The global investment firm Macquarie Capital believes that US Treasuries and the dollar will likely never regain their status as safe-haven assets.
In a new CNBC interview, Macquarie Capital global strategist Viktor Shvets says investors are no longer flocking to US bonds and the dollar during a geopolitical crisis, following US attacks on Iran.
According to Shvets, investors now see gold as the only safe-haven asset.
“And in fact the only place money is looking for safety is gold. That I think will continue to perform. USD, I think it’s just a tactical [rally]. It’s nothing more than that. So I don’t believe either US Treasuries or the US dollar will probably ever come back as a safety asset.”
The Macquarie strategist adds that while the US dollar has rallied over the past few days, he believes that the move will be short-lived, as other economies look weaker due to potential energy shocks and economic stress from tensions in the Middle East.
“I think it’s more temporary because remember, currencies are relative. They don’t have absolute values. And if you think of the impact of energy on Europe and Japan and the United Kingdom, it’s far greater than what you’re going to see in the United States. And so the US dollar reflected that higher degree of vulnerability in other areas.”
Looking at the Treasury market, Shvets says two macro trends are pushing investors away from US bonds.
“But in the Treasury market, there was no evidence because investors are concerned about inflation that actual inflation could tick up way beyond 2.8%-2.9% on a PCE (personal consumption expenditures) basis.
And not only that, but at the end of the day, do people want to diversify the investment of the wider space? And I think the answer is yes. That’s been the answer for the last nine or 10 months. And I think that’s going to be the answer as we go over the next two or three, four or five years.”
Last month, the “Black Swan” author Nassim Taleb warned that the US dollar is progressively losing its reserve status amid surging budget deficits and asset confiscation.
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