The prospect of foreign investors reducing their exposure to U.S. assets due to concerns about the dominance of U.S. Treasuries as a safe haven is fueling discussions about the very concept of a safe haven. Significant shifts in correlations between various asset classes, particularly between U.S. equities and the dollar, are at the heart of this debate.
Correlations between U.S. equities and the dollar are nearly two standard deviations above their five-year average, with the dollar weakening as stocks are sold—a pattern more typically associated with emerging markets than developed ones. So, what are the reliable safe havens in 2025?
Traditional safe havens under review
Historically, certain assets were almost synonymous with the concept of a “safe haven.” At the top of the list were U.S. Treasuries. The United States, with its economic dominance and strong institutions, was considered the ultimate refuge during times of crisis. This status was largely a consequence of the dollar’s role as the world’s reserve currency. However, the position of U.S. Treasuries as a safe haven is under pressure from rising debt, political risks, and the use of the dollar as a geopolitical weapon. Also notable is that long-term Treasuries have seen a correction of more than 50 percent in recent years due to rising interest rates—an even steeper decline than seen in the stock market this century.
The U.S. dollar was long regarded as the ultimate safe-haven currency. In times of global crises, investors traditionally flocked to U.S. assets, strengthening the dollar. That pattern—known as the “dollar smile”—now appears to be shifting. The fact that the dollar is weakening even as global risks rise is a remarkable development.
When true systemic risk hits the markets, the dollar still remains the ultimate safe haven. The institutional infrastructure and global trust in the dollar are too deeply entrenched to change quickly. Overall, the dollar’s value against the euro has essentially returned to pre-Trump victory levels, from 1.12 to 1.135.
The Japanese yen also long served as a safe haven alongside the U.S. and Switzerland. This was mainly a result of carry trades. During times of financial stress, Japanese investors repatriated funds into the yen, making it appear as though the yen was a safe haven. However, with rising interest rates in Japan dismantling carry trades, the yen’s status as a safe haven may also be fading.
The Swiss franc is renowned for its stability, but even Switzerland has seen its reputation tarnished. Under pressure from social media, it imposed sanctions on Russian assets, undermining its image as a neutral guardian of wealth.
The rise of new safe havens
Interestingly, new categories are emerging as alternative safe havens. For example, big tech stocks surprisingly served as safe havens during and after the correction in U.S. Treasuries. Major international investors preferred the perceived stability of big tech over the turbulent bond market. With companies like Microsoft, Apple, and Amazon, investors believed they were on solid ground.
Gold has made a remarkable comeback. In addition to monetary chaos, the U.S. banking crisis and the use of the dollar as a weapon against Russia have driven a resurgence in gold prices. Moreover, China is implicitly pegging the renminbi to the gold price to boost confidence in its currency. However, gold has no intrinsic productive value and ultimately is worth only what others are willing to pay for it, following the “greater fool” theory.
Bitcoin shows a correlation with tech stocks but is increasingly being viewed as an alternative to traditional currencies and gold. Nevertheless, it belongs to the same category as gold, albeit without gold’s disadvantages. In the end, bitcoin too is only worth what the next buyer is willing to pay, making it unsuitable as a true safe haven.
The Chinese renminbi is gaining ground as an alternative reserve currency. Overall, these developments are a positive sign for the renminbi. Although China risks Western sanctions, there are few alternatives for companies and individuals seeking to reduce their exposure to Western currencies and assets.
European bonds are gaining a more prominent role. Following the issuance of the first pandemic bonds, new loans are being introduced, expanding the market for European supranational bonds. In the long term, this could strengthen the euro’s position as a safe haven.
Evolution, not revolution
The definition of a “safe haven” is evolving gradually, but the fundamentals remain intact. The dollar and U.S. Treasuries continue to hold their central role as ultimate safe havens, especially during true systemic crises. What we are witnessing is not a fundamental shift but rather a diversification of options that can complement traditional safe havens in specific contexts.
For investors, this means that it remains wise to base the core of their defensive portfolios on proven safe havens, while cautiously diversifying into a few alternatives. It also remains prudent to leave dollar exposure in equity portfolios unhedged and to view the dollar as part of risk diversification. Hedging dollar exposure would actually increase portfolio risk. In a world full of uncertainty, one certainty remains: true safe havens prove their value only during a real crisis.
Han Dieperink is Chief Investment Officer at Auréus Vermogensbeheer. He previously served as Chief Investment Officer at Rabobank and Schretlen & Co.