Classic Haven Assets Don't Reflect Panic in Markets Right Now


© Bloomberg. Two men stand in front of a screen displaying stock indices at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group Inc. (JPX), in Tokyo, Japan, on Friday, Feb. 9, 2018. The Topix index headed for its worst week in two years following a meltdown in U.S. equities amid concern rising interest rates will damp economic growth.

(Bloomberg) — So much for the adage that stocks are inversely correlated with Treasuries and the Japanese yen. Equities have slumped over the past two weeks but there’s been little reaction in the classic haven assets.

One positive way to skew this information is that other assets are confirming the consensus view that this is just a “healthy correction” in the equity market and the good times will roll on again very soon.

The negative interpretation is that there’s far too much complacency, and so broader market pain will ensue if shares don’t bounce back imminently.

Some might argue that assets are no longer moving in line — but anyone who holds that view may want to have a look at what happened in 2008 when emerging markets supposedly decoupled from their developed counterparts. That seemed true to some until the real pain hit, and then it was quite clearly shown up to be pretty ridiculous.

Global economies and asset markets are more connected today than ever before.

While stocks from Sydney to Hong Kong are selling off Friday, gold has barely budged and the yen is actually weaker. Treasuries, too, have moved relatively little over the past 24 hours.

A version of this story was originally posted on Bloomberg’s Markets Live blog.

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