Greenback could be the safest bet for investors as US tariffs take effect

Dollar-based money market funds are now offering rates of about 2 per cent, a level above the yield on seven-year Treasuries as recently as last September

The US might be the trigger for escalating trade tensions with China but it turns out that its currency could still be the best place for global investors to find safety as the dispute comes to a fresh crossroads Friday with tariff increases set to take effect.

That’s because the conflict is unfolding alongside what could be an even more powerful dynamic: US monetary-policy normalisation. An appreciating dollar, propelled by expectations for stepped-up Federal Reserve tightening, has hammered a wealth of markets since April when benchmark 10-year Treasury yields first pricked through 3 per cent. That’s left some traditional havens --