Author: Bao Yilong
Source: Wall Street Insights
US stock volatility rarely exceeds emerging markets and Bitcoin, while US Treasury bonds, traditionally seen as safe assets, are experiencing severe fluctuations, causing investors to question the wisdom of holding US assets. UBS believes that once global risk-free rates fluctuate, it means all markets will be disrupted. Analyst Ed Al-Hussainy pointedly noted: "I'm not actually worried about a recession, I'm worried about a financial crisis."
US stocks rebounded on Friday, seemingly restoring market risk appetite, but investors have begun to question the safety of US assets, especially the dramatic volatility of US Treasuries, which has once again cast a shadow of financial crisis fears over Wall Street.
Over the past week, the US 10-year Treasury yield saw the largest single-week jump in over 20 years, with US stocks plunging and then surging. Superficially, the S&P 500 rose over 5% for the week, Treasury yields returned to February levels, and Bitcoin closed higher, appearing normal.
However, what is unsettling is that this week's simultaneous decline in US stocks, Treasuries, and the dollar is typical of emerging market characteristics, not the performance of the world's safest assets. Especially with such significant volatility in long-term US bonds, a liquidity crisis seems imminent, causing investors to question the wisdom of holding US assets. UBS Chief Strategist Banu Baveja further stated: "This is terrifying. We are redefining global risk-free rates, and if global risk-free rates fluctuate, it will disrupt all markets."
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