Treasuries are the standout play as Trump’s trade war heats up

Both stocks and bonds person been connected a chaotic thrust successful the archetypal 3 months of the twelvemonth successful absorption to President Donald Trump’s barrage of tariffs. But 1 happening is becoming wide successful this backdrop: bonds are a amended stake than stocks adjacent arsenic the dollar wavers arsenic a harmless haven.

US Treasuries person outperformed stocks this quarter, heading for a much than 2% gain, portion the equity benchmark S&P 500 fell astir 5%. It marks the archetypal clip since the onset of the pandemic successful March 2020 that stocks fell, and bonds roseate successful a three-month period.

Barclays strategists led by Ajay Rajadhyaksha shifted their plus allocation presumption past week successful favour of bonds implicit planetary equities for the archetypal clip successful “several” quarters, saying that argumentation uncertainties airs “downside” risks to economical growth.

More than $5 trillion has evaporated from US banal marketplace valuation since precocious February arsenic Trump plans to enforce reciprocal levies connected trading partners connected April 2 arsenic portion of his sweeping tariff push. His medication has besides targeted sectors similar automobiles and concern metals, aimed astatine boosting American manufacturing and employment.

“If the equity marketplace corrects lower, it tightens fiscal conditions,” said Jack McIntyre, portfolio manager astatine Brandywine Global Investment Management. “And that’s bully for bonds. You’d amended beryllium a purchaser connected weakness.”

In summation to tariffs, investors volition crook their attraction to Friday’s jobs study to get the latest work connected the labour market. Economists are expecting a slowdown successful payroll maturation and a dependable unemployment rate.

“We judge risks to yields are skewed to the downside if the employment information disappoints,” Subadra Rajappa, caput of US rates strategy astatine Societe Generale, wrote successful a Friday note.

The tentative instrumentality of the accepted correlation betwixt stocks and bonds is simply a invited alleviation for investors. It is aft each the cornerstone of a 60/40 portfolio, a strategy which had mostly been retired of whack since 2022 erstwhile the post-pandemic ostentation surge hammered some stocks and bonds simultaneously.

Since bonds are offering investors “a existent return,” with yields that are presently higher than inflation, “it’s an perfect happening to summation the allocation successful an wide portfolio,” Earl Davis, caput of fixed income astatine BMO Global Asset Management, said connected Bloomberg Television.