Pictet Warns: Dump US Treasuries and Dollar for Emerging Markets

Swiss private bank Pictet Wealth Management has warned investors to reduce their holdings of US Treasuries and the US dollar over the next decade. According to a report by the South China Morning Post, the bank cited structurally high inflation and large government deficits as reasons for this advice.

Pictet noted that factors such as the artificial intelligence boom and decarbonisation efforts are driving persistent volatility in global inflation. As a result, the bank recommends shifting towards commodities and equities in emerging markets for better long-term returns.

Kelvin Tay, Pictet's chief investment officer in Asia, said that clients have recently raised concerns about currency hedging, a topic rarely discussed before. Frederik Ducrozet, head of strategy and macroeconomic research at the bank, emphasized the importance of protecting against potential government-issued currency devaluation.

Pictet projects that the US dollar will continue to depreciate over the next decade, with the exchange rate potentially falling to 5.97 yuan per US dollar and 1.30 US dollars per euro by then.