Global Macro Outlook: First Quarter 2025

What You Need to Know

We expect all major economies to continue to expand, with the US out front again, as well as positive momentum for business investment. The question for investors will be to what degree US outperformance will extend to the financial markets. Global headwinds are likely, especially in the trade channel in light of proposed tariffs and immigration policies, but our outlook remains generally positive.

• The US seems well placed to grow more quickly than other developed economies for the time being, and that will shape the market outlook.
• As the US economy outperforms others, the Fed will likely be slower in lowering rates, which should keep US rates  higher across the curve. 
• Our outlook for the euro area was already subdued since the European economy has slowed significantly in recent months, and the situation now looks even more precarious.
• China growth continues to suffer, and while both monetary and fiscal easing are in train, more will be needed in our view. 
• Our outlook is generally constructive, and if we’re right that the coming US divergence is one of magnitude rather than direction, we think it poses opportunities rather than risks for investors.