'Hedge America' Trade Takes Over The S&P 500: Here's How You Can Take Part

Despite fears that foreign investors would dump U.S. assets, stock inflows have remained strong.

But the dollar has still tanked 8% over the past year, and foreign purchases of U.S. Treasuries have slowed sharply.

This has given rise to a new narrative called the “hedge America” trade.

Hedging Replaces Selling

When Danish pension fund Akademiker Pension dumped $100 million in U.S. Treasurys in January, markets braced for contagion. But CIO Anders Schelde called it “daily business” driven by deficit concerns, not politics.

“It’s not selling America—it’s hedge America,” John Sidawi, senior portfolio manager at Federated Hermes, told The Wall Street Journal.

Danish pension funds ramped USD hedging ratios from 61% to 71% by year-end 2025. The strategy: use derivatives to reduce dollar exposure without selling stocks.

The U.S. dollar index (DXY), tracked by Invesco DB US Dollar Index Bullish Fund (NYSE:UUP), sits at 96.83, down from 108 highs last year.

As The Dollar Declines, Assets Soar

The S&P 500 sits near all-time highs at $6,877

Gold has once again retaken the $5,000 per ounce level and the SPDR Gold Trust (NYSE:GLD) hit record levels this year.

And Silver had an even wilder ride, whipsawing violently but still above $77, the iShares Silver Trust (NYSE:SLV) has more than doubled its price from last year.

What Polymarket Says

Polymarket traders are split on how many Fed cuts there will be this year: 27% odds each for two OR three cuts in 2026, 17% on just one cut, and 13% betting on four.

With $6 million in volume, traders are pricing just 6% odds of zero cuts, even with stocks close to record levels and no recession in sight.

The market on a U.S. recession has declined since the start of the year, now at 24%.

Rate cuts typically drive two effects: the dollar weakens as investors chase better yields overseas, while extra liquidity lifts stocks and commodities.

Metals & Stocks, Not Crypto Benefit From The Debasement Trade

Foreigners bought $689 billion in U.S. equities through November 2025, more than triple the prior year’s $197 billion. Meanwhile, Bitcoin crashed 50% from its October highs above $126,000, now testing $68,000 support.

“I can’t go to my board and say I want to reduce U.S. stock allocations,” Vincent Mortier, CIO of Europe’s biggest asset manager Amundi, told the WSJ. “You needed to be very brave.”

Norway’s $2.1 trillion sovereign wealth fund is stuck too. Despite worrying about concentration risk in AI stocks, CEO Nicolai Tangen admitted: “We do not have that kind of risk budget” to sell.

Crypto was supposed to rally alongside gold when the dollar weakened. Perhaps, the ‘digital gold’ narrative just died.

Image: Shutterstock