2025/03 Market Situational Awareness

March 2025 Market Snapshot: Tighter Policy Narrative Drives Risk Repricing

• Risk assets adjusted to softer growth signals through factor and sector rotation rather than broad de-risking.Equities were mixed as investors reduced exposure to high-beta and momentum-driven segments while reallocating toward quality, dividends, and more defensive growth profiles. Credit markets remained orderly, indicating confidence that slowing activity would remain manageable rather than disruptive.

• Rates and FX reinforced a deceleration narrative with limited stress signals. Treasury yields eased modestly, particularly at the front end, as inflation pressures continued to cool and policy expectations shifted toward a prolonged hold. The U.S. dollar softened slightly, supporting non-U.S. assets, while cross-asset correlations declined, highlighting a more nuanced, late-cycle allocation environment.