More tales from de-dollarization

Daily Data: Currencies get non-traditional and the markets go wild

Programming note: no post 6/13 and probably no 6/14 either for the holiday. Enjoy your Festival of Weeks, especially for those not celebrating.

In today’s dispatch:

• yes, gold is the new reserve chic

• but it’s not just gold, or one of the other Big 4 stepping into the breach

• non-traditional monies are the new walking around monies

• price differentiation and uncoordinated rate cuts, enter the chat

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More tales from de-dollarization

Last week, Random Walk highlighted some data from the Fed that shows de-dollarization is happening, but it’s got a long way to go.

The trend still matters, mostly inasmuch as it impacts the marginal buyer of Treasuries. If old reliable sovereigns (e.g. China) don’t want dollar denominated reserves, then demand has to come from someone else, and it’s likely that someone else will need to be enticed by higher yield.¹

Maybe.

I would be remiss if I failed to point out that the latest Treasury auction (for $39B in 10years) had relatively strong demand, in contrast to the previous two

Anyways, Random Walk learned another interesting thing about de-dollarization.

Everyone knows that gold has become reserve chic again, at the dollar’s expense:

Gold is hotter than a Bretton Woods brush fire.

But it’s not just Gold that’s benefited as an alternative source of reserves.

It’s also not one of the other traditional “Big Four” reserve currencies that’s picking up the slack.

Non-traditional monies

If it’s not just gold, and it’s not Euros, Yen or Pounds, then what’s the preferred new walking around money for Central Banks?