The greenback is once more proving it’s the only haven that matters.
Treasuries are cratering — and sending other bond markets down — as a looming shutdown underscores the potential that U.S. fiscal profligacy will spur issuance. With the Federal Reserve determined to keep interest rates higher for longer, investors are finding few places to hide apart from the world’s reserve currency.
The rout in U.S. sovereign securities is actually spurring dollar demand, by helping to drive up the interest rates that buyers of the currency can receive — and keep them elevated. Investors are facing an unprecedented third straight year of losses as the $25.5 trillion Treasuries market is wracked by liquidity concerns, ever-tighter Fed policy, increased U.S. government issuance, and the volatility created as investors get forced out of large futures bets.
“The US dollar is a high yielding, high growth, safe haven — an unusual and powerful combination,” said Andrew Ticehurst, a rates strategist at Nomura Inc. in Sydney. “We expect USD strength to continue, driven by growth divergences, higher rates and potential further risk-off moves ahead.”
The Bloomberg Dollar Spot Index extended gains in Asia on Tuesday, and is up more than 2% in September, while alternative safety plays have mostly produced losses.
Global government bonds are tumbling toward their worst month in a year, while the Japanese yen and Swiss franc are off more than 2%. Gold is also sliding. Bitcoin has managed modest gains, though it’s still down 14% this quarter.
Yields climbed to fresh multiyear highs on Tuesday, with the 10-year benchmark rising to 4.56%. That extended a surge that came on Monday even after Moody’s Investors Service, the only remaining major credit grader to assign the U.S. a top rating, signaled its confidence is wavering ahead of a potential shutdown.
The yen is heading for its third straight annual loss of more than 10%, as the Bank of Japan clings to extremely easy monetary policy during a wave of global tightening. Governor Kazuo Ueda this month doubled down on his dovish stance, disappointing yen bulls who had hoped he would signal a move toward ending negative interest rates.
A Bloomberg index of global government bonds is on track for its worst month in a year, with a 2.9% drop.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
