3Q25 Economic & Market Outlook

KEY TAKEAWAYS:

1. The first half of 2025 was notable for the U.S. financial markets’ emotional responses to government policy announcements and actions.
2. Elevated uncertainty in the U.S. economy, driven by several potentially disruptive policy changes, is leading to subdued business and consumer sentiment. We remain constructive on the economy and believe these uncertainties will ultimately be resolved. However, caution is warranted, and we expect more volatility in the near-term.
3. We anticipate the Fed will lower short-term rates as the year progresses, which should aid sentiment for stocks. However, longer term interest rates have so far risen this easing cycle, suggesting concerns on inflation or deficit spending.
4. While we expect a noisy summer for markets, we believe there are good reasons to expect continued stock market performance going forward.