Five Macro Factors to Monitor in 2025
By Erik Norland
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Equity Markets

The S&P 500 was up over 20% in each of the past two years, but now valuations may be getting stretched. Will higher bond yields destabilize the equity market and eventually provoke a correction?

S&P 500 cap vs 10 year

Employment and Growth

While the U.S. continues to generate jobs at a decent pace, there are some signs that the labor market is slowing and household finances are under strain from the cumulative impact of higher interest rates. Defaults on private credit are also rising sharply, so an economic slowdown is possible in the U.S. Much of the world is already growing slowly.

Options Markets

Across almost every asset class – including stocks – options prices are near historic lows. Are markets under-pricing risks? If so, could implied volatility on options rise significantly?

A New U.S. Administration

A new administration is arriving on January 20 in Washington, D.C. which could have big impacts on tax, tariff and U.S. foreign policy, potentially impacting a variety of different markets including currencies, oil, gold, equities and interest rates. 

As we head into this new year, one of the big questions is if we're all underpricing the amount of risk in the system.

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About the author

Erik Norland
Erik Norland, Executive Director & Chief Economist, CME Group

is responsible for generating economic analysis on global financial markets by identifying emerging trends, evaluating economic factors and forecasting their potential impact on CME Group's various asset classes, ranging from interest rate products to energy and agriculture. He is also one of CME Group’s spokespeople on global economic, financial and geopolitical developments.

 

 

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