State Street Global Advisors expects the U.S. economy to achieve a "soft landing" in 2025, and considers increasing holdings in stocks and fixed income assets
State Street Global Advisors expects the U.S. economy to achieve a "soft landing" in 2025 and advises investors to consider increasing their holdings in stocks and fixed income assets. It anticipates that interest rate cuts and economic resilience will continue, despite uncertainties in the market. State Street Global Advisors holds an optimistic view on the fixed income outlook, believing that slowing economic growth and controlled inflation will prompt central banks to further cut interest rates. Investors need to carefully plan their portfolios while paying attention to long-term trends such as demographic changes and geopolitical conflicts
According to the Zhitong Finance APP, State Street Global Advisors today released the "2025 Global Market Outlook: Seeking the Right Investment Path," pointing out that as the economic environment shows resilience and major central banks embark on a monetary easing cycle in 2024, the stock market is expected to record strong returns, while returns in the fixed income market will be relatively moderate. Looking ahead, State Street Global Advisors anticipates that the trend of interest rate cuts and a resilient macro economy will continue into 2025, and the long-term forecast for a "soft landing" of the U.S. economy will also be realized. Although the market remains full of uncertainties, investors may consider increasing their equity allocation, but should remain cautious when planning their portfolios.
State Street Global Advisors believes that the interest rate cut cycle starting in 2024 will last for a period of time, but a victory for the Republican Party led by Trump in the U.S. elections may impact the market environment in late 2025. The geopolitical tug-of-war among global powers may also disrupt long-established economic and financial ties.
In addition, State Street Global Advisors maintains an optimistic outlook for fixed income in 2025. Slowing economic growth and controlled inflation will lead central banks to further lower policy interest rates. Although the uncertainty regarding the speed and scale of interest rate cuts may increase after the Trump administration takes office, this uncertainty may provide strategic opportunities for investors to establish or expand duration positions during the easing cycle.
Jennifer Bender, Global Chief Investment Strategist at State Street Global Advisors, stated that despite the spread between investment-grade bonds and high-yield bonds being close to historical lows, we remain very optimistic about the outlook for fixed income assets next year and believe that the sovereign debt environment in developed economies is generally favorable. Market sentiment fluctuations and uncertainties may create opportunities for investors to manage or extend duration.
In the global equity market, a resilient economic backdrop supports corporate earnings, particularly in the U.S. The situation outside the U.S. is more complex, but various markets still offer ample opportunities. Investors need to be cautious in dealing with short-term uncertainties while also paying attention to deeper structural changes such as demographic shifts, geopolitical conflicts, and the rise of transformative technologies.
Jennifer Bender added, "We expect the Japanese stock market to consolidate sideways due to potential instability. Additionally, large-cap U.S. stocks will maintain their structural advantages relative to other developed markets, while the outlook for emerging markets is more complex, as investors need to consider factors such as economic growth, earnings growth, and easing inflation pressures, along with geopolitical risks and a strong dollar."