Market commentary
SEI Forward
“In like a lion” certainly held true for the first quarter of 2025.
SEI Forward: First quarter
Market review
“In like a lion” certainly held true for the first quarter of 2025 as tariff escalations, new entrants in the artificial intelligence (AI) race, stubborn inflation, and softening economic data all contributed to reversals of fortune from 2024. Recently dominant market themes, including U.S. exceptionalism, European economic stagnation, and a global soft landing, seem to have shifted considerably during the first 90 days of the year as international equity markets outperformed the U.S., Germany launched substantial stimulus measures, and U.S. interest rates fell on rising recession probabilities. Investors’ hopes for an “out like a lamb” remainder of the year appear unlikely given the continued overhang of tariff announcements and retaliations, the on again/off again peace negotiations in Europe, and mixed messages from corporate earnings and consumer behavior that reflect a “wait-and-see” approach to these uncertain times.
The Long Game
Uncertainty is one of the clear certainties of capital markets. In fact, any endeavor that involves discounting the future (such as investing) exists in the realm of uncertainty. There are times, however, when uncertainty feels more…present. I think most would agree that our current moment clearly falls into that category, and for good reason.
Thus far, 2025 has delivered more than just a momentum reversal, the potential for steeper and wider applications of tariffs, and a higher probability of a U.S. recession. It has also delivered (or at least highlighted) some notable transformations affecting the global economy and capital markets.
Returns in USD unless otherwise noted.
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