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Nanette Abuhoff Jacobson, Managing Director and Multi-Asset Strategist at Wellington Management and Global Investment Strategist for Hartford Funds
Supriya Menon, Multi-Asset Strategist at Wellington Management
Alex King, CFA, Investment Strategy Analyst at Wellington Management
US exceptionalism will remain a focus for markets, but the big question is how long it can last.
Risk markets have been ecstatic over the US election results, with US equities climbing to record levels and credit spreads tightening. US exceptionalism is the running theme based on expectations of deregulation and lower taxes, and that has meant US outperformance over pretty much everything else. The big question is how long it can last.
Johanna Kyrklund, Group Chief Investment Officer at Schroders
The economic backdrop is still conducive for returns, but diversification will be essential for building resilient portfolios.
We’ve written before about the changing investment regime: a shift to a multipolar world, more proactive fiscal policies, and higher interest rates compared to the last decade. What does this mean for markets in 2025? Leaving aside political risks, the economic backdrop remains benign. Inflation has moved in the right direction and interest rates are falling in the US and Europe. We expect a soft landing, and our expectation is that growth will reaccelerate as we move through 2025, but there likely will be challenges.
Juhi Dhawan, Macro Strategist at Wellington Management
Donald Trump’s second administration is expected to bring significant policy changes, with concurrent impacts on inflation, trade, and economic growth.
The decisive victories of President-elect Donald Trump and the Republican Party appear to be a mandate for meaningful change that will influence the US economic outlook in 2025 and beyond. While the GOP’s ambitious agenda is expected to increase US inflation, its impact on economic growth should be more mixed, depending on the scale and sequence of policy measures enacted.
Tom Wilson, Head of Emerging Market Equities at Schroders
Valuations in many markets are broadly cheap, and since a great deal of uncertainty is already priced in, there may be opportunities to consider adding to exposures in the coming months.
The outlook for emerging-market equities is colored by uncertainty relating to the impact of a Trump administration. Valuations, excluding India and Taiwan, are broadly cheap, but markets are facing a period of uncertainty. Key drivers include tariff risk, a strong US dollar, a higher US yield curve (higher US bond yields), Chinese policy action, India, and technology trends.
Bob Kaynor, CFA, Head of US Small & Midcap Equities at Schroders
Multiple favorable trends may explain why Wall Street expects to see the strongest earnings gains come from small caps in 2025.
The US economy emerged from the pandemic with greater strength than most other economies around the globe. That rebound was fueled, in part, by the fiscal stimulus the Biden administration promoted with two major pieces of legislation—the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act and the Inflation Reduction Act. The US consumer, however, has once again demonstrated a propensity to drive the economy.
Amar Reganti, Managing Director at Wellington Management and Fixed-Income Strategist for Hartford Funds
Marco Giordano, Investment Director at Wellington Management
Will Prentis, Investment Specialist at Wellington Management
We identify key fixed-income themes to watch in 2025, with an emphasis on how active investors can make the most of greater disperson.
Since the inflation shock first started rattling interest-rate markets around the start of 2022, we’ve focused on trying to understand the drivers of inflation and the policy reactions to this price phenomenon. Our expectation going into 2024 was that disinflation would dominate market narratives, paving the way for rate cuts across the globe. While we were proven right in that regard, with policy easing in most parts of the world, we believe caution is now warranted in the face of changing policies and the potential for volatile markets.
-
Global Macro
Nanette Abuhoff Jacobson, Managing Director and Multi-Asset Strategist at Wellington Management and Global Investment Strategist for Hartford Funds
Supriya Menon, Multi-Asset Strategist at Wellington ManagementAlex King, CFA, Investment Strategy Analyst at Wellington Management
US exceptionalism will remain a focus for markets, but the big question is how long it can last.
Risk markets have been ecstatic over the US election results, with US equities climbing to record levels and credit spreads tightening. US exceptionalism is the running theme based on expectations of deregulation and lower taxes, and that has meant US outperformance over pretty much everything else. The big question is how long it can last.
Johanna Kyrklund, Group Chief Investment Officer at Schroders
The economic backdrop is still conducive for returns, but diversification will be essential for building resilient portfolios.
We’ve written before about the changing investment regime: a shift to a multipolar world, more proactive fiscal policies, and higher interest rates compared to the last decade. What does this mean for markets in 2025? Leaving aside political risks, the economic backdrop remains benign. Inflation has moved in the right direction and interest rates are falling in the US and Europe. We expect a soft landing, and our expectation is that growth will reaccelerate as we move through 2025, but there likely will be challenges.
Juhi Dhawan, Macro Strategist at Wellington Management
Donald Trump’s second administration is expected to bring significant policy changes, with concurrent impacts on inflation, trade, and economic growth.
The decisive victories of President-elect Donald Trump and the Republican Party appear to be a mandate for meaningful change that will influence the US economic outlook in 2025 and beyond. While the GOP’s ambitious agenda is expected to increase US inflation, its impact on economic growth should be more mixed, depending on the scale and sequence of policy measures enacted.
-
Equities
Tom Wilson, Head of Emerging Market Equities at Schroders
Valuations in many markets are broadly cheap, and since a great deal of uncertainty is already priced in, there may be opportunities to consider adding to exposures in the coming months.
The outlook for emerging-market equities is colored by uncertainty relating to the impact of a Trump administration. Valuations, excluding India and Taiwan, are broadly cheap, but markets are facing a period of uncertainty. Key drivers include tariff risk, a strong US dollar, a higher US yield curve (higher US bond yields), Chinese policy action, India, and technology trends.
Bob Kaynor, CFA, Head of US Small & Midcap Equities at Schroders
Multiple favorable trends may explain why Wall Street expects to see the strongest earnings gains come from small caps in 2025.
The US economy emerged from the pandemic with greater strength than most other economies around the globe. That rebound was fueled, in part, by the fiscal stimulus the Biden administration promoted with two major pieces of legislation—the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act and the Inflation Reduction Act. The US consumer, however, has once again demonstrated a propensity to drive the economy.
-
Fixed Income
Amar Reganti, Managing Director at Wellington Management and Fixed-Income Strategist for Hartford Funds
Marco Giordano, Investment Director at Wellington ManagementWill Prentis, Investment Specialist at Wellington Management
We identify key fixed-income themes to watch in 2025, with an emphasis on how active investors can make the most of greater disperson.
Since the inflation shock first started rattling interest-rate markets around the start of 2022, we’ve focused on trying to understand the drivers of inflation and the policy reactions to this price phenomenon. Our expectation going into 2024 was that disinflation would dominate market narratives, paving the way for rate cuts across the globe. While we were proven right in that regard, with policy easing in most parts of the world, we believe caution is now warranted in the face of changing policies and the potential for volatile markets.
Download the PDF to read all of our 2025 outlooks.
Important Risks: Investing involves risk, including the possible loss of principal. • Foreign investments may be more volatile and less liquid than US investments and are subject to the risk of currency fluctuations and adverse political, economic, and regulatory developments. These risks may be greater, and include additional risks for investments in emerging markets. • Fixed income security risks include credit, liquidity, call, duration, and interest-rate risk. As interest rates rise, bond prices generally fall. • Small- and mid-cap securities can have greater risks and volatility than large-cap securities.
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