With the US stock market reaching record highs despite political dysfunction, investors may be underestimating the risks. The US dollar’s status as the world’s reserve currency and the dominance of the US Treasury bond market have traditionally provided a sense of stability. Despite facing challenges like losing its triple A credit rating in 2011, the US continues to be seen as a safe haven for investors.
However, as global economic conditions evolve, advanced economies are now perceived as riskier investments compared to two decades ago. This shift underscores the need for investors to reassess traditional notions of stability and risk. While US assets still hold significant appeal, the changing landscape of global finance suggests a more cautious approach may be warranted in the future.