The global macroeconomic landscape could become more fluid in 2025 as markets face increasing complexity. In the coming months, the evolution of the business cycle will likely be driven by the interaction between macro dynamics and monetary policy, with added uncertainty from potential policy changes by the new U.S. administration.
“As we transition into 2025, although business cycle dynamics remain crucial to the outlook, there will be heightened focus on policy changes in the U.S. across trade, immigration, regulatory and fiscal policies. These changes should significantly influence outcomes in the U.S. and beyond,” said Hussein Malik, head of Global Research at J.P. Morgan.
All in all, J.P. Morgan Research’s baseline scenario for 2025 is one that sees global growth still remaining strong. U.S. exceptionalism is expected to bolster the U.S. dollar and buoy U.S. risky assets, but the outlook appears more mixed for Treasuries. J.P. Morgan Research is broadly constructive on credit, anticipating modest changes in high-grade spreads, but remains cautious on EM fixed income. In addition, the outlook for U.S. equities and gold is bullish, but bearish on oil and base metals.
Equity markets
In 2025, global equity markets could face an environment characterized by several cross-currents. “The central equity theme for next year is one of higher dispersion across stocks, styles, sectors, countries and themes. This should improve the opportunity set and provide a healthier backdrop for the active management industry after consecutive quarters of record narrow and unhealthy equity leadership,” said Dubravko Lakos-Bujas, head of Global Markets Strategy at J.P. Morgan.
De-coupling central bank paths, uneven disinflation progress and technological innovation will likely continue to drive divergence across business cycles globally. Moreover, heightened geopolitical uncertainty and evolving government policy agendas could introduce unusual complexity to the stock market outlook.
The global economy
In 2024, the global expansion proved resilient despite elevated inflation limiting central banks’ scope for rate cuts. J.P. Morgan Research’s 2025 baseline forecast incorporates an extension of this high-for-long rate environment. Global GDP is anticipated to rise 2.5% and core CPI inflation could remain sticky, remaining close to its current 3%. While consistent with limited easing in the aggregate, the global impulses that have promoted synchronization are expected to fade, and divergence among central banks is a key outlook theme.
Rates
At a global level, the base case macro view assumes growth resilience and sticky inflation, which limits the magnitude of further policy rate easing in 2025. As a result, DM policy rates will likely remain higher for longer, albeit with continued divergence between U.S. and euro area rates.
However, the new Trump administration could result in tail risks, including a downside scenario where overly aggressive trade and migration policies result in an adverse supply-side shock and negative hit to global sentiment. All in all, J.P. Morgan Research expects DM yields to grind lower over the course of 2025.
Emerging markets
“EM growth faces significant uncertainty in 2025, caught between two giants, China and the U.S., with policy changes in the latter potentially delivering a large negative supply shock that will have spillovers across EM,” said Luis Oganes, head of Global Macro Research at J.P. Morgan.
While EM inflation is expected to slow as services inflation moderates, core goods prices could see a temporary boost from tariffs and FX depreciation. In addition, EM central banks will likely need to contend with changes in U.S. financial conditions and weigh financial stability concerns against the adverse impact on growth from deteriorating sentiment and slowing global trade flows. Overall, weaker domestic growth and ample rate buffers could still leave room for cautious monetary easing in 2025.
Commodities
Trump’s return to the White House should see a focused agenda with a promise to “rapidly defeat inflation, quickly bring down prices and reignite explosive economic growth.” Much of his strategy relies on reducing energy prices, and he has pledged to lower oil costs. Under these plans, deregulation and increased U.S. production present downside risks to oil prices, while upside risks are posed by exerting pressure on Iran, Venezuela and possibly Russia to limit oil exports and revenues. Weak supply-demand fundamentals may, however, help Trump keep his promise to bring oil prices down.
For agriculture markets, a low inventory base at the global level continues to limit downside price risks into 2025. More volatility could lie ahead, though. “U.S. trade, foreign policy and wider geopolitical developments ahead add complexity through the 2025/26 balances, with more immediate impacts for price,” said Tracey Allen, an agricultural commodities strategist at J.P. Morgan. “We anticipate a more volatile price environment for agricultural commodities through 2025–2026, particularly for U.S. trade-exposed soybean, corn, cotton and wheat markets.”
