Market Viewpoints

January 2025

U.S. equities advanced in January, but the more important development was the shift beneath the surface. Leadership broadened as value stocks and small caps outperformed while last year’s mega-cap growth leaders paused. Ongoing progress on inflation allowed the Fed to remain patient, reinforcing confidence that policy is no longer becoming more restrictive.
International equities continued to lead. Developed markets benefited from improving inflation trends and supportive currency dynamics, while emerging markets built on strong recent performance as a softer U.S. dollar and incremental policy support in parts of Asia sustained positive momentum.
Fixed income delivered steady but uneven results. Investment-grade bonds were constrained by rate volatility, while high yield remained supported by attractive income and generally healthy corporate balance sheets.
Stepping back, January was less about a change in direction and more about a widening opportunity set. As inflation cools and policy uncertainty eases, markets are increasingly rewarding diversification, valuation discipline, and underlying fundamentals rather than a narrow group of winners.

Silver’s recent one-day decline of 26% marks the worst daily move in modern data history, underscoring just how volatile the metal can be during periods of market stress or rapid position unwinds.
While extreme, the move fits a broader pattern seen across commodity markets, where leverage, crowded positioning, and shifting rate and growth expectations can drive sharp, sudden repricing rather than gradual adjustments.
The move serves as a reminder that real assets are not immune to drawdowns, reinforcing the importance of diversification, risk management, and maintaining a long-term focus amid short-term market shocks.

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