The opinions expressed here are those of the author, a columnist for Reuters. Repeats April 14 column with no changes.

By Jamie McGeever

ORLANDO, Florida, April 14 (Reuters) - Amid the cacophony of chaos in financial markets created by the Trump administration's tariffs, the loudest - and most alarming - signal is surely the simultaneous slump in the dollar and U.S. Treasury bonds.

It's too early to say whether this is the beginning of a more prolonged trend. But it is a warning that faith in U.S. assets - and indeed, the global financial system of the past half-century shaped in America's image - cannot be taken for granted.

It's never advisable to let long-term forecasts be swayed by short-term price moves but last week was potentially pivotal, both for the dollar and Treasuries.

Whether it turns out that way will be determined to a large extent by overseas private sector investors, who have emerged as significant marginal buyers even as foreign official sector holdings of Treasuries barely moved over the past decade.

Private sector investors have greatly increased their holdings of Treasuries and, by doing so largely on an unhedged basis, also greatly increased their exposure to the dollar.

If a global crisis of confidence in the U.S. does snowball, they will be more likely to head for the exits before their more staid, conservative central bank counterparts.

Foreigners held $8.5 trillion of Treasuries in January, U.S. Treasury figures show - central banks with $3.8 trillion and the private sector with $4.7 trillion. Five years ago central bank holdings were $4.2 trillion and private sector investors held $2.9 trillion, and a decade ago official holdings were more than twice as large as the private sector's stash of $2 trillion.

Japanese institutions and households are among the largest holders of Treasuries on the planet, and if they reflect private sector thinking in other countries, investors and policymakers should brace for further market upheaval.

According to Bank of America, Japanese private investors sold $17.5 billion in long-term Treasuries in the week through April 4, the largest amount of foreign bond sales since before the U.S. election in November.

DOLLAR TIDE TURNING

Eroding confidence in the dollar and Treasuries, the two pillars of the global financial system would of course have serious long-term consequences for the world. The more immediate fallout for investors has been no less dramatic.

Last week the 30-year U.S. Treasury yield rose 48.5 basis points. It was the biggest weekly rise since June 1982. The benchmark 10-year yield's 50-basis point surge was its steepest weekly rise since November 2001.

At the same time, the dollar fell nearly 3% against a basket of major currencies. Excluding the Global Financial Crisis and the COVID-19 pandemic, this has only happened five times in the past 30 years, and one of them was last month.

Analysts at Goldman Sachs note that last week also marked only the fifth week since 1980 where the euro, or a pre-single currency weighted equivalent, rose 2% and the S&P 500 fell 2%. In other words, a significant slump on Wall Street is rarely accompanied by an equally steep decline in the dollar.

Goldman's FX strategy team last week flipped their dollar call to a bearish view, arguing that the recent breakdown in "usual" correlations is a clear sign that "markets are concerned about what recent policy actions imply about U.S. governance and institutional credibility."

They were joined on Monday by strategists at HSBC, who note that "as long as U.S. economic policy uncertainty is elevated, it will be difficult for the dollar to recover versus other core currencies."

Also on Monday, Barclays' FX team published a note, "The end of the dollar as we know it?", in which they observe that the euro's spike to $1.1480 from $1.0950 last week was a move rarely seen over a six-month time frame never mind two days.

The tide is turning against the dollar and U.S. bonds, certainly at the long end of the curve, and the power to direct the flow is now increasingly in private, not official sector hands.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Nia Williams)

((jamie.mcgeever@thomsonreuters.com; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net/))