The Trade War and Its Impacts
The trade war, especially between the USA and China, has led to significant shifts in the global financial markets in recent months. These developments affect several key areas: bonds, the US Dollar, and stocks.
Bonds
- US Treasury Bonds: Historically, US Treasury bonds were considered a safe haven in turbulent times. However, due to uncertainty in the trade war and political risks in the USA, they are losing attractiveness. Investors are withdrawing from the Dollar and investing in other assets like German government bonds, putting pressure on the US bond market.
- Yields and Risk: The yields on US bonds serve as a basis for many financial products. A lasting decline in confidence in US bonds could have historical impacts on the global financial system.
US Dollar
- Loss of Confidence: The US Dollar, usually a safe haven in times of crisis, is showing weakness. The loss of confidence in the dollar is evident, reflecting in losses against other currencies like the Euro.
- Exchange Rate: The dollar has stabilized against the Euro but remains at a level corresponding to what it was about six months ago.
Stocks
- Volatility and Losses: Stock markets worldwide are heavily affected. The S&P 500 has fallen 17 percent from its record high, and the Nikkei in Tokyo lost four percent. These losses are attributed to the uncertainty and loss of confidence in the US economy.
- Sectors in Focus: Particularly export-oriented industries such as the automotive and machinery industries, as well as tech companies with manufacturing facilities in China, are significantly impacted. Companies like Apple and Alphabet are challenged by tariffs and uncertainty in global supply chains.
- Political Risks: US stocks are now burdened with a political risk premium, which means that investors demand higher returns to compensate for the increased risk.
Outlook and Strategies
- Uncertainty and Volatility: The markets are characterized by high volatility and uncertainty. Investors are seeking safe havens and diversifying their portfolios to minimize risks.
- Tactical Opportunities: In such an environment, tactical opportunities arise for investors willing to take on controlled risk. Structured products with an asymmetrical risk-reward profile can be a way to specifically exploit the high volatility level.
- Long-Term Effects: The long-term effects of the trade war on the global economy are uncertain. Experts warn of a potential shift in global power structures and an erosion of confidence in the US financial system.