Our US economic outlook remains constructive, although this scenario comes with its share of uncertainties and risks. We are slightly revising our growth and inflation forecasts upwards for 2025 and 2026, reflecting the consideration of a pragmatic approach by the new US administration in terms of economic policies. This evolution in our growth and inflation assumptions leads us to anticipate a more cautious approach from the Federal Reserve (Fed), with the policy rate expected to reach 4% by the end of 2025 and 3.5% by the end of 2026.

The scenario of strong growth and the moderately inflationary impact of Donald Trump's policies already appears to be significantly priced into the rates markets, and we continue to favour the short end of the US yield curve (up to 5 years) while having a more neutral view on longer maturities. On the equity side, after two years of performance driven by the dominance of the technology sector and artificial intelligence (AI), we expect continued performance in US equity markets. However, 2025 could see more emphasis on the broadening theme, both within the US and in Emerging markets. Meanwhile, Europe could present an attractive investment case for contrarians, although effective catalysts are currently lacking for us to adopt a positive view.

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