The past may not inform the future this time around.
Investors seeking to minimize risk are at a loss as investments that typically rally during periods of volatility, like gold and Treasurys, weakened instead. Even more confusing, these assets unexpectedly diverged from the U.S. dollar and Japanese yen, going against the observed correlation from past periods of market disruption, as the Wall Street Journal reports.
“The normal correlations you expect to see don’t work so well,” Haidar Capital Management’s Said Haidar told the Journal. So what is considered a “safe” asset now?
“The big burning question right now is ‘Where is the safe haven?’” Sunrise Capital’s chief investment officer Christopher Stanton told the Journal.
Money mangers are trying to come up with an answer amid a lot of moving parts, among them the easement of stimulus policies from the Federal Reserve, Bank of Japan and European Central Bank.
“The uncertainty level has compounded exponentially,” portfolio manager Christopher Sullivan of United Nations Federal Credit Union told the Journal.
For real estate assets, shares in the S&P 500 have not fallen as far as the index as a whole, which dropped 8.1 percent, but the Journal reports borrowing costs are rising.
[WSJ] — Erin Hudson