Cyclical Shifts in Dollar Dominance of Global Bond Markets
The US dollar's role in global bond markets has oscillated in cyclical patterns over six decades, showing neither consistent growth nor decline in dominance. Federal Reserve research reveals these fluctuations defy linear narratives of dollar supremacy or de-dollarization.
Three distinct waves emerge from the data: periods of expanding dollar share followed by contractions. Notably, the dollar's portion of international debt securities dipped to 43% post-2008 financial crisis before rebounding to 60% in recent years.
This cyclicality suggests structural forces—perhaps liquidity preferences during crises or yield differentials in recovery periods—continually reshape currency allocations without establishing permanent trends.