Chris Ainscough

We expect Q1 2025 to bring heightened volatility in equity and fixed income markets. US trade policy brinkmanship increases inflation risks through tariffs and supply chain disruptions while fiscal policy remains loose. Such a backdrop will likely force the Fed to maintain rates higher for longer and put upward pressure on yields. Regardless, we see diversification benefits from UK and US 10 year sovereign bonds within a multi-asset portfolio, as well as short term pan-European credit.

The US tech led rally will likely continue despite challenge from China but valuations are stretched following two years of outstanding returns. We see cyclical stocks around the world as a risk diversifying source of returns as major economies look inwards in search for growth and resolutions to major geopolitical frictions come into view.

Emerging markets are currently benefiting from the Chinese market rally but this may prove short lived if trade frictions increase significantly.

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