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Swissy Never Lies
What's the best hedge for geopolitical turmoil?
That question's a bit of a red herring. There's no hedge for a geopolitical worst-case, and hedging anything short of a worst-case is notoriously difficult and very often ends up being more trouble than it's worth. Or at least in my experience.
Certainly, there's a case for adding and maintaining more commodities exposure in portfolios than you might've in the past, and for my money, USD cash at 5% is worth holding too. I like Treasurys here give
I am putting on my dunce cap to ask this . . . because I am all that when it comes to fixed income . . . but when we’re talking about Treasuries having an asymmetric return profile, we are more talking about extremely long duration UST, right?
Looking at a random 10 year Treasury (91282CHT1) I see YTM 4.9%. If I plug it into a bond calculator and figure price change at – / + 100 bp yield, I get +8.1% upside / -7.4% downside. Which seems only mildly asymmetric (convexity 75).
Looking at a random 30 year Treasury (912810TR9) I see YTM 5.1%. If I plug it into a bond calculator and figure price change at – / + 100 bp yield, I get +17.8% upside / -14.1% downside. Now that’s very asymmetric (convexity 376).