The international 'fintech' Ebury, specializing in cross-border payments and currency exchange, has pointed to the US dollar as practically the only available alternative as a true safe-haven asset in the current market context.
The firm details in a recent analysis that global stock markets reacted with declines to the solid May employment report in the United States (US). Following this data, public debt yields rebounded, as investors interpreted that the Federal Reserve's rate cut cycle had come to an end.
In this scenario, those responsible for the report maintain that, "in a particularly expensive stock market --especially in the US--, with little room for error, investors opted to take profits."
In line with this diagnosis, the document argues that "the simultaneous and massive sale of stocks and bonds highlights the current scarcity of safe-haven assets, where the US dollar consolidates as one of the few available options."
The company emphasizes that the evolution of exchange rates during the week supports this reading, as no G10 currency has managed to avoid declines against the 'greenback'.
According to market data, around 4:00 PM this Monday, each European currency was exchanged for 1.153 dollars, compared to 1.197 'greenbacks' at the end of January, which implies a depreciation of close to 4% of the European currency against the dollar in that period.
The report adds that not even gold, a traditional safe-haven asset in periods of geopolitical uncertainty, has managed to retain its value. In the early afternoon, the precious metal was trading below 4,350 dollars per ounce, more than 22% below the approximately 5,600 dollars it marked at the end of January.
INFLATION DATA AND RATE ADJUSTMENT AT THE ECB
Aside from the war in Iran and reports on the fragile ceasefire between the parties, the report highlights that investors will closely follow several key macroeconomic indicators this week and, especially, the European Central Bank (ECB) meeting on Thursday.
Among the most relevant references, analysts emphasize the importance of the May inflation data in the US. Market consensus forecasts a new significant rebound in the headline rate, driven by the pass-through of higher energy costs to the final consumer.
However, the document specifies that attention will be directed above all to the underlying index (without food or energy), given that fixed-income investors "remain nervous after last week's solid labor report."
As for the ECB, Ebury recalls that the institution had already anticipated the first rate hike of this new cycle; therefore, the market will be attentive to the monetary policy signals that emerge from the minutes and, in particular, from the appearance of its president, Christine Lagarde.