The financial market has experienced a reduction in interest rates from 5.25-5.5 percent to 4.25-4.5 percent, and now anticipates one or two additional cuts. Investors are watching fiscal and tariff policies to forecast inflation and the Federal Reserve's stance. As 2025 progresses, they are focusing on the policies of the upcoming presidential administration and its impact on the markets.
The U.S. economy starts the year strong, after a 3 percent growth in 2024 primarily driven by consumption. Although uncertainties about the deficit and tariffs persist, this could affect long-term bond investment. Regarding stocks, a more diversified sector leadership is expected in 2025, with potential opportunities in case tariffs are mispriced.
Global fixed income remains a crucial component of investment portfolios, providing protection in an uncertain environment and attractive yields, especially in corporate credit. The outlook for U.S. stocks seems positive, supported by a resilient economy and strong earnings growth, projected at a 14 percent increase in S&P 500 earnings.
Despite the favorable outlook for 2025, uncertainties remain about U.S. policies, stimulus in China, and geopolitical risks. On the other hand, the year 2024 was excellent for global equity markets, with the MSCI All Country World Index recording an 18 percent increase, mainly driven by the U.S. In the global fixed income space, turbulence was experienced, with volatility in bonds due to fiscal concerns and growth in some regions.
The U.S. is expected to maintain a cautious approach regarding investments in Chinese stocks, especially in light of tariff escalation threats. Markets have already reacted to this scenario with an increase in 10-year Treasury yields. On the other hand, fiscal measures and other policies could generate inflationary pressures, leading the Federal Reserve to be more cautious in cutting interest rates.
To maintain a long-term perspective and seek global diversification as a primary strategy, investors must be attentive to signals amid uncertainty. In other regions such as Mexico, Canada, and Europe, tariffs could be used as negotiation tools on various issues. The fiscal discussion for 2025 will focus on extending policies like the Tax Cuts and Jobs Act. China, for its part, was an important focal point, with a solid economy and earnings growth driving the S&P 500.
