Investors are moving away from typical U.S. assets that they usually favor during uncertain times due to concerns about the economic repercussions of President Donald Trump's reciprocal tariffs, which are causing anxiety about traditional safe-havens.

The dollar and U.S. Treasuries are facing losses as a result of Trump's tariffs, including a significant 104% duty on China, leading to swift retaliation from China. Meanwhile, tried-and-true safe-haven options like gold and the Swiss franc are still attracting investments.

The sharp increase in U.S. Treasury yields is causing concern among investors who worry that this could prompt selling to offset portfolio losses and a rush for cash, bringing back memories of the market disruptions during the COVID-19 pandemic.

Here's a summary of how traditional safe-haven assets are faring amidst the tariff-related uncertainty:

1. Dollar Decline: The dollar lost its appeal soon after Trump's tariff announcements, dropping alongside stock markets, which was an unusual occurrence casting doubts on the global prominence of the U.S. currency, often referred to as "King Dollar" for its dominance in global currency markets. The dollar has weakened by over 5% this year against other currencies, showing its worst start since 2016.

2. Bond Market Turmoil: Initially, investors sought refuge in government bonds due to increased recession fears, but this trend quickly reversed. U.S. 10-year Treasury yields, after dropping significantly last week, have surged by over 40 basis points this week. Particularly, longer-term bonds have been strongly impacted, with 30-year yields rising by nearly 50 bps, marking their largest weekly increase since the early 1980s. Despite expectations of quicker U.S. Federal Reserve rate cuts, Treasury yields have risen, suggesting intentional selling of Treasuries rather than reacting to economic outlook changes.

In light of the widening gap between Treasury yields and interest rate swaps, it appears that there is a reluctance to hold onto Treasuries, according to Pepperstone senior strategist Michael Brown.