As the defeat of technology and the US dollar swing driven by the threat of President Donald Trump’s tariff sent markets into Tailspin, investors piled assets from Yen Japan to European loans who could act as turbulence buffers.
The market that entertains the pro-growth agenda of Trump has changed bumpy, with the price of oil and Canadian currency and the Mexican currency, the estimated inflation that is chaotic shaking the treasury and investors began to view the new White House as a source of risk.
“It is likely that there will be more volatility in the US dollar and in many other assets,” said Amelie Derambure, a senior multi-asset manager at the largest investor in Europe Amundi.
He said he had limited exposure to funds for sudden changes in US prospects by investing in bonds related to inflation that would be isolated from the increase in consumer prices induced by European company tariffs and debt that could obtain further euro zone interest rates.
Decline of Monday in the Chipmaker of Nvidia’s artificial intelligence (.nvda.o), driven by panic on the low -cost Chinese competition at AI, has also threw a new curveball ball in the US market that has a fever with investors expect more turmoil in front.
The line chart shows the fall of Nvidia compared to the Nasdaq Index because Deepseek triggered the AI market decline
Thomson Reutersnvidia fell sharply because Deepseek triggered AI market decline
Buffer trade
Trump began his presidency by leaving the market guessing when he might wear his highly lagging import duties, float the Chinese trade agreement, call for lower oil prices, and assess cutting and urge multinational companies to produce in the United States.
It has encouraged rush to assets which according to investors are less sensitive to US policy uncertainty and AI anxiety.
Since the November 5 election, bonds related to the US inflation index have returned around 1.5% (.Merg0qi), while the US Treasury Index dropped by around 0.4% (.Merg0Q0).
Yen USDJPY from Japan reached the highest in more than five weeks against the dollar on Monday, after the Japanese bank last Friday raised interest rates to the highest since the 2008 global financial crisis and revised inflation estimates.
This has strengthened more than 2% to around 155 per dollar since reaching the lowest position of six months on January 10.
Russell Investments Head of Currency Solutions Strategy and Fixed Revenue Van Luu said Yen could be a strong buffer for tariff shocks because while all currencies of the exporter country would suffer from trade war, Euro and Swiss Franc were weakened by interest rates
“Yen has clearly done very bad since 2022 so I think the time for turnover can be relatively close,” he said.
Head of Asset General Societe Assets Alain Bokobza said he recommended clients to buy Yen, who had taken a dollar climbing burden but now supported by an increase in Bank of Japan tariffs.
He added that Yen could also rise if the Wall Street search encouraged Japanese investors to move money back to the house.
Note: Until the stimulus ‘Abenomics’ in 2013 Yen passed the strengthening phase during the bear market, forming its reputation as a currency of heaven.
Thomson Reutersthe Yen is your friend again?
Hunting cover
European credit is also prominent, said investor.
According to Bank of America, investors have moved money to funds invested in high-quality European companies for 23 consecutive weeks.
Bank of America Chart features funds that increase European allocation
Thomson Reutersbank of America Chart which shows funds that increase European allocation
Other assets that are less fashionable may also be seen because they can be more isolated with rapid policy pivot and market shocks.
Global Legal & General Strategy Expert Equity Robert Griffiths said that in the case of a prolonged decline of US technology, assets that have been “disliked and lacking” during long wall street rally, such as European shares and FTSE 100 England, will do it healthy.
The British asset manager, who runs around $ 2 trillion of client assets, also in recent weeks increases Euro Holdings Eurusd if the dollar Dxy drops further.
Twentyfour Asset Management Co-Head Investment class Gordon Shannon said the impossibility of predicting Trump’s policy had encouraged him to support bonds issued by European banks that focused on domestic, utility providers and telecommunications groups whose interest payments were reliable.
While the return of Trump to the White House has not caused an increase in tariffs, as anticipated, uncertainty remains high.
“There is a scenario where Trump only does what it feels like and I cannot model the effect,” Shannon said, adding that the US president who had just delayed the tariff or used it as a negotiation tool.
“You want to be in a name that is well covered (with cash flow) and well understood,” he said. “Telecommunications and European utilities are a good place to be hidden.”
Drambure Amundi added that he continued to invest in Wall Street shares but protect this exposure with derivatives that would pay if the price fell.
“It is important to build some resilience in your portfolio, because we know that there will be ups and downs depending on what is believed by the market (deciding) the scenarios (tariffs) that are most likely to occur.”
“But in the end everything is exposed to a certain level and there is no one asset that is really safe.”
Source: Reuters
