USD Easing as the Mechanism of Deleveraging
February 2nd, 2026
Across global markets, risk is increasingly being reassigned away from fiat currencies and toward real assets. This shift is not ideological or cyclical in nature, it is a structural response to over-levered balance sheets across both the public and private sectors.
As capital migrates toward real assets, relative prices adjust. Assets reprice higher in fiat terms, while liabilities remain fixed. In effect, balance sheets are repaired through revaluation rather than default. This is how deleveraging is unfolding in the current cycle. However, this process cannot proceed indefinitely without accommodation.
Rising real-asset prices tighten financial conditions if currency and credit availability do not adjust. As a result, USD easing becomes less a policy choice and more a mechanical requirement. A release valve that allows revaluation to continue without destabilizing the system.
This week’s signals suggest that this easing process is very much underway.
The U.S. Dollar: On the Edge of Adjustment
What we are paying attention to on the chart below: DXY is in the middle of its long term historical range. Momentum indicators suggest more likelihood of beginning to move toward low end of range rather than high end.
The U.S. dollar currently sits near the middle of its long-term historical range. Momentum indicators increasingly favor movement toward the lower end of that range rather than a renewed push higher.
Importantly, this aligns with the broader macro regime. Elevated leverage increases the perceived risk of holding fiat liabilities, while rising real-asset prices require currency flexibility to avoid excessive tightening. Trump's continuous call for a weaker dollar and Powell’s statement that there will be no more hikes have reinforced this reality, but the underlying driver is structural rather than rhetorical.
A weaker USD does not signal economic strength elsewhere; rather, it reflects the system’s need to accommodate ongoing balance-sheet repair.
Bottom Line
USD appears to be on a path toward continued easing as part of the broader deleveraging process.
Real Estate: Repricing Requires Room to Breathe
On Thursday, President Trump made a statement that suggests what we are seeing is a controlled debasement of the USD. The White House seems to be the orchestrator of how repricing is to be carried out at a macro sector level. The political narrative agrees with our current top story: USD debasement will continue and scarce assets will continue to reprice higher.
Historically, gold tends to lead during periods of uncertainty, with real estate lagging before eventually re-aligning through higher nominal prices.
Relative valuation measures suggest that this divergence may be nearing exhaustion. Gold has already repriced meaningfully, while real estate has yet to fully reflect the same adjustment in USD terms. As currency conditions ease, the pressure for real estate to reprice higher increases.
This dynamic is less about immediate catalysts and more about restoring long-term balance between assets and liabilities.
Bottom Line
Real estate is positioned to begin participating more meaningfully in the revaluation process as USD easing provides relief to financing conditions.
Health Care: Capital Rotation into Stability
What we are looking at on the chart: The health care sector has reached historically attractive valuation levels relative to the broader equity market. MACD and RSI momentum indicators show that the pivot in health care’s favor has already begun.
Health care occupies a uniquely advantaged position in the current macro environment. The sector offers stable, recurring cash flows at a time when leverage sensitivity and earnings durability are increasingly valued. Importantly, those cash flows are not purely cyclical — they are structurally supported by large and persistent federal spending programs.
As fiscal pressures rise alongside demographic trends, government-backed health care expenditures are unlikely to contract meaningfully. This places the sector downstream of sustained fiscal outlays, providing a level of cash-flow visibility that few other equity sectors can match during periods of balance-sheet repair and currency adjustment.
In a regime where capital is rotating away from concentrated growth narratives and toward resilience, health care combines low relative valuation with structural revenue support, making it particularly well positioned as deleveraging continues.
Bottom Line
Health care offers an attractive combination of depressed relative valuation and durable, fiscally supported cash flows in an environment increasingly defined by risk repricing.
Technology: Concentration Risk in a Repricing World
What we are looking at on the chart: In 2020, tech’s valuation relative to the broad stock market reached levels not seen since the dot com bubble. They have stayed around there since.
Technology valuations remain elevated relative to both the broader equity market and real assets. When measured against gold, tech appears to be undergoing a prolonged mean-reversion process, with no clear sign of stabilization yet.
This reflects more than valuation excess. Highly concentrated, long-duration cash flows are particularly sensitive in an environment where real assets are repricing and currency accommodation becomes necessary. As capital reallocates toward tangible inputs and balance-sheet resilience, tech’s relative dominance is likely to continue unwinding.
Bottom Line
Technology appears vulnerable to continued relative underperformance as real-asset repricing progresses.
Closing Thoughts:
Markets are not repricing at random. What we are witnessing is a coordinated adjustment across currencies, assets, and sectors as leverage is worked down through revaluation.
USD easing plays a central role in this process, allowing real assets to reprice without destabilizing balance sheets. Sector behavior — from real estate to health care to emerging markets — reflects this same mechanism expressing itself in different forms.
This deleveraging process is likely to be long and uneven. Periods of calm may persist, but they coexist with the potential for sharp, discrete repricing steps as constraints are reached and pressure is released.
Understanding the mechanism, rather than reacting to headlines, remains the key to navigating what lies ahead.
Look out for next week’s newsletter for further insight into the forces shaping today’s markets.