Yen, Swiss franc to regain allure if global market storm hits

October 23, 2018

By Tommy Wilkes and Tom Finn

LONDON (Reuters) – Shaky global stocks and a recent spike in U.S. equity volatility have sounded a warning for investors eager to find assets offering shelter in case world markets go belly-up.

Treasury bonds, gold, London property, and even bitcoin have lured investors during times of stress. In currency markets, the dollar, Swiss franc and Japanese yen are the traditional go-to choices.

But the conundrum of recent months is that few of these assets have lived up to their reputation for safety. Even as trade war fears, U.S. equity volatility and Italy’s public spending plans have rattled investors, the yen <jpy=>has lost 7 percent to the dollar since March.</jpy=>

The Swiss franc (EURCHF=) has gained two percent against the euro in 2018 but fallen since early September, despite an Italy-European Union showdown over Rome’s budget spending.

German and U.S. government bonds, having enjoyed a decade-long bull market run, are widely seen as expensive; gold <xau=>, often considered inflation-proof, is down five percent this year.</xau=>

Only the dollar has reigned supreme, benefiting from being the world’s most liquid currency, the robust U.S. economy and rising interest rates.