Hedge funds rush to reposition after US-Iran peace deal

Treasuries rallied across the curve Monday as swaps traders cut the odds of a Fed rate hike by December to roughly 60%, down from about 80% Friday, according to Bloomberg.yahoo
The US-Iran deal, brokered by Pakistan and set to be signed Friday in Switzerland, calls for a permanent ceasefire and reopening of the Strait of Hormuz.independent
Funds including Reed Capital Partners and Vantage Point Asset Management are buying short-dated Treasuries and eyeing beaten-down Southeast Asian equities as post-war plays.linkedin

Hedge Funds Dust Off Pre-War Playbooks After US-Iran Peace Agreement

The announcement Sunday of a peace deal between the United States and Iran sent global markets into a sharp repricing on Monday, with hedge fund managers racing to reposition portfolios around a post-conflict world where lower oil prices could give central banks room to ease monetary policy.

Bond Bets and Currency Plays

Treasuries rallied across the curve as investors dialed back expectations for Federal Reserve rate hikes, with shorter-dated maturities — most sensitive to shifts in monetary policy — leading the move. Swaps traders cut the probability of a quarter-point hike by December to roughly 60%, down from about 80% on Friday, according to Bloomberg.yahoo

Florida-based Grey Value Management and Singapore’s Reed Capital Partners are among the funds buying shorter-dated US Treasuries, betting the deal will allow central banks to adopt a more accommodating stance. Reed Capital, an independent asset management firm registered with the Monetary Authority of Singapore, has also been constructive on the yen, having publicly argued since January that “the extent of yen weakness has been exaggerated” and that macroeconomic dynamics support appreciation.linkedin

Matthew Haupt, lead portfolio manager of the WAM Leaders Fund at Wilson Asset Management in Sydney, said the deal removes a key constraint on policymakers. “Central banks can now be less hawkish, as they can afford to look through any short-term inflation,” Haupt told Bloomberg.yahoo

Asia’s Beaten-Down Markets in Focus

Vantage Point Asset Management, a Singapore-headquartered firm managing about $2 billion in assets across Asia, sees beaten-down Southeast Asian equities as likely outperformers. The region’s markets have lagged behind AI-driven rallies in Taiwan and South Korea during much of the conflict, with MSCI’s review of Indonesia’s market and Fitch’s downgrade of the Philippines’ outlook adding to headwinds.vietstock

Nick Ferres, Vantage Point’s chief investment officer, has previously flagged Asia-Pacific stocks as competitively priced relative to global peers, and the firm recently committed $10 billion to Vietnam’s international financial centre as part of its Southeast Asia expansion.yahoo

Deal Details Still Uncertain

The peace agreement, brokered through Pakistani mediation, calls for an immediate and permanent ceasefire, the reopening of the Strait of Hormuz, and an end to the US naval blockade of Iranian ports. The formal signing is scheduled for Friday in Switzerland. Oil prices fell sharply on Monday while the S&P 500 futures climbed and the dollar index dropped to a 10-day low. But some investors cautioned that the deal remains unsigned and details are sparse, with negotiations on Iran’s nuclear program deferred for 60 days.independent