstmeyer
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Oyen Adedoyen
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Oyen Adedoyen: 我认为美元价值的下跌对投资者具有重要影响,特别是在当前关税和经济不确定性增加的情况下。市场对美元和美国国债是否仍然是最安全的避险资产存在诸多猜测,因此密切关注美元的走势至关重要。 Derek Horstmeyer: 我认为美元贬值对风险资产有显著影响。从我的研究来看,当美元贬值时,国际股票通常表现最佳,这主要是由于汇率变动所致。如果投资者担心美元持续走弱,可以考虑增加对国际股票的投资,例如投资于追踪欧洲或亚洲公司的ETF。相反,如果美元反弹,投资于专注于美国国内市场的小盘股可能更为有利。此外,商品,特别是黄金,通常在美元疲软时表现良好,因为它们被视为避险资产。最后,债券市场也会受到美元走势的影响,通常在美元贬值、预期降息时,长期债券和高收益债券的表现会更好。但投资者应该避免过度反应,坚持既定的投资策略。

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The US dollar's recent decline has significant implications for investors. Uncertainty around tariffs and trade deals adds to the concern, making it crucial to monitor the dollar's performance and its impact on various assets. This episode will discuss the dollar's impact with finance professor Derek Horstmeyer.
  • The US dollar's value has been dropping recently.
  • There is speculation about whether the dollar and US T-bills are still the safest assets.
  • Uncertainty around tariffs makes it crucial to watch the dollar's performance.

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KPMG makes the difference by creating value, like developing strategic insights that help drive M&A success and embedding AI solutions into your business to sustain competitive advantage, or deploying tech-enabled audits to deliver more accurate and transparent outcomes. KPMG drives brighter insights, bolder solutions, better outcomes.

It's how our people make the difference every day. KPMG, make the difference. Learn more at www.kpmg.us slash insights. Here's your money briefing for Tuesday, June 17th. I'm Oyen Adoyen for The Wall Street Journal.

The U.S. dollar is one of the most powerful currencies in the world. Recently, its value has been dropping. That has implications for investors. There is so much speculation now about whether the dollar and our T-bills and our long-term debt are still the safest assets in the world to pile into.

And with all of this uncertainty regarding tariffs, and it's a really important thing to watch. We'll talk with finance professor Derek Horstmeyer about why we should all be keeping an eye on the U.S. dollar right now. That's after the break. ♪

With leading networking and connectivity, advanced cybersecurity and expert partnership, Comcast Business helps turn today's enterprises into engines of modern business. Powering the engine of modern business. Powering possibilities. Restrictions apply. The U.S. dollar has tumbled in value over the past few months. Amid tariff turbulence and economic uncertainty, many on Wall Street are hoping that the trade deals the U.S. is striking with other countries will help the dollar bounce back.

Derek Horstmeyer is a professor of finance at George Mason University. He also wrote a recent piece for the Wall Street Journal where he and his team ran the numbers on how some stocks perform when the dollar weakens. Derek, before we go into what this means for investors, why should our listeners care about the dollar falling in value?

Well, the dollar falling has a significant impact on risk assets in our economy. First off, we see that if the dollar falls in value, international stocks seem to do the best.

Vice versa, if the dollar increases in value, we see that U.S. small caps tend to do the best. That's pretty interesting. Historically, what is the relationship between stocks and the dollar? I'm trying to get a better understanding of why we see this inverse relationship.

In general, if the US dollar goes down, the reason why we see international stocks do better is purely an exchange rate phenomenon. If you have an international stock and they, let's say, are mostly operating in euros, once they convert their euros over to a weaker dollar, here in the US, we see those stock prices go up because obviously our US markets are quoted in US dollars.

So for investors who are concerned about the dollar going down, where should they have their money right now? The biggest spread that we see between when the dollar goes up and when the dollar goes down, again, is in international stocks. So this would be foreign ETFs, U.S. dollar denominated. So if you can find an ETF that tracks European companies or Asian companies or even a large conglomerate of companies, that typically is the best. So

In such cases, we would see if the dollar went up in a given month, international stocks here in the U.S. tend to move just about 0%, so they don't move at all. But if the dollar goes down in a given month, international stocks move about 2.5%. So that's the biggest spread that we saw in our results. That's fascinating. How about those who are holding out hope the dollar is going to bounce back?

If the dollar bounces back, your best bet is to stay local. So this is companies that produce and have their revenue here in the U.S. The best bet there are usually U.S. small cap. So let's say like the Russell 2000. In those cases, we see companies that are operating locally.

locally, don't have much foreign revenue, produce and operate here in the US. Those are the best bets for a strong dollar. Can you give me some idea as to what types of stocks perform best when the dollar is weak? The one area of the economy that does really, really well when the dollar is down or weakening are commodity stocks. Commodity stocks usually moves inverse to dollar strength.

So you can imagine copper stock, silver, gold, any sort of hard commodity. I'm curious why commodities are different. Commodities are measures of fear. We would include gold in that scenario. So if the dollar is weakening, it usually means people are piling into gold. So we see an inverse relationship in that scenario.

How does the bond market perform when the dollar strengthens versus when it weakens? We see similar results when we look at the bond market. Across the board, again, bonds tend to do a little bit better when the dollar decreases in value. Your best bets, if you see the dollar weakened, is in long-term debt or in high-yield debt. And we think the fundamental reason there is

When the dollar weakens, a lot of times that means rate cuts might be coming.

So your long-term debt and your high-yield debt tends to do best when there is an expectation of rate cuts. So kind of looking back at everything, why is it so important for us to watch the dollar right now? What makes the dollar unique amongst the world's other currencies? There is so much speculation now about whether the dollar and our T-bills and our

Long-term debt are still the safest assets in the world to pile into. And with all of this uncertainty regarding tariffs and everything else, I think it's a really important thing to watch. One really unique thing that we saw over the past month or two is that the dollar stocks and bonds all move together, which is a very rare phenomenon.

So the dollar weakened, stocks weakened, and bonds weakened. And that's a really rare phenomenon that you usually only see in emerging market economies. So that is something to watch if that is a one-off or if that

will continue to repeat itself. What is the rule of thumb for anxious investors right now? I've talked to a lot of investors in recent months who are just super stressed about where the economy is going and who are really uncertain. I would say...

Don't overreact. We know that investors tend to overreact to really negative news and that costs investors two to three percent by some estimates to their returns on an annual basis, which is very significant. That would be selling at the bottom and buying at the top. And that, again, is due to overreaction to news. You know, it's the tried and true kind of strategy here, which is stay the course and

You can react on the margins to things, but try and update your portfolio as little as possible. That's finance professor Derek Horstmeyer. And that's it for your Money Briefing. This episode was produced by Ariana Asparu and Coleman Standifer with supervising producer Melanie Roy. I'm Oyen Adedoyen for The Wall Street Journal. Thanks for listening. ♪

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