Goldman Sachs: Ongoing Iran conflict and supply shocks weaken the ability of U.S. Treasuries to diversify risk

Golden Finance reports that on May 18th, Goldman Sachs analysts stated in a report that since the end of February, U.S. Treasuries have been a poor diversification tool. They pointed out: “The ongoing uncertainty surrounding the Iran conflict and supply shocks remain the main obstacles to nominal duration suppressing daily portfolio volatility, which could keep risk premiums elevated in the short term.” However, analysts believe that the growth optimism already priced into risk markets, along with the more pronounced accumulation of inflation risk premiums on the yield curve, has increased the value of U.S. Treasuries as a medium-term hedging instrument.