Northern Trust Asset Management (NTAM) has expressed optimism regarding the performance of US equities and high-yield bonds in 2025, anticipating strong earnings and healthy sales growth to support stock outperformance. With $1.3 trillion in assets under management, NTAM's Chief Investment Officer, Anwiti Bahuguna, emphasized a preference for equities over fixed income, predicting modest gains for traditional 60/40 portfolios, with US equities leading the way. This sentiment aligns with views from other major financial institutions, including UBS, Goldman Sachs, and Pictet, which also favor US equities as a sound investment choice. [ce57ed4c]
In addition to equities, NTAM is bullish on high-yield bonds, citing elevated yields and strong fundamentals as key reasons for this outlook. The firm's economic forecast for 2025 includes expectations of a soft landing for the economy, with inflation projected to ease towards 2%. However, potential risks from the incoming administration's policies could disrupt these favorable economic conditions. [ce57ed4c]
While NTAM remains positive about the US market, it acknowledges mixed economic signals in Europe, where geopolitical tensions pose additional risks. In Asia, concerns over China's economic growth and deflationary pressures continue to be a source of anxiety for investors. [ce57ed4c]
This optimistic outlook from NTAM comes at a time when Norway's $1.8 trillion sovereign wealth fund is grappling with elevated risks in the global stock market. Managed by Norges Bank Investment Management (NBIM), the fund reported a return of 4.4% in the third quarter of 2024, slightly underperforming its benchmark. Trond Grande, NBIM’s deputy CEO, pointed to global challenges, including the upcoming US presidential election and China's economic stimulus efforts, as contributing factors to market uncertainty. [1e5fd2cb]
The International Monetary Fund (IMF) has echoed these concerns, indicating that while progress has been made in controlling inflation, increased global risks remain. Eric Johnston from Cantor Fitzgerald highlighted additional worries, such as dwindling US consumer savings and persistently high prices, complicating the economic landscape. [1e5fd2cb]
As NTAM and other financial institutions remain optimistic about US equities and high-yield bonds, the broader economic environment continues to pose challenges, necessitating careful decision-making and risk management across various sectors. [ce57ed4c]