2025 Midpoint Economic & Market Outlook

Returning to the Fundamentals

Key Takeaways

• While geopolitical developments continue to make headlines and bear scrutiny, the underlying fundamentals of the U.S. economy remain resilient, warding off recession fears.

• Although the Federal Reserve appears to be still skewed toward rate cuts later this year, Chair Powell acknowledged that monetary policy remains “well-positioned,” and there’s “no hurry” to cut rates.

• The Treasury 10-Year yield is expected to remain at an elevated, “normal” level with heightened headline and data dependency producing continued volatility.

• We believe the bond portfolio decision-making process could benefit from taking an active-passive barbell approach from a solution standpoint.

• Stocks have upside catalysts that include robust lending activity, a muted oil price reaction to the Iranian conflict and a generally stable labor market.