Why Global Investment Flows Will Drive Up US Real Asset Prices
Counterbalancing the trend: how global capital inflows will impact US asset values.
As interest rates in the US continue to rise, it's natural to think that real asset values will decrease. 👉 However, there's a significant factor that will counterbalance this trend and push values even higher: global capital flows into the US dollar.
Despite the challenges facing the US economy, it's still perceived as a safer and more stable investment destination on a global scale. This is likely to drive a significant influx of capital into the US in the coming years. 👉 In fact, it wouldn't be surprising if the European Union implemented capital controls to stem the flight of capital to the US.
There are several issues currently facing Europe that are causing economic concerns:
The mismanagement of the European Central Bank, which has kept interest rates at or below zero for nearly a decade. This has led to decreased trust in European government bonds and has the potential to impact the allocation of capital within the region. The European government bond market is massive, with a total size of over $10 trillion. 👉 Even a small shift in capital allocation could have a significant impact on real asset values in the US.
Increasing political risk in the eurozone, made up of 19 sovereign countries with varying political landscapes. In recent years, these countries have increasingly struggled to find common ground, putting pressure on the European "Union" and causing even more uncertainty.
The escalating conflict with Russia, as evidenced by the troop build-up in Poland, disrupting trade and economic relations.
Keep an eye on US real asset values in the near future as the capital flight from Europe intensifies, resulting in a decline in the value of the British pound and the Euro.
👉 Institutional-quality real estate, infrastructure, and energy assets are likely to be major beneficiaries of this influx of capital...