Tariff War Erodes Long-Term Treasuries Safe Asset Privilege
Tariff shocks weigh on the long-run hedging property of Treasuries and alter cross-border demand for safe assets.
The research tracing the tariff episode outlines how the long-term convenience yield on ten-year Treasuries declined by about ten basis points in the late March to 10 April 2025 window. The same period saw the two-year premium trading higher than the ten-year, a rare divergence that indicates investors questioned the long-run safety role of Treasuries even as near-term protection remained valued. TIC data showing $47 billion of April 2025 long-term outflows adds corroboration to the idea that international demand for long-duration Treasuries weakened amidst tariff-induced risk reallocation. In parallel, gold surged by more than 30 per cent from April to October 2025, suggesting a shift in flight-to-safety preferences away from Treasuries toward bullion.
The analysis emphasises that the conventional hedging logic linking equity-market downturns to Treasury protection weakened during the tariff shock. The observed covariance patterns between stocks and bonds inverted on several tariff-announcement days, signalling a breakdown in the usual stock-bond diversification dynamic. The paper links some of this to inflation expectations but finds only a modest lift in long-horizon inflation forecasts, suggesting that inflation alone cannot explain the erosion of the long-run subsidy from Treasuries.
If the long-run safe-asset demand remains impaired, the federal government could face higher interest costs and greater rollover risk as maturities become concentrated in shorter-term issuances during times of stress. The paper highlights the potential fiscal and policy consequences of a sustained shift in global preferences away from Treasuries, with implications for currency dynamics, market liquidity and collateral frameworks that underwrite large-scale government finance.
Observers caution that the tariff-driven re-pricing is still evolving. While tariff revenues have risen in 2025, the broader economic incidence of tariffs remains uncertain and highly policy-dependent. The central question is whether the observed weakness in the long-term convenience yield is transitory or signals a more lasting reassessment of Treasuries as a safe asset in a diversified risk environment.
No Flow, No Change: SFDR Greenwashing Regulation Fails to Move Flows Significantly
Even when disclosures are clearer, investor behaviour remains contingent on information usefulness and interpretation.
A pair of 2026 studies examines whether the EU Sustainable Finance Disclosure Regulation produced meaningful changes in mutual fund flows or portfolio sustainability. The findings suggest that, at inception, roughly 7 per cent of funds were Article 9, 57 per cent Article 8, and 35 per cent Article 6, with 2022 reclassifications not triggering notable flow shifts. A survey and experiment indicate that clearer explanations alongside disclosures can tilt investors toward more sustainable choices, but the baseline for investor reaction to the SFDR remains limited.
Researchers argue that SFDR’s limited impact stems from two factors: the disclosures rarely delivered genuinely new assets or information and were difficult to interpret in practice. Investors reportedly already had an intuition about which funds were greener based on mandates and branding prior to SFDR. The lack of transparent, actionable explanations constrained the regulation’s ability to shift flows.
The implications for policy are clear: SFDR 2.0 is being framed to replace Article 8 and 9 with three simpler categories-ESG Basics, Transition, and Sustainable. Whether this simplification translates into meaningful investor reallocation depends on Level 2 rules that define thresholds and indicators. The broader takeaway is that effective disclosure depends on information that is both new and accessible to a broad retail audience.
For market participants, the message is nuanced. Sustainable-labelled funds continue to attract inflows, indicating that investors do care about sustainability, but the SFDR 1.0 format did not animate capital toward more sustainable exposure. The key design challenge is to ensure disclosures materially affect decision-making rather than merely codify existing perceptions.
Emerging Markets Rally Goes Core as Global Growth Dims
Emerging markets are shifting from tactical to central allocations as inflation cools and reforms support AI and infrastructure.
EM equities and bonds have moved from a tactical overlay to a core holding in portfolios as inflation pressures ease, positive real policy rates endure and domestic reforms bolster AI and digital infrastructure. India and Brazil have been upgraded to overweight in several client profiles, while Korea is highlighted as leading AI supply-chain momentum. The case rests on a combination of improving macro dynamics, improving earnings revisions, and a more accommodating global funding backdrop should the dollar soften or policy easing gather pace in major advanced economies.
The narrative raises the prospect of broader EM inflows, with investors seeking higher yields and diversification relative to US mega-cap risk. The architecture of EM growth remains dependent on external funding conditions and the degree to which domestic reforms translate into more stable, export-oriented growth. The near-term trigger would be clearer signs of capital inflows and improving current account dynamics, alongside policy signals from major central banks.
Observers stress that EM inclusion is contingent on a stabilising global backdrop. If US monetary policy remains tight or the dollar strengthens, EM assets could underperform again. Conversely, signs of US easing or a weaker dollar could catalyse a sustained EM rally, as higher real yields elsewhere improve relative attractiveness and policy support sustains growth trajectories.
Activism Narrows Investment Trust Discounts Toward the Median
Activist campaigns are narrowing discounts on UK and global investment trusts toward sector medians through corporate actions.
In a developing trend, activist engagement and subsequent corporate actions are driving discount compression in UK and global investment trusts. Notable moves include Murray Income shifting to Artemis and Shires Income merging with Aberdeen Equity Income, reflecting a broader push to align trust discounts with medians. The outcome, for now, points to higher opportunity costs for standalone passive positions and a shift toward more dynamic ownership strategies that seek to unlock embedded value.
Industry observers caution that the ultimate test is sustained value creation rather than a short-term reclassification. While discounts may tighten, the durability of improvement depends on enduring earnings growth, strategic asset realisations and efficient corporate governance that translates into higher realised returns for investors. Market participants will watch for additional mergers or reclassifications that could tighten discounts further or, conversely, reopen gaps if performance falters.
The trend also underscores the importance of governance and activist oversight as a price discipline mechanism. With more investors scanning for mispriced assets, the scope for selective mergers, spin-offs and reclassifications to recalibrate value becomes a core channel for market efficiency. The near-term milestones lie in further consolidation activity and the degree to which discounts align with sector medians.
Zijin Gold International to Acquire Allied Gold for CAD 5.5 Billion
Strategic expansion into Mali, Ivory Coast and Ethiopia broadens Zijin’s African footprint and metal mix.
Zijin Gold International has signed a binding agreement to acquire Allied Gold for CAD 5.5 billion in cash, at CAD 44 per Allied share, expanding into Mali and Ivory Coast as well as Kurmuk in Ethiopia. The deal widens Zijin’s footprint into Africa and adds to its portfolio of copper and gold assets, with closing anticipated by late April 2026. Allied’s asset base, including the Sadiola and Côte d’Ivoire operations, reinforces Zijin’s diversification and risk distribution across African mining jurisdictions.
Regulatory clearance and Allied shareholder approvals will determine the timing of the close. The transaction emphasises a broader industry trend toward consolidation as firms seek scale to navigate cost inflation, permitting challenges and the demands of an accelerating materials transition. The strategic value for Zijin hinges on integration across operations, with potential synergies in project development timelines and cross-border logistics that could alter the regional competitive landscape.
From a policy perspective, the deal intersects with the broader Canada-Africa and China-Africa corridor dynamics, where investment frameworks and governance standards shape the pace of project execution. The market will watch for how regulatory approvals align with expansion plans for the company, and how the combined entity might prioritise investment, infrastructure development and capacity deployment across its new African assets.
North Seas Wind Pact Signals a Multi-Trillion Investment Wave
European governments and system operators commit to 300 GW of offshore wind by 2050, backed by a EUR 1 trillion investment framework.
Nine European governments and transmission system operators signed a joint offshore wind investment pact aiming for 300 GW of offshore wind capacity by 2050, with a target of 15 GW per year in 2031-2040. The framework envisions major cross-border interconnections and a broad investment envelope around EUR 1 trillion to support scaled deployment, cost reductions and energy independence. The pact signals a long-run reconfiguration of European power markets and a durable shift toward renewables in the North Sea basin.
The near-term indicators to watch include the initiation of cross-border projects, the alignment of HVDC standards, and any cross-border power purchase agreement mechanisms that unlock financing. Early project announcements and interconnector development would validate the economics underpinning this ambitious plan, even as permitting regimes and grid integration challenges remain a critical constraint.
Policy dynamics across Europe will matter for project pacing. The plan depends on consistent funding, coordinated procurement and stable regulatory terms to de-risk investments. While the scale is transformative, the timeline remains sensitive to political developments, financing cycles and the ability to translate framework commitments into shovel-ready developments.
EU to Ban Russian Gas Imports by 2027 with Penalties; Energy Security Reshapes Europe
European Union policy sets a staged ban on pipeline Russian gas by late 2027, with penalties up to 3.5 per cent of global turnover for non-compliance.
European policymakers have agreed to prohibit pipeline gas from Russia by 2027, subject to storage and security constraints, with enforcement teeth in the form of penalties reaching up to 3.5 per cent of global turnover for non-compliant firms. The strategic aim is to diversify sourcing toward LNG and alternative pipelines, reinforcing energy resilience and reducing exposure to geopolitical risk. The policy architecture implies a structural shift in energy security, storage planning and interconnector deployment across member states.
Observables include the pace of LNG capacity expansion, the scheduling of interconnector projects and price re-pricing as new supply routes emerge. Early signals will come from compliance indicators, the timing of capacity additions and the evolution of European gas markets as the import mix reweights away from pipeline Russian gas.
Analysts emphasise that while this is a long-run structural reform, the near-term financing and project delivery cycles will shape the transition. Industrial users and energy-intensive sectors will be watching for price signals, storage strategies and the practical implications for procurement and industrial competitiveness as the mix evolves.
China Launches World’s Largest Compressed-Air Energy Storage Plant
A 2.4 GWh adiabatic CAES facility in Jiangsu demonstrates scalable storage with high efficiency and grid-stability potential.
China has brought online what is described as the world’s largest compressed-air energy storage plant, a 2.4 GWh facility using molten salt and pressurised thermal storage to deliver energy through two 300 MW units. Reported conversion efficiency of around 71 per cent in operation points to meaningful grid-stability benefits, particularly in stabilising renewable output and balancing peak demand. The development underscores China’s push to scale storage and its role in regional energy security.
The plant’s performance will be watched alongside grid integration milestones, cross-border interconnection plans and potential cost trajectories that affect electricity pricing and investment in renewable capacity. The broader context includes ongoing expansion of clean energy infrastructure and the pursuit of reliability as renewables grow in prominence within the energy mix.
Observers caution that storage economics hinges on sustained utilisation and cost control, but the technology demonstration is a meaningful marker for system planners assessing storage’s role in grid resilience and renewable integration across Asia.