Tactical Investment Strategy — January 2025

January 21, 2025 — Tactical Investment Strategy provides an overview of key economic and policy themes and how Sage is tactically positioned in the current market environment.

Key Takeaways

• Solid data supported risk markets during the fourth quarter but prompted a significant repricing of Fed cutting expectations, pushing yields higher across the curve. The result was negative global equity returns, gains for US equities, and losses for bonds.
• On the surface, macro conditions and confidence appear supportive into 2025, suggesting the table is set for another decent year across major asset classes. We believe this upside potential comes with greater uncertainty and hurdles, most prominently valuations and policy risk.
• This should translate into more modest returns in equities. Higher yields provide a better setup for fixed income, even if rate volatility persists, and yield carry will help cushion returns and provides a nice base to start with.