This article will ...

• Outline the challenge of fighting inflation against a backdrop of trade wars and recession fears.

• Describe the two pivotal themes for the U.S. economy for the remainder of 2025.

• Underscore the importance of keeping a long-term perspective and staying diversified.

As highlighted in our previous edition, 2024 exceeded consensus expectations: risk assets outperformed, consumers proved resilient, and the labor market remained robust. Entering 2025, the expectation was moderation, attributed to several factors, including elevated valuations, persistent inflation, diminishing fiscal stimulus, and policy uncertainty. However, underperformance of U.S. equities and a historic sell-off in early April was not in the cards.

As we enter the first quarter of 2025, institutional markets are facing an evolving landscape shaped by economic shifts and interest rate uncertainties with significant impact on business dynamics that require close attention. To best manage, businesses will need to focus on strategic solutions, quality assets, and strong partners to navigate these changes effectively.