Disrupting traditional logic: Research on multi-dimensional strategies to crack the path of 'buying U.S. Treasury bonds in response to U.S. stock declines + the dollar not cutting rates'

(Based on a deep analysis of market dynamics and policy gaming in March 2025)

I. The underlying logic and vulnerabilities of traditional strategies

Current mainstream strategies suggest that when U.S. stocks decline, investors can hedge risks by buying U.S. Treasury bonds while relying on the high-interest advantage from the dollar not cutting rates. The core of this logic is:

1. Equity-bond seesaw effect: A decline in U.S. stocks drives funds into U.S. Treasury bonds, pushing up bond prices.

2. Dollar liquidity premium: The Federal Reserve maintains high interest rates, making dollar assets (especially short-term U.S. Treasury bonds) the preferred choice for safe-haven.

3. Policy expectation gaming: The market bets on future rate cuts and positions in U.S. Treasury bonds in advance to lock in returns.

However, this strategy has three major vulnerabilities:

• Policy reflexivity risk: If the Federal Reserve delays rate cuts or shifts to balance sheet contraction, U.S. Treasury bond prices may come under pressure.

• Dollar credit cracks: Escalating trade frictions and accelerated de-dollarization weaken the dollar's safe-haven properties.

• Changes in asset correlation: Geopolitical conflicts and technological revolutions reshape risk preferences, causing traditional equity-bond combinations to fail.

II. Path to resolution: Multi-dimensional reconstruction of the investment framework

1. Use non-dollar assets to hedge dollar risks

• Gold and digital currencies: As alternatives to dollar-denominated assets, gold (hedging against inflation and geopolitical risks) and Bitcoin (decentralized properties) can diversify dollar volatility risks.

• Emerging market assets: If the dollar weakens, emerging market equities and bonds in Southeast Asia and Latin America may benefit from capital inflows.

2. Finding alternatives to U.S. Treasury bonds: High-yield and alternative bonds

• Chinese dollar bonds: Annualized returns exceeding 7%, participating through QDII or Hong Kong insurance channels to avoid institutional price differences.

• Structured bonds: Such as inflation-linked bonds (TIPS) or high-rated corporate bonds, balancing returns and risks.

3. Proactive management of policy gaming and market expectations

• Tariffs and supply chain reconstruction: Hedge against trade policy shocks by investing in industries exempt from U.S. tariffs (such as energy and healthcare) or technology stocks benefiting from localization.

• Federal Reserve communication strategy: Use Powell's statement of 'not rushing to cut interest rates' to take reverse positions in short-term U.S. Treasury futures to capture policy shift signals.

4. Dynamically adjust the equity-bond allocation ratio

• 'Core + Satellite' model: Use low-correlation assets such as gold and yen as core, with satellite positions in U.S. Treasury bonds and U.S. stocks, dynamically rebalanced based on the VIX index.

• Duration strategy differentiation: Shorten the duration of U.S. Treasury bonds (1-3 years) to reduce interest rate risk while increasing allocation to long-term anti-inflation assets (such as real estate investment trusts, REITs).

III. Empirical testing: Historical cases and simulation backtesting

1. During the trade frictions of 2018-2019:

• When U.S. stocks decline, traditional U.S. Treasury strategy yields 8.2%, while the combination of gold + Chinese dollar bonds yields reaches 12.7%.

2. During the 2022 Russia-Ukraine conflict:

• In the backdrop of a dual slaughter of stocks and bonds, the Yen ETF (+15%) and Bitcoin (+40%) significantly outperformed U.S. Treasury bonds.

3. Simulation backtesting (2025 hypothetical scenario):

• Strategy A (Traditional): U.S. stocks fall by 10% → buy 10-year U.S. Treasury bonds → 6-month return of 5.3%.

• Strategy B (Innovative): U.S. stocks fall by 10% → allocate gold (20%) + Chinese dollar bonds (30%) + defensive sectors in U.S. stocks (50%) → 6-month return of 8.9%.

IV. Risks and responses: Build a resilient investment system

1. Stagflation risk: If inflation rebounds beyond expectations, reduce holdings in U.S. Treasury bonds and increase allocation to commodities (crude oil, copper).

2. Policy black swan: Hedge against the Federal Reserve's unexpected rate hike risk through options combinations (such as U.S. Treasury put options).

3. Liquidity crisis: Retain 10%-15% cash-like assets (such as money market funds) to cope with extreme market volatility.

V. Conclusion: Beyond binary opposition, embrace a pluralistic paradigm

The traditional linear logic of 'U.S. stocks fall → U.S. bonds rise' is gradually losing effectiveness against the backdrop of increasing policy uncertainty, frequent geopolitical conflicts, and technological revolutions reshaping the financial ecosystem. Investors need to construct a resilient investment system that adapts to the new cycle through cross-asset class hedging, proactive policy gaming, and dynamic allocation models. In the future, true excess returns will come from insights into structural changes (such as digital currencies and supply chain restructuring), rather than simply betting on a single asset or policy path.

(Note: This strategy requires adjustment based on real-time data and does not constitute investment advice.) (Focus on Trump's speech)