The Surface Story: From Exceptional to Average The argument presented is straightforward. The dollar’s weakness isn’t a collapse. It’s a recalibration. For years, the U.S. benefited from a powerful “exceptionalism premium”—stronger growth, higher yields, deeper capital markets, and global confidence in institutions. Capital flowed in. The dollar strengthened. Valuations stretched. Now that growth expectations are moderating and the Federal Reserve is expected to ease, that premium is compressing. Fiscal deficits remain elevated. Political pressure around central bank independence has increased. Markets are adjusting. That analysis is not unreasonable. Currencies do reprice. Cycles do turn. But focusing only on FX positioning misses the far more important story. This Is Not Just an FX Story — It’s a Fiscal Sustainability Story The…
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