PARIS (Reuters) – Customs announcements of the last days have panicked on the markets, complicating the construction of portfolios and reviving concerns about the sustainability of American debt, estimate on Friday of experts from Natixis CIB.

“Stress levels have soared in the markets in recent days”, summarizes Émilie Tetard, multi-active strategist within the investment bank.

The risk perception index calculated by the bank has jumped at its highest since 2020, while the variation during a session of the S&P 500 has reached a higher since 2008 and that the correlation between assets has increased sharply – which means that almost all financial investments have dropped.

“There is only one large market engine, and it is very changing,” summarizes the strategist, evoking uncertainty around American politics.

In this context, some rare strategies have behaved well: long/shorts (sellers and buyers), with low volatility, or depending on trends (trend-following) on ​​short rates, in particular, Natixis remark.

Remains in the medium term, the allowance work may be more and more complicated, explains Émilie Tetard.

“The equity/bonds and shares/dollar correlations have become more unstable with the rise in the risk of inflation, on the one hand, and the distrust of the United States on the other,” recalls the strategist.

The shares are historically positively correlated with the dollar and negatively to the obligations, which therefore offer protection when the risky asset markets retreat.

“And how to diversify when only Gold and the Swiss franc played their role of refuge value?” Adds Émilie Tetard.

In fact, American Treasuries fell in full stock market debacle, unusual behavior for these debts considered to be the ordeal of refuge assets.

“This movement has been able to fear that the American debt, asset refuge, will become a risk,” sums up Eya Chammakhi, rate rate at Natixis Cib, which evokes several reasons for concern, including a volume of debt deemed unbearable and a decrease in the exposure to the dollar of financial actors, or “dedollarization”.

“But the main reason remains the concern linked to American policy, the president seeming ready to use the commercial weapon as a lever, even at the cost of damage on his currency,” summarizes the strategist.

If market trajectory is now primarily depends on the United States and China, investors are also attentive to the economic impact of customs duties.

Market indicators suggest that the scenario retained by operators is that of a slowdown in savings, rather than that of a rebound in inflation. Inflation swaps at 5 years in 5 years have lost 20 basic points for the United States as for the euro zone during the sequence, while the markets revised their rate reductions in the federal reserve and the European central bank.

It is not the central scenario of Natixis, which however expects a slowdown in growth at 1% in the United States in 2025 (against 1.8% expected previously and 2.8% in 2024) and 4.2% in China, far from the official growth target “around 5%” announced by the government.

(Written by Corentin Chappron, edited by Blandine Hénault)

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