Investors Hunt for Hedges as War Shatters Decades-Old Strategies
A damaged building in the aftermath of a drone strike in the Seef district of Manama, Bahrain, on March 10.
Source: AFP/Getty Images
The basic assumptions that have underpinned hedging strategies for decades are coming undone by the escalating war in Iran.
Government bonds, which typically rise during periods of market stress to cushion equity losses, are now moving in the same direction with stocks as oil markets are going through unprecedented turmoil. On Thursday, for example, bonds fell, sending two-year US yields up about 9 basis points to their highest level since August, while the S&P 500 Index dropped 1.5%.