2025 AART Outlook Paper
FIVE POTENTIAL SURPRISES FOR THE ECONOMY AND MARKETS IN 2025
• The two-year drop in U.S. inflation rates might not continue in 2025 due to persistent inflation pressures and the potential for new ones.
• The fiscal debate in Washington might create volatility in bond and asset markets, as legislative proposals create anxiety about exacerbating an already challenging debt outlook.
• Despite a Fed easing cycle, longer-term market interest rates may not fall as expected.
• Emerging-market equities might give U.S. stocks a run for their money, as discounted relative valuations make the positive surprise hurdle easier to clear.
• Investors might face below-average asset returns, as so much good news is already baked into consensus expectations.
