{"id":4906,"date":"2023-10-24T05:51:53","date_gmt":"2023-10-24T05:51:53","guid":{"rendered":"https:\/\/zoominfinancial.com\/markets\/israel-hamas-war-sees-investors-shun-most-traditional-havens-except-for-these-two\/"},"modified":"2023-10-24T05:51:53","modified_gmt":"2023-10-24T05:51:53","slug":"israel-hamas-war-sees-investors-shun-most-traditional-havens-except-for-these-two","status":"publish","type":"post","link":"https:\/\/zoominfinancial.com\/?p=4906","title":{"rendered":"Israel-Hamas war sees investors shun most traditional havens, except for these two"},"content":{"rendered":"
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The Israel-Hamas war makes investors nervous, but hasn\u2019t sparked a headlong rush into many of the assets that traditionally see huge inflows during periods of geopolitical crisis.<\/p>\n

While dwarfed by the tragic human consequences of the conflict, the market reaction has left some analysts and investors struggling to explain why so far only a few traditional havens have benefited from a so-called flight to quality.<\/p>\n

\n

Stock-market volatility, meanwhile, has risen, but at 20.37, the Cboe Volatility Index
\n VIX,<\/span>
\n an options-based measure of expected volatility in the S&P 500 over the coming 30 days is just slightly above its long-term average just below 20.<\/p>\n

Perhaps, argued Marc Ostwald, chief economist and global strategist at ADM Investor Services International, a lack of more pronounced market volatility and subdued inflows into safe-haven assets go hand in hand, reflecting a sense of paralysis in the face of an overwhelming array of worries.<\/p>\n

\u201cThe complexity of the large volume of event risks, be that geopolitical, macro- or microeconomic which markets are confronted with at the current juncture borders on the mind boggling,\u201d he said in a Monday note.<\/p>\n

\u201cThe fact that volatility has not picked up even more than it has probably attests to an element of \u2018being rabbits in front of the headlights\u2019, as well as the fact that a good many traditional \u2018safe haven\u2019 or defensive assets\u2019 are anything but,\u201d including the Japanese yen
\n USDJPY,
\n +0.02%<\/bg-quote>,<\/span>
\n government bonds, utilities, consumer staples or health care.<\/p>\n

In turn, he said, that has created \u201cbubblelike\u201d flows into gold
\n GC00,
\n -0.06%<\/bg-quote>
\n and the Swiss franc
\n USDCHF,
\n -0.04%<\/bg-quote>
\n \u2014 the two havens that have rallied since the Oct. 7 Hamas attack on southern Israel. <\/p>\n

Gold was up more than 7.5% from its Oct. 6 close through Monday, while the Swiss franc strengthened more than 2% versus the U.S. dollar over the same stretch. But U.S. Treasurys, viewed as the world\u2019s risk-free asset, have suffered. Yields, which move opposite to price, continued a sharp rise, with the 10-year rate
\n BX:TMUBMUSD10Y
\n briefly topping the 5% threshold early Monday for the first time since 2007. <\/p>\n

Rising Treasury yields and geopolitical angst are blamed for a rough October for stocks. Equities have extended a pullback that\u2019s seen the S&P 500
\n SPX
\n retreat 8.5% from its 2023 high set on July 31, leaving it up 9.8% for the year to date. Since Oct. 6, the large-cap benchmark is down around 2.1%. The Dow Jones Industrial Average
\n DJIA
\n turned lower on the year last week.<\/p>\n

The Japanese yen, typically the biggest haven beneficiary alongside the Swiss franc during periods of uncertainty, has been left on the sidelines. The dollar briefly fetched more than 150 yen last week, a level that risks yen-buying intervention by the Bank of Japan. The central bank\u2019s ultraloose monetary policy explains the yen\u2019s lack of haven appeal, analysts said.<\/p>\n

Meanwhile, \u201ceven a war in the Middle East is not persuading investors to buy US Treasuries, or government bonds, an asset class that is usually seen as the ultimate haven because they are priced in the world\u2019s reserve currency and come with the backing of America, the world\u2019s leading economic and military power,\u201d said Russ Mould, investment director at AJ Bell, in a note.<\/p>\n

He offered three reasons that may explain the continued Treasury selloff:<\/p>\n