Geopolitical upheavals affecting asset allocations! Markets Pulse survey: Safe-haven attributes of US bonds are diminishing, consensus forming on stocks being strong while bonds are weak.

The latest Markets Pulse survey shows that the majority of respondents believe that, against the background of international policy dynamics dominating the market, the return on stocks will exceed that of bonds after adjusting for volatility. Among the 138 respondents surveyed from January 28th to February 4th, more than half believe that trade and geopolitical progress will be the biggest catalyst for market volatility, while 46% of respondents choose monetary policy. In this context, nearly two-thirds of participants expect the yield on 10-year U.S. Treasuries to rise. So far this year, amidst the resurgence in the field of artificial intelligence, historic highs and lows in precious metals, U.S. intervention in Venezuelan affairs, and Trump's push for U.S. control of Greenland, the S&P 500 Index has maintained a moderate increase. Despite continuous market volatility, the strong macroeconomic fundamentals continue to provide solid support for the market and sell-offs in the stock market are always short-lived. The uncertainty brought by the trade war is gradually diminishing, and corporate earnings reports show resilience to tariff pressures. Henry Allen, macro strategist at Deutsche Bank, stated in a research report released on Wednesday, "For investors, the key is to distinguish between the noise of market headlines and the overall strong macroeconomic fundamentals. Based on historical experience, sustained market declines inevitably accompany a fundamental negative reassessment of macroeconomic prospects, but at this point, we have not observed any substantial relevant signals." Safe-haven properties diminished In contrast, U.S. Treasuries have recently shown weakness. Investors are preparing for a change in the leadership of the Federal Reserve, with many worrying that Federal Reserve Chair nominee Kevin Warsh's policy preference for shrinking the central bank's balance sheet will cause significant volatility in bond yields. During periods of past geopolitical turmoil, the largest and most liquid U.S. Treasuries have often served as a safe haven for funds. However, the new policy risks brought by the Trump administration, coupled with market concerns about the independence of the Federal Reserve and fiscal outlook, have significantly weakened the appeal of U.S. bonds as a safe haven. At the same time, trillion-dollar market value companies have emerged in recent years, with these companies holding massive cash reserves, making large-cap blue-chip stocks in the U.S. a new safe-haven choice. Managing Director Gareth Ryan of IUR Capital stated, "Currently, the 10-year U.S. Treasury yield is still hovering around 4%, while the return on risk assets in the past three years has been several times that level, making such yields clearly unattractive." He also pointed out that, despite a recent decline in the software sector, market risk appetite remains at a healthy level. U.S. Dollar under pressure In the current market environment, the U.S. dollar is clearly one of the losers. 71% of survey respondents expect the USD exchange rate to weaken over the next month. When asked which major market trends in January are likely to be sustainable, 28% of respondents chose the decline of the U.S. dollar, ranking second. Macro strategist Brendan Fagan said, "The U.S. dollar has not yet escaped its difficulties, but the worst-case scenario seems to be gradually fading. After the nomination of Kevin Warsh, concerns about aggressive actions by the Federal Reserve Chair have eased, and various data also do not indicate a sharp deterioration in the U.S. labor market." Furthermore, 41% of respondents believe that the upward trend in gold is most likely to continue for at least a month. This result indicates that, despite recent fluctuations in the precious metals market, investor confidence in the gold bull market has not been significantly shaken.