This overlooked risk to financial markets usually lurks quietly under the surface. But now it's 'shouting, not whispering'

The article emphasizes the importance of the net international investment position (NIIP) as a key metric of U.S. financial health, particularly in context of the current account deficit. Kevin Ford, a strategist at Convera, warns that the U.S. is in a precarious position with a NIIP deficit of $26 trillion, meaning foreign investors possess significantly more U.S. assets. This becomes problematic during periods of low confidence, as indicated by the dollar's current drop and growing fiscal deficits. Investors are becoming increasingly anxious about potential impacts on U.S. debt.

"That means foreign investors hold way more American assets than Americans hold abroad," Ford added. "It's a setup that works fine when confidence is high, but in shaky times like 2025, it can become a pressure cooker."

"In fact, the dollar's year-to-date plunge is the worst since the U.S. transitioned to a free-floating exchange rate in 1973, effectively ending the post-World War II system of fixed rates under the Bretton Woods agreement."

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