Why Pictet Wealth Management Says the Dollar Bull Run Is Over

Pictet Wealth Management, the Swiss private bank with over €700 billion in assets under management, has issued a stark warning to investors: reduce your exposure to US Treasuries and the US dollar over the next decade. In its Secular Outlook 2026 report, the firm argues that the era of stimulus-fueled gains is giving way to a world of higher government debt, lingering inflation, and greater market volatility—forces that will compress returns from traditional US-centric bond and cash portfolios .

This is not a short-term tactical call. It is a structural thesis about the diminishing role of the dollar and US sovereign debt in global portfolios. Here is exactly what Pictet is forecasting, why, and what it recommends investors buy instead.

The core thesis: structurally high inflation and fiscal deficits

Pictet Wealth Management's bearish view rests on two interlocking arguments. First, structurally high inflation, driven by factors such as reshoring, decarbonization, and the AI boom, is expected to stay above the Fed's 2% target for much of the next decade. The firm expects US inflation to remain between 2.5% and 3% for much of 2026, limiting the Fed's ability to cut rates and keeping real bond yields unattractive .

Second, large and persistent US fiscal deficits are expected to erode the real value of US government bonds. Pictet flags that the supply overhang from government borrowing will keep upward pressure on yields and crowd out private investment . The base case is US 10-year yields staying below 5%, but Pictet warns that higher yields are a "significant tail risk" .

The specific dollar depreciation forecast

Pictet's Secular Outlook projects the US dollar will depreciate by roughly 1.1% per year on average over the next 10 years, implying a total decline of about 10–15% . But the firm went further in an August 2026 briefing, providing specific exchange-rate targets:

Currency pair	Pictet 10-year forecast	Spot rate at briefing	Implied depreciation
USD/CNY (yuan per USD)	5.97	6.74	~11–12%
EUR/USD (USD per euro)	1.30 (i.e., €1 = $1.30)	1.16	~11–12%

These targets are drawn directly from Pictet's Secular Outlook 2026 report and were covered in media reports in August 2026 . The implied decline of roughly 11–12% against both the yuan and the euro is consistent with the overall 10–15% depreciation forecast for the dollar on a trade-weighted basis.

What to buy instead: European and EM equities, gold, and EM debt

Pictet recommends a significant rotation away from US-centric allocations . The preferred asset classes, drawn from the Secular Outlook 2026 report and multiple Pictet briefings, are:

• Euro-zone equities and emerging Asia equities (especially India and China) — expected to be the top-performing equity regions over the next decade .
• Emerging-market (EM) debt — Pictet expects EM bonds to "re-rate" as the dollar declines, making them the preferred fixed-income alternative to US Treasuries . The firm has maintained an overweight stance on EM local currency bonds and EM corporate debt throughout 2025–2026 .
• Gold and other "assets that governments cannot print" — Pictet explicitly favors hard assets in a de-dollarization environment . The bank has retained an overweight position on gold across multiple monthly outlooks .
• Corporate credit and alternatives — Pictet advises shifting capital from government bonds into corporate credit and alternative assets to boost returns in a lower-return world .

Broader pressures supporting the bearish outlook

Pictet identifies several reinforcing headwinds for US fixed-income markets:

• Multi-year elevated Treasury yields. The base case is US 10-year yields staying below 5%, but Pictet flags higher yields as a "significant tail risk" given the supply overhang from fiscal deficits .
• Fiscal deficits out of control. Large, persistent government borrowing is expected to keep upward pressure on yields and crowd out private investment .
• De-dollarization trend accelerating. Central banks and sovereign funds are diversifying reserves away from the dollar. Pictet notes this shift "is gaining traction" and directly undermines demand for US Treasuries .
• Geopolitical uncertainty and US policy unpredictability. Pictet strategist Christopher Dembik cited "uncertainty of American policy and the weak evolution of the US Dollar" as structural negatives, alongside the risk that tariffs and trade friction hurt US growth while keeping inflation elevated .
• Sticky inflation above Fed targets. The firm expects US inflation to remain between 2.5%–3% for much of 2026, limiting the Fed's ability to cut rates and keeping real bond yields unattractive .

Pictet acknowledges that the dollar and US Treasuries will remain anchor investments in global portfolios for years to come. But the message is clear: the next decade looks structurally different from the last one. Investors who do not gradually diversify away from US assets risk accepting lower real returns in a world of persistent inflation and fiscal strain.