Dollar rises after Iran strikes but hedge remains uneven
The U.S. dollar strengthened after recent attacks on Iran, but that move should not be read as proof that the currency reliably protects investors in every bout of market stress, according to comments from Hauser. He said 2025’s market behavior may look like a turning point, yet the pattern is not unprecedented when viewed through the longer history of risk-off episodes.
Hauser argued the dollar has never served as a flawless hedge against all shocks. In his view, the currency tends to perform most consistently during moments of funding stress, when demand for dollars rises because market participants need liquidity and the ability to secure financing in the world’s dominant funding currency.
Foreign buying of US assets continues despite rotation narrative
The remarks push back against a popular storyline that international investors are pulling money out of the United States and reallocating toward other markets. Hauser said foreigners remain major buyers of U.S. assets even as media coverage and market commentary highlight interest in alternatives, including Australia.
He added that capital flows into Australia have been broadly consistent with previous years, suggesting there has not been an unusually large redirection of global capital away from the United States into the Australian market based on the information referenced.
Composition of US inflows shifts from debt to equities
Where Hauser did identify a meaningful change was in what overseas investors have been buying in the United States. He said the pickup in capital flows into the U.S. over the past year has been driven more by purchases of equities rather than debt.
That distinction matters because it can signal a change in how global investors view U.S. assets and the U.S. funding model. Debt inflows often support government and corporate borrowing directly, while equity inflows reflect risk appetite and expectations for corporate earnings and valuation support.
Questions emerge around “exorbitant privilege” framework
Hauser said the shift in inflow composition raises the possibility that the global system is edging away from the long-running dynamic sometimes described as “exorbitant privilege.” That concept refers to the United States being able to borrow heavily because the dollar’s reserve status creates persistent demand for U.S. assets.
If foreign demand continues to tilt toward equities rather than debt, it could imply a gradual change in the balance between America’s ability to finance itself through borrowing and the willingness of global investors to hold U.S. fixed-income exposure at scale. Hauser did not describe this as a definitive break, but said the recent pattern is notable and could point to a transition in how the reserve-currency advantage functions.
