United States: Equities favored over Treasuries – BNY

Geoff Yu at BNY argues that the loss of some U.S. exceptionalism has not translated into a broad exodus from U.S. assets. Cross-border investors maintain high U.S. equity allocations, supported by technology and AI themes, while trimming Treasury holdings as curve steepening raises duration risk. The report expects U.S. asset positioning to remain structurally firm.

Equity strength, managed duration risk

"An immediate follow-up to the loss of “U.S. exceptionalism” is whether U.S. asset dominance will also collapse. The answer remains a resolute “no”: “sell America” is still discussed far more often than it is implemented in portfolios."

"The technology and AI story underpinning U.S. equity performance remains intact and continues to dominate cross-border positioning. Our data show that U.S. equities’ share in non-U.S. portfolios has risen sharply, approaching year-to-date highs."

"Within sovereign-bond portfolios, Treasury holdings dipped, showing that curve steepening has had an impact. Even so, a week after the Fed decision, total Treasury positioning for this investor cohort remained above the early-July lows."

"We remain confident that U.S. asset positioning will stay firm for structural reasons. The positioning skew within U.S. assets also appears increasingly favorable to equities."

"Within U.S. assets, retain equity exposure but manage Treasury duration more actively, as curve steepening and fixed-income volatility remain the main pressure points."