March 18, 2025 Edition

Market Trends & Investment Insights: U.S. Inflation, China’s Policy Shift, and Gold’s Record Surge        

As we move further into 2025, markets continue to navigate inflation trends, policy shifts, and geopolitical uncertainty, all of which are shaping investment strategies across asset classes. This week, we examine the February CPI report from the U.S., China’s latest economic stimulus efforts, and gold’s surge past $3,000 per ounce, reflecting a broader investor search for safe-haven assets and diversification opportunities.?

U.S. Inflation Cools More Than Expected, but Growth Risks Persist?

(Source: CNBC) The latest February CPI report from the U.S. showed inflation slowing more than expected, with headline CPI rising just 0.2% (vs. 0.3% expected) and 2.8% YoY (vs. 2.9% expected). Core CPI also came in lower at 3.1% YoY (vs. 3.2% expected), marking its lowest level since April 2021. However, food inflation remains elevated, with egg prices surging 10.4% (58.8% YoY) and meat, poultry, & fish up 7.7% YoY. Inflation-adjusted hourly earnings rose just 0.1% MoM and 1.2% YoY, reflecting subdued wage growth, which in turn could limit discretionary spending in sectors like retail, travel, and entertainment.?

At the same time, the Atlanta Fed’s GDPNow model projects a -2.4% contraction in Q1, pointing to slowing economic momentum as businesses face rising trade uncertainty. With 25% U.S. tariffs on steel & aluminum triggering EU retaliation and 20% tariffs on Chinese goods adding further pressure, markets remain cautious. The Fed is expected to hold rates at 4.25%-4.5% in its March meeting, but expectations for a rate cut cycle beginning in June (totaling 0.75 percentage points by year-end) remain intact. With inflation trending downward, lower rates should support private market transactions and capital deployment across select opportunities.?

China’s Special Action Plan: A Step Toward Structural Reform?

(Source: CNBC) China has unveiled a Special Action Plan to Boost Consumption, reinforcing a shift toward long-term structural reforms aimed at strengthening domestic demand, enhancing income levels, and stabilizing financial markets. This comes amid deflationary pressures, weak consumer confidence, and a prolonged property market downturn. The plan focuses on income growth, employment support, and expanding domestic consumption, alongside new investment products for individual investors. With 300 billion yuan ($41.45B) in ultra-long special treasury bonds allocated for consumer subsidies, policymakers are taking gradual steps to rebalance the economy.

Over the past year, Chinese policymakers have supported capital markets,?but this latest plan confirms a pivot toward addressing fundamental economic challenges such as deflation, slowing wage growth, and employment concerns. China’s equity market has responded positively, with strong gains following DeepSeek’s launch in early 2025, reflecting a shift in sentiment and increasing investor engagement. Despite the recent rise in valuations, Chinese stocks remain broadly undervalued, and they have already become a meaningful part of investor portfolios this year. This reinforces our view that 2025 presents opportunities for diversification, with Chinese equities likely to stay on investors' radar as they reassess global allocations.

Gold Surges Past $3,000: A Safe-Haven Rally Amid Uncertainty?

(Source: Financial Times) Gold has reached a historic milestone, surpassing $3,000 per ounce for the first time, driven by rising trade war fears and economic uncertainty. Investors are increasingly turning to gold as a hedge against inflation and global instability, with both institutional and central bank demand remaining strong. Major banks, including Citi, Goldman Sachs, and RBC, have revised their gold price forecasts higher, while New York’s gold stockpiles have reached record levels, as concerns over potential tariffs on bullion fuel demand.?

Gold’s rally reflects a lack of compelling opportunities in traditional markets, as the rate cut cycle nears its end and trade war uncertainty complicates capex and investment decisions. This further supports our view that 2025 is a year for diversification, where alternative asset classes can offer uncorrelated returns and exposure to the next capital rotation.

● Private equity remains subdued, but with deal flows expected to pick up in 2025, the asset class is positioned to benefit as capital deployment accelerates.?

● Private REITs, particularly in the industrial sector, have seen property values recover, with both price appreciation and income growth returning to positive territory.?

● Private credit remains a meaningful portfolio component, offering floating rate returns that can hedge against potential rate volatility from tariff-driven inflation risks.

While gold is likely to remain supported amid ongoing uncertainty, investors should take a broader view of asset allocation in 2025 to ensure they are well-positioned to capture opportunities across multiple asset classes.

For tailored investment strategies and insights into navigating the current market landscape, contact us today. Our team is here to help you capitalize on emerging opportunities across asset classes. Don’t miss out on the chance to enhance your portfolio—reach out to Altive now!

Disclaimer: This newsletter contains information from public sources, and any investment decisions made based on its contents are at the reader's own risk. Investing involves risks and might result in loss of capital invested. Past performance is not a guarantee of future results.?

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