You Can Run, But You Can't Hedge

Jeffrey Rosenberg
422 Followers
(17min)

Summary

  • Bonds and stocks falling together stirs painful memories of the 2022 inflation surge.
  • The episode underscores the challenges to traditional portfolio diversifiers and the need to consider alternative sources of diversification.
  • The dollar’s decline is unusual in the context of falling stocks and rising uncertainty, which reflects the unique circumstances of the uncertainty and speed of tariffs impacting globally connected economies and financial markets.
  • Signals of less extreme tariff implementation brought markets back from the brink, but market pricing largely reflects an unwind in post-election growth enthusiasm rather than a risk premium for the rise in stagflation and recession risks.

Rear view of a female athlete jogging on the road in nature.

skynesher/E+ via Getty Images

You can run, but you can’t hedge. That’s the unsettling message investors have been faced with over the recent period, as traditional safe havens—including long-dated bonds and the dollar—have failed to behave as expected amid intensifying policy and

This article was written by

422 Followers
Jeffrey Rosenberg, CFA, Managing Director, is BlackRock's Chief Fixed Income Strategist and a member of the BlackRock Investment Institute. His responsibilities include working closely with the Global Chief Investment Officer of Fixed Income and the global fixed income portfolio teams to develop BlackRock's strategic and tactical views on sector allocation within fixed income, currencies and commodities. Mr. Rosenberg is also the portfolio manager for the fixed income tactical allocation managed model portfolio, an actively managed portfolio of exchange traded funds. Prior to joining BlackRock, Mr. Rosenberg spent nearly 10 years at Bank of America Merrill Lynch as the Chief Credit Strategist. His most recent role included coordination of strategy across all fixed income, securitized assets, credit, FX and commodities. Mr. Rosenberg brought innovation to his credit strategy work producing the first commercialized quantitative corporate credit portfolio risk analytics system from a dealer firm. At BAML, Mr. Rosenberg and his team were consistently top ranked by Institutional Investor for high grade, high yield, and general fixed income strategy. At BlackRock, Mr. Rosenberg publishes his monthly "Fixed Income Strategy" along with regular posts to the BlackRock Blog, contributions to BlackRock Investment Institute publications and numerous media appearances. Mr. Rosenberg earned a Masters in Science degree in Computational Finance from Carnegie Mellon, a BA degree in Mathematics from the University of Minnesota, and a BA degree in Finance from the University of Wisconsin. He has been a Chartered Financial Analyst since 1997.

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