What to Expect in 2025 From a 2nd Trump Term

Predictions vary, but the overarching themes provide a roadmap for 2025

With the return of Donald J. Trump to the White House, 2025 is shaping up to be an unconventional year. Wall Street’s projections, traditionally centered on growth, inflation, and other economic indicators, are now profoundly influenced by this singular development.

Optimism Amid Uncertainty

The investment outlook for the year ahead reflects a mix of optimism and caution. Trump’s anticipated pro-growth policies have sparked positive sentiment regarding Corporate America and U.S. assets. However, his confrontational approach to global trade and his unpredictable style of governance have also introduced elements of uncertainty. While some view these dynamics as opportunities, others are more cautious about their potential impact on market stability.

A Resilient U.S. Economy

Wall Street expects the U.S. economy and its assets to retain their leadership position globally. Trump’s policies, coupled with the lackluster performance of many international markets, reinforce the idea of “U.S. exceptionalism,” as noted by JPMorgan Chase & Co. However, his trade tariffs and strict immigration policies are likely to influence inflation and the Federal Reserve’s ability to meet its targets. Apollo Global Management, for instance, foresees a slower pace of interest rate cuts than the market currently anticipates.

Equity Markets and Innovation

The remarkable gains in equity markets last year, fueled in large part by advancements in artificial intelligence (AI), may not repeat in 2025. While institutions caution against expecting another year of 20% returns, the AI-driven rally is far from over. BNY Mellon has emphasized the transformative potential of AI, suggesting its role in shaping markets will surpass that of earlier technological revolutions. Broader adoption of AI is expected to support market growth, though perhaps at a moderated pace.

Opportunities in Fixed Income and Diversification

For fixed-income investors, bonds may present a more traditional appeal this year. With yields on rates and credit at solid starting points, the potential for generating steady income has returned. Schroders aptly summarizes this sentiment: “The traditional appeal of bonds — generating income — is back.”

Given the uncertainties tied to Trump’s policies and lower expected returns from equities, diversification becomes even more critical. Exploring alternative assets such as private markets and hedge funds may provide opportunities to enhance portfolio resilience. Relying on professional financial guidance will be essential in navigating these complex landscapes.

Staying Informed and Prepared

This year’s market forecasts, compiled from over 50 leading financial institutions, highlight the importance of staying informed and adaptable. Predictions vary, but the overarching themes – Trump’s policies, AI-driven growth, and the return to traditional fixed-income strategies – provide a roadmap for what to expect.

Nothing contained herein shall constitute an offer to sell or solicitation of an offer to buy any security. Material in this publication is original or from published sources and is believed to be accurate. However, we do not guarantee the accuracy or timeliness of such information and assume no liability for any resulting damages. Readers are cautioned to consult their own tax and investment professionals with regard to their specific situations.