14-07-2025
The Dollar's Collapse Party Might Be Ending -- HSBC Says the Real Bubble Is Forming Now
After an 8% slide in the Bloomberg Dollar Spot Index this year, investors seem convinced the dollar's pain is far from over. But HSBC (NYSE:HSBC) isn't buying the euphoria. In a fresh note to clients, Paul Mackel and his team flag signs of what they call a growing anti-USD bubblea mirror image of the bullish dollar wave seen just a few years ago. With traders extrapolating recent weakness into the future, HSBC believes sentiment may be tipping into crowd-think territory.
Warning! GuruFocus has detected 6 Warning Sign with HSBC.
The dollar's fall has been fueled by U.S. tariff drama, rising global de-dollarization talk, and general unease around Washington's policy direction under Trump. But HSBC notes that some of the initial catalystslike the shock from the April tariff announcementare now old news. What's more, historical correlations between the dollar and U.S. yields are starting to re-emerge, which could be an early sign that the dollar is bottoming out. Equities and yields are also moving in tandem again, hinting at a broader return to fundamentals.
Still, the bears aren't out of ammo just yet. HSBC highlights scenarios that could keep the pressure on: more policy chaos, a faster-than-expected global rebound, or even leadership changes at the Fed. While none of these are base case assumptions, Mackel's team urges investors to stay alert. Bubbles don't last forever, they wrote. And if this really is an anti-dollar bubble, the unwinding could be just as sharp.
This article first appeared on GuruFocus.
