Macro traders from New York to Hong Kong prep for tariff day
From New York to London and Hong Kong, investors are cutting back risk ahead of next week’s tariff announcements, while keeping cash ready to pounce the moment opportunities arise.
Money managers all around the world say they’re turning neutral, stepping back or de-risking their portfolios. Volumes in Treasuries have fallen as traders refrain from taking big positions, with some looking to options trades for insurance before President Donald Trump unveils so-called reciprocal levies next week.
At the same time, many are primed to jump back in, especially if the announcement puts an end to the back-and-forth on tariffs that has roiled markets for months.
“If we get more clarity on the Trump administration’s end-game on tariffs, we could see an unexpected relief rally,” said Anders Faergemann, co-head of emerging-markets global fixed income at Pinebridge Investments in London. “The worst case would be another deadline.”
Like many global counterparts, Faergemann has been seeking out safer assets – moving away from emerging-market junk bonds and adding higher-quality names that are less exposed to U.S. growth.
Ask Aberdeen Investments’ Xin-Yao Ng how he’s preparing and the Singapore-based fund manager gives a similar refrain.
“It is a fool’s errand to try and predict what Trump will do,” he says. But the plan is “to make sure we are invested in companies where their own destiny isn’t as affected by tariff decisions. Then we take advantage of volatility, if any, to bargain hunt if there is meaningful weakness.”
Bets including long positions in the greenback seemed to be the best hedge at the start of the year, but that has been challenged by a weakening in U.S. sentiment, said Anthony Kettle, a senior portfolio manager at RBC BlueBay Asset Management. He’s been using equity instruments – rather than currencies – as a way to shield his portfolio, saying “puts” on U.S. stocks could offer some protection.
“It has been very hard to position for Trump’s policy announcements as they seem quite erratic, perhaps by design,” Kettle said. “We are focusing on the core things we like in EM fixed income but with a reduced gross risk budget and with more overlay hedge (in equity) than we would normally have.”