Goldman Sachs Asset Management 2025 Outlook report is titled “Reasons to Recalibrate.”
On bonds, GS is bullish:
- “When the Fed cuts rates, history suggests the bond market is where investors should want to be,”
- see broad-based fixed income gains
- expects the Fed to cut rates in December and early 2025
- main risk for fixed income is renewed inflation, this could slow the pace of easing
On equities:
- US equities remain the most attractive
- “There is a potential inflection point for small caps, driven by rate cuts and more domestic trade policy. US small caps have often outperformed large caps when central banks started rate cuts, especially in soft landings, and smaller companies may benefit from rate reductions as interest payments decrease”
- risks around China shares growing on the prospect of new tariffs
- Japanese equities have been driven by strong earnings, corporate governance momentum, and an inflationary environment shift, but with headwinds
This article was written by Eamonn Sheridan at www.forexlive.com.
