2025/01 Market Situational Awareness

January 2025 Market Snapshot: Equity Leadership Clarifies Under Tighter Policy Conditions

• Equity markets began the year with heightened dispersion as tighter policy expectations reshaped leadership. Risk assets were volatile, with investors rotating away from the most crowded growth exposures toward more balanced quality and value profiles. Performance patterns suggested markets were adjusting to a higher-for-longer rate environment rather than anticipating imminent policy relief.

• Rates and FX reinforced a disciplined macro backdrop. Treasury yields remained elevated and curves flat, reflecting persistent inflation sensitivity and constrained easing expectations. The U.S. dollar held firm, limiting international equity upside, while cross-asset correlations declined, signaling a more selective and factor-driven investment environment.