2025 Outlook
Inflation pressures and fiscal debates may disrupt markets in 2025. Long-term rates could stay high despite Fed easing, while emerging-market equities may outshine U.S. stocks. Below-average returns are likely as optimism is already priced in.
A feature article from our U.S. partners. Originally published in November 2024.
Five potential surprises for the economy and markets in 2025
- The two-year drop in U.S. inflation rates might not continue in 2025 due to persistent inflation pressures and the potential for new ones.
- The fiscal debate in Washington might create volatility in bond and asset markets, as legislative proposals create anxiety about exacerbating an already challenging debt outlook.
- Despite a Fed easing cycle, longer-term market interest rates may not fall as expected.
- Emerging-market equities might give U.S. stocks a run for their money, as discounted relative valuations make the positive surprise hurdle easier to clear.
- Investors might face below-average asset returns, as so much good news is already baked into consensus expectations.
