Yen, Swiss Franc Emerge As Top Tariff Shelter
As global markets reel from President Donald Trump’s sweeping tariff announcement, investors are rapidly pivoting to safe haven assets, with analysts identifying the Japanese yen and Swiss franc as premier hedges against continued market turbulence. Both currencies have strengthened more than 3% against the U.S. dollar since the April 2 tariff announcement, even as most global currencies weaken amid growing recession fears.
“The Japanese yen will be a good — and probably the best — candidate to hide from trade tensions and a U.S. recession, for a whole host of familiar reasons,” Ebrahim Rahbari, head of rates strategy at Absolute Strategy Research, told CNBC. “It is cheap, the likely decline in U.S. interest rates will narrow the rate differentials to the yen, and even though Japan is a prominent exporter, its overall reliance on trade is lower now.”
The Swiss franc, traditionally viewed as a refuge during market chaos, has likewise appreciated to 0.8522 against the dollar. Matt Orton, head of advisory solutions and market strategy at Raymond James Investment Management, suggests the franc may offer superior protection given uncertainties surrounding the Bank of Japan’s monetary policy trajectory.
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Hedge Fund Leaders Question Tariff Strategy
As investors scramble for safety, prominent hedge fund managers have begun publicly criticizing the tariff policy itself. Bill Ackman, billionaire founder of Pershing Square Capital Management and a vocal Trump supporter, has called the tariffs a “mistake” that are “massively in excess” of what other countries charge the U.S., according to Bloomberg.
Ackman has urged a 90-day pause in the implementation of additional tariffs scheduled for April 9, suggesting the president needs time to “carefully and strategically resolve our historically unfair global trading position,” as reported by Business Today. Stanley Druckenmiller, the former George Soros protégé, has also publicly criticized the policy.
Despite his concerns, Ackman clarified that his firm maintains “substantial cash on hand” and would use market declines as buying opportunities rather than selling into weakness. “We will suffer mark-to-market losses if the market crashes, but we will not be sellers in a declining market,” Ackman stated.
Sir Keir Starmer has said his government stands ready to use industrial policy to "shelter British business from the storm" after Donald Trump's new 10% tariff kicked in.
— Sky News (@SkyNews) April 6, 2025
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Diversifying Beyond Traditional Havens
While traditional safe havens dominate investor attention, some strategists suggest exploring “exotic” hedges as well. Rahbari identified the Brazilian real as a potential option due to its relative value, high yield, and lower exposure to global trade. The Brazilian currency has been among the major outperformers this year.
Fixed income investments have also seen significant inflows, with bond yields declining sharply as investors pile into Treasurys and other government bonds. The benchmark 10-year U.S. Treasury yield has fallen 6% since April 2 to 3.873% on Monday, while Japan’s 10-year government bond yield plunged to 1.05%, a 28.52% drop and its lowest level since December 2024.
Gold Maintains Appeal Despite Volatility
Gold prices, which initially surged to record highs following Trump’s announcement, have moderated slightly but remain elevated. “Gold remains boosted by escalating trade uncertainties, heightened geopolitical tensions, a weaker U.S. dollar, increasing central bank purchases, and rising risks of recession,” BMI analysts noted.
Adrian Ash, director of research at BullionVault, believes the fundamental catalysts for gold’s strong 2025 performance have only strengthened. “Weaker trade, higher input costs and shrinking margins are badly hurting the stock market, while geopolitical mistrust is deepening. Such a gloomy outlook for economic growth offers the perfect backdrop for further gains in gold,” Ash explained.
The flight to safety comes as U.S. equities suffered their worst week in years, falling 9.08% according to FactSet data. JPMorgan has raised its probability for both U.S. and global recession to 60% by year-end, up from 40% previously, as the tariff impact ripples through supply chains and consumer prices.
For investors navigating this volatile landscape, José Torres, senior economist at Interactive Brokers, described current market positioning as dominated by risk-off sentiment, with participants selling stocks in favor of “Treasurys, gold bars, greenback futures, crude oil barrels, volatility call options, equity index put derivatives, and forecast contracts.”
As markets brace for potential implementation of additional tariffs on April 9, the search for effective hedges is likely to intensify unless administration policy shifts in response to market turmoil and growing criticism from prominent financial voices.
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