The European Central Bank (ECB) today lowered its deposit rate to 2%, a move expected to accelerate the shift of global investors away from US assets. This decision, the eighth rate cut since 2023, is seen as a boost for the eurozone's recovery.
Nigel Green, CEO of deVere Group, stated that the rate cut would "supercharge" capital rotation out of US markets. Investors are actively diversifying away from the US, driven by concerns including political volatility, rising debt, and trade policy unpredictability.
US fiscal pressures, such as a $2 trillion annualized deficit and nearly $1 trillion in yearly debt interest payments, are contributing to this shift. The Congressional Budget Office projects federal debt reaching 122% of GDP by 2034.
Trade tensions under former President Donald Trump have further eroded confidence in US assets. Investors are re-evaluating their overexposure to a single economy facing fiscal and geopolitical headwinds. Capital is flowing towards Europe and the UK for stability.
The ECB's policy aligns with stability, while the weaker euro boosts export competitiveness. Green emphasized that European equities remain comparatively undervalued. This move reflects a structural diversification shift as investors act on long-term convictions.