If the Chinese yuan truly becomes one of the reserve currency poles, what changes will occur in the underlying logic of US Treasuries and US stocks?

Don’t get sidetracked by grand narratives like “de-dollarization.”

The key isn’t about who replaces whom, but rather the US dollar transitioning from being the 'only anchor' to becoming the 'first among equals.'

What has been weakened is not the usage of the US dollar, but the long-standing **'valuation privilege'** enjoyed by dollar-denominated assets.

Why were dollar assets so expensive in the past?

Because US Treasuries equaled the world's only risk-free asset, and the dollar was the sole endpoint for liquidity.

This monopolistic position gave US stocks an extremely high 'valuation tolerance.' Once the yuan takes even 5% of reserve share, this **'uniqueness premium'** will disappear.

Core transmission: from demand for US Treasuries to discount rates.

Previously, global central banks were passive buyers of US Treasuries; now buyers have a Plan B.

This means the theoretical lower limit for US Treasury yields (the risk-free rate) has been raised. This is not just a currency issue—it’s a reassessment of the benchmark interest rate for all dollar-denominated assets.

The impact on US stocks: it’s not about earnings, but valuation (P/E).

The US stock bull market over the past decade relied on extremely low discount rates supporting long-duration narratives.

If the dollar is no longer the only safe haven,

👉 The equity risk premium (ERP) will rebound.

👉 In the past, a Mega-cap that was considered reasonable at a 30 times P/E may only be worth 20 times in the future.

Asset performance will diverge sharply.

• Valuation-sensitive (growth stocks/tech giants): ❌. They are most sensitive to fluctuations in the discount rate, and the previous "mindless buying" logic will become ineffective.

• Physical assets/hard currency (energy/resources): ✅. In a multipolar currency game, physical assets are more certain than credit currency.

Volatility will become the "norm" rather than an "exception."

After the US dollar no longer automatically enjoys the "minimum discount rate," its buffer has thinned when facing geopolitical shocks and fiscal deficits.

The market will find that the fluctuations of dollar assets are beginning to converge with those of ordinary countries.

If the internationalization of the renminbi succeeds, it will not be the name of the world currency that changes, but rather the odds structure of global assets.

Dollar assets are no longer the default option that can "ignore risks"; the threshold for investing in U.S. stocks has increased.

This is a long-term gradual decline in premium, rather than a one-time crash.

The 'dollar dividend' that we've been accustomed to for forty years is receding, and the discount rate model needs recalibration.

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