Experts say fears about unpredictable policy are creating crisis of confidence in US bonds once seen as ‘risk free’

In recent developments, experts are raising alarms about the diminishing confidence in U.S. bonds, traditionally considered a safe investment. This shift is attributed to fears surrounding unpredictable policy changes, particularly in the context of the Fed's monetary policy direction amidst a slowing economy. The U.S. Dollar Index has been on a decline, reflecting a broader unease among investors regarding economic stability. Key economic indicators, like consumer sentiment and job market data, indicate that while some inflationary pressures are easing, there are still major concerns over economic growth. The tightening and loosening of tariff policies between the U.S. and China further complicate the situation, reigniting fears of a trade dispute that could create additional economic headwinds. The Federal Open Market Committee (FOMC) minutes highlight the balancing act they face between combating inflation and managing growth, and markets are now anticipating potential rate cuts as soon as May. As a result, the Dollar is facing significant pressure, with critical technical levels acting as potential triggers for further declines. The GBP and EUR are showing strength against the USD, which could suggest a softening in U.S. economic power in global markets. Investors are advised to remain vigilant of the evolving landscape, especially as critical macro data releases are expected soon. The overall narrative paints a picture of a fragile dollar and falling confidence in its once-esteemed safe haven status, as external factors and domestic policy uncertainty weigh heavily on investor sentiment.