It is amazing to me that the market has come this far. We have had the Cyprus banking crisis which has proved conclusively that money in the bank is no safer than money kept in the cistern behind the loo. By the skin of its teeth, the principle that the first €100,000 deposited in a regulated European bank is protected has survived.
Now a rogue state has threatened to launch a nuclear strike, and the US is taking the threat seriously. It has deployed anti-missile defenses on Guam. And still there is not a serious peep in response from the market.
There is a long standing principle in the markets that when the world order is threatened, investors take their money off the table and run for cover. This is a risk off situation.
US Government bonds are often regarded as the safest haven for cash. Since the Chinese Government is heavily committed to this asset class it's hard to imagine a situation when either of the big powers would allow this rock of security to crumble. There is some indication that money is running for cover in the US.