U.S.-Iran Deal "Reached," Hedge Funds Reactivate "Pre-War Trading Playbook"

```

The US-Iran peace agreement is about to be finalized, and global hedge funds are rapidly adjusting their positions, turning their attention to short-term US Treasury bonds, Asian currencies, and battered emerging market stocks.

The US and Iran will officially sign the peace agreement this Friday. This news quickly boosted market sentiment, with oil prices falling on Monday and both stock and bond markets rising, while the US dollar weakened as safe-haven demand subsided. The US Treasury yield curve fell across the board, and traders began to reduce their bets on Federal Reserve rate hikes.

According to Bloomberg’s Monday report, several hedge fund managers said the agreement has eliminated a major uncertainty that has plagued global markets for months. The war triggered the largest oil supply disruption in history and heightened inflation concerns worldwide. As geopolitical risks fade, fund managers are revisiting their “pre-war trading manuals” to look for assets that were wrongly punished.

Back to “pre-war logic”: US Treasuries and Yen favored

Thomas Hayes, Chairman of New York hedge fund Great Hill Capital, said that with the agreement in place, inflation expectations are receding, and market logic is returning to the state of January and February this year — that is, before the outbreak of war. The current strategy is to go back to the future and rediscover trades that worked at that time. The fund manages over $1 billion. Hayes is seeking opportunities to buy US consumer stocks, betting on a recovery in consumer confidence.

In the bond market, Steven Grey, Chief Investment Officer of Florida-based Grey Value Management, expressed “cautious optimism” about the latest developments, believing that short-term US Treasury bonds are more cost-effective. He pointed out that the 10-year US Treasury yield is only about 40 basis points higher than the 2-year, “there’s no reason to extend duration or go down the credit curve just for yield.” On Monday, the 2-year US Treasury yield fell 6 basis points to 4.02%, and the 10-year yield fell 5 basis points to 4.43%.

Matthew Haupt of Sydney’s Wilson Asset Management is equally bullish on global bonds. The fund manages over 6 billion AUD (about $4.3 billion USD). “Going long rates is very reasonable,” he said, “Central banks now don’t have to be so hawkish.”

Meanwhile, the yen has regained favor among some hedge funds. Gerald Gan, Chief Investment Officer of Singapore’s Reed Capital, said the fund is buying yen “both as a bet that the US dollar may be overvalued and based on the structurally positive outlook for Japanese currency.” Previously, the yen was under pressure due to Japan’s heavy reliance on energy imports. Reed Capital manages about $600 million.

Asian Emerging Markets: Undervalued Rebound Opportunities

Asian markets were hit hardest by the US-Iran conflict — major economies in the region are all oil importers, and India and Indonesia’s benchmark stock indices rank among the worst performers globally this year, with both countries’ currencies hitting historic lows.

Chauwei Yak, CEO of Singapore-based GAO Capital, believes Asian companies will be major beneficiaries of the agreement. He specifically mentioned that some companies previously pressured by high oil prices deserve re-evaluation, such as instant noodle businesses reliant on palm oil — “If the war dragged into summer, these companies would face greater pressure; now their value can be reassessed.”

Nick Ferres, Chief Investment Officer of Vantage Point Asset Management, is focusing on Southeast Asian stock markets. He said that Southeast Asian markets, heavily sold during the Iran conflict, may offer “off-the-radar” opportunities, “although investors’ attention may still focus on artificial intelligence and AI-related sectors as the dominant theme.”

Data shows that since the outbreak of the war, the MSCI Asia-Pacific Index has risen more than 7%, but almost all gains came from the tech sector; the other ten industry sectors recorded declines.

Cautious Rebound in Crypto, Awaiting Final Signal

The cryptocurrency market also rose, with Bitcoin climbing to a near two-week high, after previously dropping to its lowest since Trump’s 2024 election victory. However, even after rebounding, Bitcoin is still down about 48% from its historical peak in October last year.

Richard Galvin, Executive Chairman of crypto investment firm DACM, said that the firm shifted some cash positions into crypto assets last weekend, mainly allocating to crypto AI projects, “but we remain somewhat cautious as Iran and the US have not yet signed the final peace agreement.”

Crypto traders mostly remain on the sidelines, waiting for a clear signal that the conflict is truly over before increasing risk exposure further.

Risk Disclosure & DisclaimerThe market carries risks; investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Any investment based on this article is solely at the user's own risk. ```