Monthly Review – April 2026
OUR PERSPECTIVE
“The dollar is our currency, but it’s your problem.” ~ John Connally, United States Treasury Secretary under President Richard Nixon, 1971
For more than a decade, investors have benefited from what many came to call “U.S. exceptionalism”: which is an environment where the U.S. equity market, the U.S. dollar, and U.S. Treasury markets consistently outperformed other similar assets globally. Supported by technological leadership, deep capital markets, and a powerful reserve currency, global capital has been flowing, almost reflexively, into U.S. assets. But the foundations of that exceptionalism have shown signs of strain.
The challenge is not growth. America remains one of the most innovative economies in the world and will likely remain so well into the AI-era. The challenge is financing. The United States is running historically large fiscal and current account deficits simultaneously. This so-called twin deficit dynamic is emerging at a time when government debt issuance continues to accelerate, forcing Treasury markets to absorb ever larger supply. In response, investors are increasingly demanding a higher term premium, the additional compensation for holding longer-dated U.S. debt. The result is structurally higher bond yields, tighter financial conditions, and one could reasonably expect lower valuation multiples for risk assets.
At the same time, foreign ownership of U.S. financial assets sits near record levels. For years, this was a source of strength. Today, it represents a vulnerability. If global reserve managers, sovereign wealth funds, or international investors begin diversifying even modestly away from the U.S. – whether for valuation, geopolitical, or strategic reasons – the implications could be profound.
This is where de-dollarisation matters. We do not believe the U.S. dollar is facing collapse. Not yet anyway.
Rather, we believe 2026 may mark the next phase of gradual erosion in its dominance, as bilateral trade agreements, commodity settlements, and reserve diversification continue outside the dollar system. A weaker dollar would likely ease financial conditions globally, creating a tailwind for risk assets. Emerging market equities, local currency bonds, and real assets in particular.
In such an environment, assets such as gold, which carry no sovereign liability, may continue to benefit – not merely as an inflation hedge, but as an alternative store of trust. At the same time, we see emerging markets (EM) currencies and EM equities as the primary beneficiary as these economies benefit from improved liquidity and stronger funding tailwinds.
De-dollarisation is the gradual reduction in reliance on the US dollar for trade, reserves, and financial settlement, driven by geopolitical risk, fiscal and monetary credibility concerns, and the desire to diversify exposure within an increasingly fragmented global financial system.
Market Review
Deflationary Boom Assets
(Equities, Corporate Bonds, EMD)
Risk assets rebounded sharply in April after the violent sell-off in late March, which had been triggered by the unexpected U.S.-Israeli escalation against Iran and fears of a broader regional conflict, disruption through the Strait of Hormuz, and a renewed energy-driven inflation shock. By April, markets began pricing a less severe outcome as ceasefire discussions emerged and oil supply fears partially eased. This, combined with continued optimism around hyperscaler AI infrastructure spending and resilient corporate earnings expectations, drove a powerful recovery in global equities. The S&P 500 rallied 10.5% (USD), while the “Magnificent 7” surged 15.7% (USD), highlighting the market’s continued dependence on AI-led growth narratives. International markets also participated strongly, with MSCI Emerging Markets Index up 14.7% (USD) and MSCI AC Asia ex Japan Index gaining 16.3% (USD), supported by a weaker U.S. dollar and improving global liquidity conditions. Credit markets recovered, with emerging market debt and European corporate bonds outperforming as spreads tightened and risk sentiment improved. However, U.S. equity valuations remain historically rich, leaving markets vulnerable should earnings or AI capex expectations disappoint.
Deflationary Bust Assets
(Government Bonds)
Government bonds delivered mixed returns. European sovereign debt recovered as inflation moderated and ECB easing expectations strengthened, while UK gilts also moved higher. U.S. Treasuries, however, were broadly unchanged (-0.1%), as longer-dated yields remained pressured by elevated issuance, persistent fiscal deficits, and rising term premia. This divergence continues to challenge the traditional safe-haven role of U.S. duration.
Inflationary Boom Assets
(Commodities & Managed Futures)
Managed futures and commodities continued to perform strongly amid elevated macro volatility. The SG CTA Managed Futures Index returned 1.5%, while our composite gained 3.7%. Energy markets remained volatile, with WTI crude advancing 10.0% despite the de-escalation, reflecting persistent geopolitical risk premia. Copper gained 5.5%, supported by infrastructure and AI-related electricity demand, while natural gas fell 9.3% on softer seasonal demand.
Inflationary Bust Assets
(Precious Metals & Inflation-Linked Bonds)
Precious metals consolidated after strong Q1 gains. Gold was broadly flat in April but remains up 5.6% YTD, reflecting continued central bank buying, reserve diversification, and geopolitical hedging. Inflation-linked bonds outperformed nominal bonds across Europe, the UK, and the U.S., suggesting inflation expectations remain sticky in the face of uncertainty in headline CPI.
CONTACT US
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Important information
Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office: Floor 3, 36-38 Cornhill, London, EC3V 3NG. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.
Disclaimer:
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.