Monetary Matters with Jack Farley The Dollar’s Impossible Trifecta | Jon Turek on Why USD Hedging Flows Will Increase Throughout Fed’s Rate Cutting Cycle
35 snips
Oct 20, 2025 Jon Turek, founder of JST Advisors and macro research expert, discusses the shifting dynamics of the dollar in this engaging conversation. He explains why declining U.S. interest rates will make dollar hedging more appealing for foreign investors and how this could impact the global market. Turek also dives into China's trade surplus, the ongoing gold bull market, and the implications of U.S. fiscal policy on global yield curves. With insights on foreign flows and the Fed’s potential rate cuts, Turek paints a vivid picture of the dollar's future.
AI Snips
Chapters
Transcript
Episode notes
Taiwan Insurers' Unhedged US Credit Bets
- Taiwan life insurers buy US five-year investment-grade credit because domestic markets are too small.
- Hedging that exposure would slash their yield, so they often hold unhedged positions.
Risk Assets Drive Dollar Sensitivity
- Treasuries are less the marginal inflow destination; risk assets and corporate credit drove recent foreign exposure.
- The dollar has become unusually sensitive to risk-asset moves this year.
Imperial Circle: Pro-Cyclical Dollar Loop
- The "imperial circle" described a pro-cyclical loop: US outperformance attracted capital, lifted US assets, and strengthened the dollar.
- That loop amplified divergence between US and foreign growth in the 2010s.