Private infrastructure: building tomorrow

Asset class largely immune to increasingly volatile daily market news flows. By Kean Tan

- Kean Tan

Equity markets began the month of March on a weak footing as concerns over a potential economic slowdown in the United States intensified. Investor sentiment deteriorated further following an interview with President Donald Trump, in which he downplayed the recent market correction and refrained from ruling out a recession. Instead, he characterised the economy as undergoing a “transition period” that would require time before his policies yield tangible benefits.

This shift in rhetoric signals a greater tolerance from the administration for near-term market volatility in pursuit of broader economic objectives. As a result, expectations surrounding a policy-driven market backstop — the so-called “Trump put” — have been recalibrated to a lower threshold than initially anticipated.

Back in January, this column opined that 2025 is year of capital preservation after two years of back-to-back double-digit gains in the S&P 500. While we are open to the idea that equity markets may be in the midst of a consolidation driven by the trade war news flow, we cannot help but wonder if tariffs are not just a convenient excuse to justify a drawdown triggered by something more endogenous.

Bonds have outperformed equities in the US for the year to date. Surprising as this may be, there might be a perfectly valid reason for this trend in relative performance. US economic data has surprised to the downside recently, explaining why the 10-year US Treasury yields have fallen from a peak of close to 4.80% to just under 4.3% in less than three months.