KKR: The effectiveness of bonds as a "shock absorber" in investment portfolios is gradually diminishing; the US dollar is overvalued by approximately 15%.

Henry McVey, head of global macro and asset allocation at KKR, stated in a research report that the widening fiscal deficit and stubborn inflation mean that bonds do not always rise when stocks are sold off, breaking the traditional relationship between the two assets. "On days of risk aversion, government bonds no longer serve as a 'dampener' in traditional investment portfolios," McVey wrote in the report. The alternative asset management firm also believes that there is a "structural" risk of weakening for the U.S. dollar as President Donald Trump seeks to reshape the global trade landscape. McVey pointed out that the U.S. dollar is currently overvalued by about 15%, making it the third highest level since the 1980s.