Treasury's Dollar Moves Could Lift International ETFs

Portfolio Strategies Content Hub Treasury’s Dollar Moves Could Lift International ETFs DJ Shaw September 4, 2026 For years, investors buying international stocks have battled two problems: American markets outperforming and a dollar that kept climbing. New moves by the U.S. Treasury suggest the second problem may not stick around forever. Key Takeaways: Treasury has intervened twice in three weeks to ease pressure on the yen and long-term yields. A softer dollar could remove a headwind that has weighed on overseas returns for a decade. Thornburg’s TXUE and TXUG offer active exposure to that potential shift. In the span of three weeks, the Treasury intervened alongside Japan to support the yen . It also doubled a bond buyback program after long-term yields spiked, according to Thornburg Investment Management. Neither move amounts to a formal weak-dollar policy. Together, though, they signal growing sensitivity in Washington to the fallout from dollar strength and rising long-term rates. See more: Is It Too Late to Add International Stocks? The first signal arrived in late July, according to Thornburg. The U.S. joined Japan in supporting the yen after the dollar climbed toward 164 yen. Rather than selling dollars, the Treasury orchestrated euro sales to fund the purchase, Thornburg noted. That distinction matters, because Japan holds roughly $1.2 trillion in Treasury bonds that did not have to be sold. A second signal came August 19, when the Treasury said it would double its liquidity-support buybacks of 10-to-30-year debt. The new target is $4 billion per operation, the firm said. The move followed a spike in the 30-year yield to 5.34%, its highest level in nearly 20 years, according to Thornburg. It initially pulled the yield down by roughly 10 basis points and weakened the dollar. A Softer Dollar’s Translation Benefit Higher Treasury yields may no longer be reliably bullish for the dollar, according to Thornburg. Rate increases driven by strong growth tend to attract foreign capital. Yields that rise because of fiscal deficits and heavier debt supply tend to have the opposite effect. The dollar index sits around 99 and could ease into the low-to-mid-90s, Thornburg said. That kind of move would provide a translation benefit to U.S. investors holding foreign assets. “But at the end of the day, making the U.S. government’s short-dated liabilities more expensive is going to hurt more than lowering the much smaller volume of long maturity bonds by a few basis points,” said Brian McMahon, Thornburg’s portfolio manager and chief investment strategist. Thornburg runs two ETFs built around that shift. The Thornburg International Equity ETF (TXUE) holds $557.1 million in assets and has gained 14.4% year to date through September 2, according to Thornburg. Lei Wang and Matt Burdett manage the fund, per Thornburg. It benchmarks against the MSCI EAFE Index and carries a 0.65% expense ratio. Its sibling, the Thornburg International Growth ETF (TXUG) , has returned 10.9% year to date and holds $4.34 million in assets, Thornburg data show. The fund charges a 0.70% expense ratio, Thornburg figures show. Sean Koung Sun and Nicholas Anderson manage the fund, which benchmarks against the MSCI EAFE Growth Index. Thornburg framed the moment as a possible turning point. For a decade, a strengthening currency reinforced American exceptionalism. In that scenario, company fundamentals and relative valuations would get a lift from a descending dollar rather than fighting it. For more news, information, and strategy, visit our Portfolio Strategies Content Hub . RELATED TOPICS dj shaw interest rates international equities International Growth ETFs Japan MSCI EAFE Index portfolio construction Content Hub thornburg-ps treasury TXUE Earn free CE credits and discover new strategies