The debasement trade is unraveling after President Trump nominated Kevin Warsh to lead the Federal Reserve on January 30, prompting a reassessment of strategies that favor gold and Bitcoin over the dollar. Gold tumbled as much as 13% from an all-time high that day, its steepest decline in more than four decades, while Bitcoin subsequently collapsed and the dollar found a bottom. Warsh, known as an inflation hawk, reinforced his commitment to price stability at his first policy meeting as Fed chairman last week, further pressuring the trade. Traders now fully price in two rate hikes by the end of the first quarter of 2027, with the first possible in July, boosting the dollar and inflation-sensitive long-dated Treasuries. JPMorgan raised its dollar forecast and recommended long-dollar positions, while almost $1 billion left the SPDR Gold Shares ETF this month, extending outflows to $12 billion since February, the largest four-month period since 2013.
Deutsche Bank Aktiengesellschaft
Goldman Sachs Group IncJPMorgan Chase & CoJPMorgan raised its dollar forecast and recommended long-dollar positions, benefiting from hawkish Fed policy