Swiss Bank Warns: Ditch US Assets Amid Inflation and Deficit Fears

A leading private bank is warning investors to reduce their exposure to US assets over the next decade due to rising tech-driven inflation and high government deficits.

Pictet Wealth Management, a Swiss bank, predicts that these factors will erode the value of US Treasuries and the US dollar. The bank's chief investment officer in Asia, Kelvin Tay, suggests investing in commodities and equities in emerging markets for greater long-term returns.

The rise of artificial intelligence and decarbonisation efforts are expected to contribute to global inflation volatility, according to Pictet's head of strategy and macroeconomic research, Frederik Ducrozet. He advises clients to be protected against government-printed currencies that may devalue over time.

Pictet projects the US dollar will continue to depreciate over the next decade, with potential exchange rates falling to 5.97 yuan per US$1 and US$1.30 per €1 by the end of the period. The current rates are significantly higher at 6.74 yuan per US$1 and US$1.16 per €1.