(Bloomberg) — Despite the market recovery of the past week, foreign investors “remain on a buyers’ strike on US assets,” according to Deutsche Bank AG. 

To gain an almost “real-time” window into how overseas investors have been behaving in recent weeks, Deutsche Bank’s head of FX strategy, George Saravelos, looked at the flows into a variety of funds that take money from overseas and channel it into US stocks and bonds. 

The data shows a “sharp stop” in the purchases of US assets by overseas buyers over the past two months, with no sign of a turnaround last week when the cloud over the markets seemed to be lifting, Saravelos wrote in a note on Monday.

“Our broad takeaway is that the flow evidence so far points to an, at best, very rapid slowing in US capital inflows and, at worst, continued active disinvestment from US assets,” the report says. “Either interpretation poses a challenge to the USD as a twin deficit currency.”

The Deutsche Bank strategist had been bullish on the dollar, particularly against the euro, for more than a year until February. Since then, he has emerged as one of the most vocal bears, warning that the the dollar is at risk of losing its status as the global reserve currency if President Donald Trump’s economic policies lead investors to dump US assets accumulated over the past decade.

While the US has long been a magnet for foreign assets, the inflows have been particularly notable in recent years as US markets outperformed the rest of the world. The share of US assets in the holdings of European investors quadrupled to 20% in 2024, from around 5% in 2010, and doubled among Japanese investors to 16%, according to Deutsche Bank’s estimates.

But the dollar slumped along with US stocks and Treasuries after Trump announced his plan to impose tariffs on trading partners in early April. The rare simultaneous selloff raised concerns that foreign investors were retreating from the American markets en masse. 

To get a more frequently-updated read on these trends, Saravelos said that he has been examining the daily flows into around 400 US-focused exchange traded funds that are domiciled overseas, along with the weekly data on a broader universe of closed and open-ended investment funds.

“Our conclusion from both metrics does not look pretty,” Saravelos wrote. 

The continuing selloff has been most notable in the ETF data, where investors have been selling both stocks and bonds, the report says. In the larger group of funds that Saravelos examined — which includes more slow-moving players, and more outside of Europe — investors appeared to have stopped purchasing US stocks, but were not yet net sellers. With bonds, on the other hand, the data has shown “aggressive selling.”

Saravelos this month revised down his forecast for the dollar, saying Trump’s policies are reducing foreign investor’ appetite to fund the country’s trade and budget deficits. The strategist sees the US currency falling to $1.30 against the euro and 115 versus the yen by 2027, from about $1.14 and 142 yen currently.

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