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The Daily Hodl 2025-05-20 18:41:42

$360,000,000,000 Asset Manager Says US Government Bonds No Longer Working As Hedge Against Risky Assets: Report

Kohlberg Kravis Roberts (KKR) reportedly says that US Treasuries are no longer an effective hedge against risk assets, creating a new demand for diversification. KKR, which had over $360 billion in assets under management as of the end of last year, says government bonds have ceased to act as “shock absorbers” for investors, Bloomberg reports . Says Henry McVey, KKR’s head of global macro and asset allocation, “During risk off days, government bonds are no longer fulfilling their role as the ‘shock absorbers’ in a traditional portfolio… Many CIOs are considering moving assets out of the United States toward other parts of the world.” McVey also says that the US dollar is about 15% overvalued, and that a weaker greenback is most likely approaching as President Trump’s new trade agenda develops. “The traditional role of U.S. government bonds in many global portfolios will become more diminished… The reality is that the US government is burdened with a large fiscal deficit and high leverage, and its bonds are likely over-owned by many global investors who have benefited from both positive interest rate differentials and a strong US dollar.” Last week, Moody’s downgraded America’s credit rating from AAA to AA1 while changing the country’s outlook from negative to stable. Moody’s attributes the downgrade to the United States’ soaring national debt and interest payment ratios that exceed those of other countries with the same credit rating. “As deficits and debt have grown, and interest rates have risen, interest payments on government debt have increased markedly. Without adjustments to taxation and spending, we expect budget flexibility to remain limited, with mandatory spending, including interest expense, projected to rise to around 78% of total spending by 2035 from about 73% in 2024. If the 2017 Tax Cuts and Jobs Act is extended, which is our base case, it will add around $4 trillion to the federal fiscal primary (excluding interest payments) deficit over the next decade.” Follow us on X , Facebook and Telegram Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inbox Check Price Action Surf The Daily Hodl Mix Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing. Generated Image: Midjourney The post $360,000,000,000 Asset Manager Says US Government Bonds No Longer Working As Hedge Against Risky Assets: Report appeared first on The Daily Hodl .

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