Hedge Funds Revive Pre-War Trading Strategies Ahead of US-Iran Deal
0xBroomberg
A US-Iran peace deal is set for June 19, but hedge funds have already rotated into short-dated Treasuries, the yen, and battered Asian emerging-market equities — betting the geopolitical risk premium that crushed risk assets for months is about to unwind fast.
The deal isn't signed — so what are funds buying?
The agreement is still just a verbal announcement, yet hedge funds have pivoted to three trades: short-dated US Treasuries, the Japanese yen, and Asian EM stocks.
This means → they are not betting on "peace" itself, but on the rapid evaporation of the geopolitical premium that has weighed on risk assets for months.
Monday's price action backed the thesis: Brent crude gapped down over 4% to $83.80/bbl, the Nikkei 225 surged more than 4% intraday, 2-year Treasury yields fell 6 bp to 4.02%, and the dollar weakened.
Why short-end Treasuries and the yen?
Thomas Hayes, chairman of New York's Great Hill Capital, says inflation expectations are retreating and the market is reverting to its January–February logic — before the war broke out. He is looking to buy US consumer stocks.
Steven Grey, CIO of Grey Value Management, notes the 10-year yield sits only about 40 bp above the 2-year: "There's no reason to extend duration (buy longer-maturity bonds) or move down in credit (buy lower-rated debt) for yield."
In plain terms = short-end bonds already pay well; there is no need to take extra risk on long bonds or junk debt.
Gerald Gan, CIO of Singapore's Reed Capital, is buying yen — the currency was pressured by Japan's heavy energy-import dependence, so falling oil prices are a direct tailwind.
Asian emerging markets — who was oversold?
India and Indonesia equity benchmarks rank among the world's worst performers this year; both currencies hit record lows.
This reflects a structural skew: the MSCI Asia-Pacific index is up over 7% since the war began, but almost all of that gain came from tech — the other 10 sector groups all declined.
Chauwei Yak, CEO of Singapore's GAO Capital, argues some Asian companies hurt by elevated oil prices deserve reassessment — for example, instant-noodle makers reliant on palm oil.
Nick Ferres of Vantage Point sees "contrarian" opportunities in Southeast Asian equities but cautions that investor attention may stay locked on the AI theme.
Crypto rallied too — so why the hedged tone?
Bitcoin climbed to a near-two-week high, yet remains roughly 48% below its all-time high from last October.
Richard Galvin, executive chairman of crypto fund DACM, shifted some cash into crypto assets over the weekend, focusing on crypto-AI projects.
But he is "still somewhat cautious, because Iran and the US have not yet signed the final peace agreement."
What is the biggest risk?
The deal is currently only a verbal announcement. The formal signing is not until June 19.
Israel: Netanyahu has stated explicitly he is not bound by the deal's Lebanon clause — the IDF will not withdraw from Lebanon. Iran: sources close to the negotiating team said that even if all demands are met, Tehran "will never sign on the date Trump announced."
On oil: $83/bbl is still about 20% above the pre-war level of ~$67. The memorandum calls for lifting the naval blockade within 30 days, and the strait must be de-mined before shipping resumes — the market is pricing in "ceasefire," not "Iran at full production."
In plain terms = if the signing process falters, the geopolitical premium that has been squeezed out could snap back fast, reversing today's "risk-on, safe-haven-off" trade. June 19 is the first hard checkpoint for this entire playbook.
Content is for reference only, not financial advice.