Deutsche Bank says AI-driven market adjustments may alter the traditional
dollar–US equity relationship and the dollar may no longer be a reliable
safe-haven. Recent simultaneous weakness in tech stocks and the dollar suggests
two-way risks have risen versus market pricing. Foreign holders own over $20
trillion of US equities, and roughly 90% of the rise in that position has come
from price appreciation rather than net purchases. A second factor is changing
equity-hedging mechanics: a decade-long negative correlation between US equities
and the dollar reduced incentives to hedge FX risk. If US equities suffer a
domestic shock, the dollar could fall alongside stocks, amplifying losses for
overseas investors. A concurrent drop in US real yields and equities would imply
the market is downgrading AI-driven capex growth expectations and would further
support a weakening of the dollar’s safe-haven status. Deutsche Bank summarizes
this shift as the AI dollar era.
