Two the Point — 2025 Federal Reserve Outlook

As we begin 2025, the Federal Reserve’s measured approach and the resilience of the U.S. economy shape a cautiously optimistic investment landscape. High-quality bonds remain attractive, while diversification and strategic rebalancing are key to navigating evolving market conditions.

Key Insights:

• The Federal Reserve: The Fed cut rates by 0.25% last week, bringing the target range to 4.25%–4.50%, while signaling a patient, data-driven approach moving forward.
• Rising Bond Yields: The 10-year Treasury climbed to 4.5%, despite rate cuts, a reflection of the Fed’s more hawkish 2025 projections.
• Fixed Income: With elevated yields and expectations for further rate declines throughout the year, fixed income offers compelling opportunities.
• U.S Economy: The U.S. economy continues to demonstrate resilience, supporting a diversified and disciplined investment strategy.

For a deeper dive into our views and recommendations, explore our full 2025 Economic and Market Outlook.