Lost trust

As we mentioned in our Sunday memo on recent market volatility:
“Some observers suggest that Trump's tariff strategy is less about protectionism and more about engineering a slowdown to push interest rates lower — a deliberate attempt to manage the cost of refinancing the $9 trillion in U.S. debt maturing by 2026… With the 10-year Treasury yield now below 4%, the strategy may be working — at least in the short term.”

Well, it turns out the short term was very short. This morning, 10-year U.S. government bond yields are back above 4.41%.

As the alchemists in Washington continue to experiment outside the boundaries of economic orthodoxy, the consequences are being felt. The trust that leads global investors to finance the U.S. government — by buying Treasuries — is a rare commodity these days. Imposing 104% tariffs on Chinese goods may sound bold, but halting trade is no recipe for economic growth. It risks stoking inflation and driving interest rates even higher.

At ECP, our best defence in this turbulent environment remains unchanged: staying focused on the fundamentals of individual businesses. High-quality companies with robust balance sheets and strong fundamentals, bought at attractive valuations, can weather the storm — and emerge stronger.