If you’ve followed us for any length of time, you know we don’t make hard predictions about the future. Too much can change too fast. But that doesn’t mean we don’t have a view—or that we’re afraid to take a position when the data and our experience point clearly in a direction. As they say in baseball, we just call ’em like we see ’em.

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The Dollar’s Role in the World: Is It Really at Risk?

There’s been no shortage of headlines this year suggesting the U.S. dollar is on its way out as the world’s reserve currency. And yes, the dollar had a rough start to 2025—its worst in over 50 years, in fact. That kind of move grabs attention. But let’s unpack what’s actually happening.

A lot of the weakness stems from uncertainty. With U.S. economic policy shifting and new tariffs in play, global investors are naturally cautious. When the U.S. imports less, fewer dollars circulate around the world. That can temporarily dampen demand for dollar-denominated assets like Treasuries, and by extension, the dollar itself.

But while the “death of the dollar” makes for a dramatic headline, we think that story is overstated.

Yes, there are headwinds:

• Persistent questions around inflation and Fed policy
• The rise of digital assets
• A slow but meaningful shift in globalization that’s giving regional currencies more of a voice

But despite those factors, we still see global confidence in the U.S. dollar. It’s starting to rebound from oversold levels. And most importantly, the dollar and U.S. Treasury markets remain the largest and most liquid in the world. That trust and depth are hard to replicate.

One development we’re watching closely: the Genius Act. It introduces real regulatory clarity for stablecoins—requiring that they be fully backed by cash or T-bills and that issuers publish monthly disclosures. If adopted, this could create sustained demand for both dollars and Treasuries in the growing digital economy.

If the world were truly fleeing the dollar, we’d see much more extreme volatility—like what we saw briefly in April. But for now, the market’s behaving rationally. We’re keeping a close eye, but we’re not panicking.

Bottom line: we encourage diversification, but we still see the U.S. dollar holding its ground as a central player in the global financial system.

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The Fed’s Independence: Still Intact

Another concern we’ve heard lately: is the Federal Reserve still truly independent?

It’s a fair question. The political climate is tense, and central banks are often caught in the crossfire. But the structure of the Fed was built for exactly this moment. Independence from short-term political pressure is what gives the Fed the credibility it needs to do its job—maintaining stable prices and maximum employment.

Without that independence, we risk turning monetary policy into a political tool. That’s a dangerous path. And frankly, neither party wants to lose global trust in the U.S. financial system—or the dollar. So while the noise can be loud, we believe fears about Fed independence are overblown.

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Why the Fed Hasn’t Cut Rates Yet—and Why We Think They Will

We get it. It’s frustrating. With inflation cooling and the job market softening, why is the Fed holding off on rate cuts?

Here’s what they’re thinking: cutting rates too early could reignite inflation. And after the last few years, they’re understandably cautious about that risk.

The latest numbers show:

• Core PCE inflation at 2.8%, with headline PCE at 2.6%
• Unemployment at a still-low 4.1%

On the surface, that doesn’t scream crisis. But dig a little deeper, and cracks are forming:

• Job openings are falling
• Many who want to work aren’t being counted in the labor force
• Wage growth has flattened, even with low unemployment
• Even Chair Powell has acknowledged the labor market may weaken further
• Recent estimates reveal massive downward revisions reported in May and June

Add in tariffs—which are more of a one-time price adjustment than true inflationary pressure—and the case for easing gets stronger.

Remember: real inflation risk comes from massive expansions in the money supply, like we saw during the pandemic. That’s not what’s happening now.

Rate cuts are coming. We’re confident in that. The only question is when. The futures markets suggest sooner than later. Our hope? That the Fed doesn’t wait so long that it turns a soft landing into a missed opportunity.