Much to the chagrin of many global leaders and investors, President Donald Trump is delivering on his election promises to those who voted for him in November 2016. He is doing what it takes to Make America Great Again and doing it his way. The president has two negotiating colours, black and white, there is no grey.

He has surrounded himself with those like-minded. Those who did not agree with or adhere to his directives were very temporary West Wing dwellers. If the traditions of global trade are disrupted so be it. Protectionism is in the ascendant and trade tensions are stretched almost to breaking point. A wall will be built to stem or stop the flow of illegal immigrants across the US southern border. American jobs will be protected. Mexican pole vaulters will likely be the big improvers at the next Olympics.

Trump was supported by the rust and wheat belts of the US and he is returning their faith that he would deliver on his promises. But trade policies are enacted by politicians who are supporting their constituents and Newton's third law of motion comes into play--"For every action, there is an equal and opposite reaction." This is now clearly on display in the global trade arena where tariffs are the weapons of combat.

Across the globe, uncertainty has reached critical levels and is clearly demonstrated by: Trump's unconventional behaviour; trade tensions particularly between the two largest economies; political upheaval in the European Union involving Italy, Spain and Germany; possible reintroduction of sanctions against Iran; a confrontational G7 summit; an unconvincing two-hour summit between the US and North Korea; and slowing Chinese economic growth.

And while this uncertainty has encouraged volatility in financial markets, there are some positives. Demand for safe-haven assets has increased, in currencies Yen and Swiss francs and quality sovereign bonds. The demand for US bonds is providing the Fed and the US Treasury with an opportunity to sell bonds without pushing yields higher. Without the safe-haven demand and given the inflation concerns of Fed chairman Jerome Powell and tightening monetary policy, yields would be rising.

The US yield curve continues to flatten, helped by safe-haven buying at the longer end. In the past four months the spread between 2- and 10-year yields has halved from 72 to 36 points. The bond market is far from convinced about sustainable economic growth and inflationary concerns. Trade tensions are playing into its hands, as global growth will be affected should trade flows slow meaningfully.

APA – Beware the Trojan Horse

CK Infrastructure Holdings (CKI) is Hong Kong's largest publicly listed infrastructure company. It is part of the much larger Cheung Kong Group. Over several years it has patiently and painstakingly accumulated a substantial portfolio of infrastructure and energy assets in Australia.