FirstFT: Investors pour money into safe havens

Good morning and welcome back to your daily briefing covering finance, business and international politics. Here’s what we’re covering today:

• Investors shelter in haven assets

• Nvidia unveils new AI chip

• Today’s big read on Goldman’s succession plans

• And Martin Wolf on a “Mar-a-Lago accord”

Investors have poured $22bn into short-term US government debt this year after concerns over Donald Trump’s economic and trade policies set off a race for haven assets and sent stocks tumbling.

Net inflows into short-dated Treasury funds hit about $21.7bn between early January and March 14, according to EPFR data, setting the stage for the biggest quarterly flood into the vehicles in two years. Flows into long-term government bond funds were also positive for the quarter to date, but totalled a much smaller $2.6bn.

The cascade of money into shorter-dated government debt comes as investors have sought shelter from a sell-off in riskier assets, such as stocks and junk-rated corporate bonds, amid deepening worries that Trump’s aggressive trade agenda will slow growth in the world’s biggest economy and stoke higher inflation.

The release of the EPFR data follows a Bank of America survey this week which showed investors made their “biggest-ever” cut to US equity allocations this month, while junk bond spreads — the gap in borrowing costs between lowly-rated companies and the US government — have climbed sharply.

The bet on short-term US debt will be tested later today, when the Fed issues its latest economic and interest rate projections. Markets are expecting two to three cuts in the central bank’s policy rate this year, and any deviations from that outlook are likely to ripple through fixed income markets.

Bob Michele, head of global fixed income at JPMorgan Asset Management, said the US bond market “can be the anchor in the storm”.

With “pure de-risking” and “[if] you think the equity market’s going to go through a correction, money just tends to go to cash and cash-like instruments”, he added.

• Stock vigilantes: It is time to give up on the idea that Trump will change his policies if stock markets tumble, writes Katie Martin.

And here’s what else we’re keeping tabs on today:

• Brazilian interest rates: Brazil’s central bank also concludes its latest monetary policy meeting. The country’s Selic benchmark rate is expected to rise by 100 basis points to 14.25 per cent. The Bank of Japan earlier held rates steady.

• Economic data: Argentina reports its fourth-quarter and 2024 GDP numbers along with its trade balance figures for February.

• Results: General Mills is expected to report a decline in third-quarter revenue because of the impact of falling demand for snacks and cereals. Williams-Sonoma reports fourth-quarter revenue.

• Ukraine: Volodymyr Zelenskyy said he would speak to Donald Trump later, as Russia continues to strike targets in Ukraine despite Vladimir Putin agreeing to pause attacks on energy infrastructure in a call with the US president.

• Olympics: The International Olympic Committee gathers in Greece for a three-day meeting to pick a new chair.

Five more top stories

1. Nvidia has named its next generation of artificial intelligence microchips after the American astronomer who discovered dark matter. The Vera Rubin AI semiconductor will be used to train larger AI models as the appetite for ever-faster chips and software continues to grow, chief executive Jensen Huang told the group’s annual conference in San Jose, California yesterday. Huang also made a prediction about the growth of robots.

• More technology news: X’s valuation has soared back to $44bn, the amount Elon Musk paid in 2022 to buy the social media site then called Twitter.

• Starlink: US commerce secretary Howard Lutnick touted Musk’s satellite internet network for a $42bn rural broadband programme, raising new conflict of interest questions.

2. Turkish police have detained Istanbul’s mayor Ekrem İmamoğlu, the main political challenger to President Recep Tayyip Erdoğan, as the government’s sweeping crackdown on the opposition intensified. The Republican People’s party was set to name İmamoğlu, one of the country’s most popular political figures, as its presidential candidate in a primary on Sunday.

3. China is delaying approval for carmaker BYD to build a plant in Mexico, after plans were first announced in 2023. People familiar with the matter said Beijing was worried that the smart car technology developed by China’s biggest electric-vehicle maker could leak across the border to the US.

4. The US chief justice has issued a rare public rebuke after Donald Trump threatened to impeach a federal judge who tried to block deportations of alleged Venezuelan gang members. John Roberts said the president’s remarks were “not an appropriate response” to disagreements over judicial rulings.

5. Citigroup has cut bonuses for 250 top employees under a programme that tied their pay to a turnaround effort aimed at boosting shareholder returns and fixing compliance shortcomings at the US bank. The so-called transformation bonus programme was put in place three years ago after a high-profile blunder in which Citi accidentally wired $900mn to a group of hedge funds.

Today’s Big Read

Many on Wall Street regard John Waldron as heir apparent to Goldman Sachs chief executive David Solomon. Interviews with more than 20 of his current and former colleagues, clients and other people familiar with Waldron’s career paint a picture of a well-liked client whisperer with a relentless work ethic and ability to build bridges between the bank’s different businesses. But can he thrive without Solomon’s guidance?

We’re also reading . . . 

• A “Mar-a-Lago accord”? Trump wants to protect domestic manufacturing and hold the dollar as the reserve currency, writes Martin Wolf. Will it work?

• US politics: Democracy is in peril but Trump’s opponents are paralysed by a collective action problem, writes Edward Luce.

• Ukraine and the Middle East: How the US president’s peacemaking ambitions unravelled.

• Hesai: The world’s biggest maker of laser sensors for electric vehicles has denied short-seller allegations that it misled investors.

Chart of the day

The concentration of carbon dioxide in the atmosphere is at its highest point in 800,000 years, according to research by the UN that found 2024 was likely to have been the hottest year on record and the first to surpass 1.5C above pre-industrial levels. The report also warned of a huge climate impact on the world’s seas, which are warming twice as fast as they were before 2005, leading to sea-level rise.

Take a break from the news . . . 

With more skyscrapers than any other city on earth, Hong Kong is a place that is often observed by looking down from on high. However, the point of view from the water offers some of Hong Kong’s most spectacular sights Here are the best ways to see the city from ferry, junk or yacht.

Source: Economy - ft.com