Market Focus Daily: Thursday, July 3, 2025
Synopsis: Market Focus Daily is a closing bell roundup by The Business Times that looks at the day's market movements and news from Singapore and the region.
Written and hosted by: Emily Liu (emilyliu@sph.com.sg)
Produced and edited by: Chai Pei Chieh & Claressa Monteiro
Produced by: BT Podcasts, The Business Times, SPH Media
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Business Times
an hour ago
- Business Times
As interest rates normalise, private credit can help portfolios
'HOW did you go bankrupt?' 'Two ways. Gradually, then suddenly.' – Ernest Hemingway, The Sun Also Rises Often quoted and widely recycled, that response from Mike Campbell – the fictional once-wealthy friend of Jake Barnes, narrator in Hemingway's novel – captures more than just personal financial woes. It's an apt description of how long-running trends unravel – first with subtle shifts, then with violent clarity. Economist Rudiger Dornbusch put it more clinically: 'In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.' Both sentiments apply to today's bond market. For nearly four decades, falling interest rates created a generational tailwind for fixed income. Bonds didn't just pay income, they delivered capital appreciation, diversification, and ballast. Now, that dynamic is breaking down. Prices have fallen, and correlations have flipped. The 40 per cent in a 60/40 portfolio – which comprises fixed income, the supposedly steady part – has become a problem. But there's one corner of the market that has held steady amid all this instability: private credit. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up From tailwind to headwind The bond bull market began in 1981, when then-Federal Reserve chair Paul Volcker engineered a brutal double-dip recession to break inflation's back. At the time, the 10-year Treasury yield peaked near 16 per cent. What followed was a 39-year stretch of disinflation, financial globalisation, and central bank credibility, which drove yields lower and bond prices higher. For fixed income investors, it was a golden era where being long duration paid off. A simple strategy of buying 10-year Treasuries and rolling them annually would have delivered over 8 per cent in annualised returns from 1981 to 2020. The Bloomberg Barclays Aggregate Bond Index returned a similarly impressive 8 per cent over that same period. Bonds weren't just a buffer against equity risk; they were a consistent source of performance. But that golden era followed a very different one. In the 35 years before 1981, yields climbed steadily and were far more volatile. Bondholders clipped coupons while watching principal values erode. Price appreciation simply wasn't part of the fixed income playbook. There were no 'total return' bond funds because, frankly, there was no total return to chase. The middle ground We're not heading back to the 1970s. The US economy is structurally stronger; the Fed is more disciplined; and the lessons of the Volcker era still hold. But we're also not in a new bond bull market. Instead, we're in a period of normalisation where rates are higher than the recent past but still lower than long-term historical norms. Following the global financial crisis (GFC), the Fed supported the bull market in bonds with quantitative easing. But in 2022, the central bank began reducing its balance sheet, and by continuing to let its Treasury holdings mature without reinvesting the proceeds, it has kept upward pressure on rates with the increased supply. Increased fiscal spending and higher deficits bring uncertainty and expectations of higher future Treasury issuance, increasing the term premium demanded by investors. This middle ground comes with consequences: greater volatility and interest rate risk, less price support, and less reliable diversification. We've written extensively about how rising rates scramble traditional asset class relationships. In 2022, when the Fed launched its most aggressive hiking cycle in decades, the longstanding negative correlation between stocks and bonds broke down. Since then, the two have moved in the same direction in 31 of the past 40 months, nearly 80 per cent of the time – a dynamic that undermines the very foundation of balanced portfolios. If you believe that we're beginning a normalised inflationary regime, different from the sub-2 per cent post-GFC era, the unreliable stock-bond correlation is likely to continue. Based on historical data, the stock-bond correlation becomes positive beginning at 2 per cent inflation, strengthening as inflation increases. It's not just the lack of diversification that's troubling. Bond market volatility, once rare, is becoming routine as a result of policy uncertainty. Modest data surprises or policy comments now trigger exaggerated moves across the yield curve, and central banks retreating as a steady source of demand has reduced market liquidity that helped keep bond prices stable and predictable. Once major buyers of Treasuries, central banks are pulling back as rising yields in markets such as Germany and Japan make US Treasuries less appealing, especially after factoring in currency hedging costs. At the same time, heightened uncertainty has caused the term premium to resurface, hitting an 11-year high in May. Investors are demanding more compensation for interest rate risk, reflecting a structurally different regime. In April, high-yield bond prices suffered their steepest drop since the early days of the pandemic – second only to March 2020. Private credit's quiet consistency While public credit markets have endured drawdowns and dislocations, private credit has functioned as intended, providing financing to borrowers and liquidity to private equity sponsors without disruption. That resilience is showing up in the data. April's tariff-driven volatility caused liquid credit spreads to swing sharply – widening in one of the most significant moves in history, before recovering around 71 per cent by early May. In contrast, the private credit market operated as usual, providing a stable source of funding for companies throughout the turmoil. Private credit's advantages are structural. In a world of higher rates and unpredictable correlations, it can offer insulation from policy shifts, with floating rates and lower correlation to public markets. The private credit model brings lenders (investors) directly to borrowers in a 'farm to table' model, reducing the role of bank intermediaries and giving back this spread to investors. The strategy's floating rate nature reduces exposure to interest rate risk, leaving credit risk as the primary concern – one that experienced managers seek to address through careful underwriting, active portfolio management, and within private investment-grade credit, a focus on first-lien senior secured debt. Historically, private credit has delivered steady cash flows, limited volatility, and a reliable alternative source of return. Importantly, the private credit space extends far beyond traditional direct lending. Today, the total addressable market for private credit exceeds US$30 trillion, a significant expansion from less than US$100 billion prior to the GFC. Private asset-backed financing has become a vital source of capital for companies in high-growth areas such as energy, digital infrastructure, and transportation, while providing investors with hard asset collateral, amortising cash flows and over-collateralisation. The continued growth of these sectors may expand the asset-backed financing opportunity and potentially give investors an increasingly diverse mix of private credit strategies, providing more resilient portfolios. That's good news for investors, because as they confront the 40 per cent problem – the end of easy returns and automatic diversification from public traditional fixed income – they'll need to adapt. In a portfolio that's no longer self-balancing, we believe that tools like private credit are essential. The writer is chief investment strategist, Blackstone Private Wealth Solutions
Straits Times
an hour ago
- Straits Times
Lionesses to regroup after challenging Asian Women's Cup qualifier
Find out what's new on ST website and app. Singapore's Kyra Elise Taylor (left) trying to take the ball off Lebanon's Mya Rose Mhanna in their Asian Women's Cup qualifier fixture on July 19, 2025. SINGAPORE – Four defeats in four games with13 goals conceded against two scored – the numbers sum up Singapore's tough campaign at the recent Asian Women's Cup qualifying tournament. In Amman, Jordan, the world No. 139 Lionesses finished bottom of Group A with zero points after losing to the hosts (0-5), Iran (0-4), Lebanon (0-1), and Bhutan (2-3). Humbled on the Asian stage, the results have revealed the areas of improvement for Singapore to close the gap with their regional counterparts. Head coach Karim Bencherifa said: 'The team showed tremendous effort and resilience throughout the qualifiers. While the scorelines didn't reflect the full picture, we had competitive moments, especially in the opening match against Bhutan and the final game against Lebanon. 'Despite the challenges, the players showed strong commitment and fought for every minute. These matches exposed areas we need to grow in, particularly physical conditioning and consistency, but also gave us important lessons to build on.' Originally scheduled from June 23 to July 5, the competition was delayed due to the escalating Iran-Israel conflict, forcing the Asian Football Confederation to relocate and reschedule the tournament. The games were subsequently held at the original venue at the King Abdullah II Stadium in Amman from July 7 to 19, after Iran and Israel agreed to a ceasefire. Top stories Swipe. Select. Stay informed. Singapore Subsidies and grants for some 20,000 people miscalculated due to processing issue: MOH Singapore 2 workers stranded on gondola dangling outside Raffles City Tower rescued by SCDF Business Why Singapore and its businesses stand to lose with US tariffs on the region Singapore Medallions with Singapore Botanic Gardens' iconic landmarks launched to mark milestone-filled year Life WP chairwoman Sylvia Lim to publish memoir with Epigram Books in 2027 Business $1.1 billion allocated to three fund managers to boost Singapore stock market: MAS Singapore Jail for man who conspired with another to bribe MOH agency employee with $18k Paris trip Singapore Jail, caning for man who held metal rod to cashier's neck in failed robbery attempt But the tournament began on a challenging note for Singapore against 171st-ranked Bhutan, as the Lionesses suffered multiple injuries. Four of their five substitutions were due to injury, leaving the team with only 10 players for about 17 minutes of the match, which Bencherifa said was physically and mentally exhausting. He added: 'The disruptions and injuries had a real impact... That naturally affected our rhythm and limited how we could rotate or manage players in the following matches. Still, the team kept their heads up and stayed committed. 'These challenges exposed the importance of squad depth and physical preparedness, especially in high level tournaments like this.' As the tournament progressed, Singapore came up against tough opposition, including world No. 68 Iran, who secured a spot in the 2026 Asian Cup in Australia as group winners, and 75th-ranked Jordan. They wrapped up their campaign with a 1-0 loss to world No. 130 Lebanon. Even though the results were not in their favour, captain Siti Rosnani Azman stressed that the team gave their best, while acknowledging that there is much room for improvement. The defender said: 'We tried not to dwell on it so much (on the tough matches and defeats) and pick ourselves up to go again. 'Of course, we do talk about it to clarify certain things but that doesn't stop us from giving our best for the next game.' Rosnani, who earned her 50th cap against Lebanon, said the team also had to adapt to other factors such as the weather, a different time zone and travel. She said: 'It shouldn't be an excuse, but I think as players we need to be able to take good care of ourselves. 'The medical team had been doing their best to keep everyone on top. After getting through the early phase, we managed to handle it well. The ability to adapt is very important and it should start with the player mindset.' Fitness is also a major concern, with Bencherifa noting that several goals were conceded in the final 25 minutes of the matches. Of the 13 goals Singapore let in, six were scored after the 65th minute. Bencherifa said: 'To move forward, we must find ways to better support players in committing to regular physical preparation, recovery, and strength work – not just for performance, but for injury prevention.' Raising the bar in fitness and conditioning is one area that will need to be addressed as Singapore look to catch up to their regional rivals, said the Moroccan. Gaining more exposure to high-level matches is also essential, he added, as well as creating an environment that allows players to train more consistently with support in nutrition and recovery. Consistency and continuity remain a challenge as they often travel without their full squad due to players' work commitments or other obligations, he noted. For instance, the postponement of the qualifiers left the team without key players such as forward Danelle Tan, who had to attend to mandatory administrative requirements for her transfer to Nippon TV Tokyo Verdy Beleza. Despite these challenges, the team are looking ahead to their next major competition – the SEA Games in December. Preparations for the biennial tournament in Thailand will begin after the Women's Premier League in August. Bencherifa shared that there are plans for a training camp and high-level international matches in the lead-up to the tournament. He added: 'The goal is to improve not only team cohesion and tactical readiness but also to prepare players holistically – physically, mentally, and emotionally – to compete at the SEA Games level.'
CNA
2 hours ago
- CNA
Crypto-linked stocks advance after Trump signs stablecoin law
Shares of crypto-linked companies jumped on Monday, as ether prices advanced after President Donald Trump signed into law a bill regulating stablecoins in the U.S. Trump signed the GENIUS Act late on Friday, marking a huge win for crypto supporters, who have for long lobbied for a regulatory framework to gain greater legitimacy for the industry. The bill was passed in the House of Representatives by a vote of 308 to 122, with support from nearly half the Democratic members and most Republicans. It had earlier been approved by the Senate. Bitcoin, the world's biggest crypotcurrency, climbed about 1 per cent on Monday, though it remains more than 3 per cent away from its all-time high of $123,153 hit last week. The bill bans yields or interest payments on regulated stablecoins, which Deutsche Bank said is leading to a rise in Ethereum prices, on expectations that investors are moving into the world's second biggest cryptocurrency as an alternative for yield generation in decentralized finance. Ether was last trading at $3,783.2, hovering near its highest level since December 2024. U.S.-listed shares of companies, which have been adding cryptocurrencies to their coffers lately, were on the rise on Monday. Shares of BitMine, where tech billionaire Peter Thiel is the top investor and whose chairman is Fundstrat's Tom Lee, advanced 5.3 per cent. Other ether holding firms Bit Digital, BTCS and SharpLink Gaming climbed between 3.1 per cent and 12.6 per cent, respectively. Stablecoin issuer Circle Internet rose 1.9 per cent, while crypto exchange Coinbase Global gained 2 per cent. GameSquare Holdings jumped 4.6 per cent after the Delaware-based company announced it was selling some of its shares to fund cryocurrency-related investments. Companies such as GameStop have been rushing to add crypto to their balance sheets, following the footsteps of Strategy. Shares of the largest corporate holder of bitcoin have skyrocketed nearly 3,000 per cent since 2020 and climbed 2.2 per cent on Monday. Other cryptocurrencies also advanced, with Solana hitting its highest level since February. The ProShares Ultra Solana ETF also jumped 16.2 per cent. The broader crypto sector's market value hit $4 trillion on Friday, according to CoinGecko data.
