Some investors trying to protect themselves from any market gyrations provoked by a deepening Syrian crisis are looking to oil as an alternative to top-rated government bonds, a traditional but currently unappealing haven in uncertain times. With U.S. Treasuries and German bunds on course for their biggest annual losses since the mid-1990s, oil is being touted as a better bet - although many investors remain ready to endure some short-term pain in return for the liquidity that the huge government bond markets offer. Some analysts believe crude oil prices could jump more than 20 percent if a U.S. military strike on Damascus drags other countries into the Syrian conflict. "Our oil team think oil could go as far as $150 if we get the all-out scenario," said UBS global macro strategist Ramin Nakisa. "We have gone overweight energy, that is the obvious way to play it." In past periods of geopolitical uncertainty, highly liquid U.S. or German sovereign bonds were the perfect investment bunker during crises from Kosovo to Iraq to Libya. Investors parked funds in Treasures and bunds to wait until the outcome became clearer, and markets rallied relatively quickly anyway. This time the option of sitting it out is less attractive. The U.S. Federal Reserve is planning at some stage to start winding down the huge purchases of bonds it has been making to stimulate the American economy, and growth also appears to be picking up at last in other major Western countries.
Posted on: Tue, 10 Sep 2013 18:30:18 +0000
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