In our Capital Markets Forecast published at the beginning of 2024, we noted that the challenges we faced included the fight against inflation, the outcome and path forward from the November elections, and current and potential geopolitical crises in Europe and the Middle East and around China.

Today, the results of the elections are in, and anticipation has begun regarding the potential impact from changes in taxes, regulations, and import tariffs.

The Fed’s monetary tightening regime, in place since 2022, came to an end with the first rate cut in September. Inflation has moderated greatly but persists, and the open questions are around the future path for rate cuts, inflation, and the economy.

And geopolitical tensions are perhaps not much different than they were at the beginning of the year, with conflict persisting in Ukraine and the Middle East, and continued questions around China, as that nation struggles with its internal growth, and future tensions around trade are possible as well.

We continue to have a positive outlook for stocks and other return-seeking assets in 2025. We recommend staying diversified, emphasizing large and mid-cap US stocks, continuing to move toward more core fixed income relative to shorter-term bonds, and considering the role that private assets (including equity, debt, and infrastructure) can play in portfolios seeking long-term growth.

Read or download our full 2025 Capital Market Forecast