At the opening ceremony of the 2025 World Economic Forum in Davos, Anne Walsh, the Chief Investment Officer of Guggenheim Partners, told foreign media that the Federal Reserve is expected to cut interest rates once per quarter this year, with an overall reduction of up to 75 basis points, and potentially as much as a full percentage point.
Walsh pointed out that although the rate of cuts might be slower than anticipated, the Federal Reserve will continue with this policy to address the pressures of an economic slowdown domestically. She noted that traders' expectations have changed in recent days, reducing the expected number of cuts from at least three times a month ago to just once this year, with the possibility of a second cut remaining uncertain.
In addition to forecasts on Federal Reserve monetary policy, Walsh also analyzed global economic trends, particularly concerning the strong position of the dollar and possible future policy changes. She emphasized that although the Trump administration may continue with tariff policies, tariff increases are not expected to exceed 10%, and these tariffs will be set according to different countries. This means the actual impact of tariffs could be relatively mild, especially in the context of global capital flow, with the dollar continuing to attract foreign investment as a reserve currency.
Walsh also predicted that after a bull market before 2022, the bond market has been in a trading range for three consecutive years, although its fluctuations still offer some appeal. She believes that if the 10-year U.S. Treasury yield reaches 5%, it would signal an oversold condition and a buying opportunity. She is also optimistic about U.S. equities, expecting that global positive trends, such as advances in artificial intelligence, energy, and the repatriation of manufacturing to the U.S., will drive the stock market up. By the end of 2025, the S&P 500's return could reach 8%-10%.
Although Walsh holds an optimistic view of future economic prospects, she also pointed out that there might be uncertainty between Trump's policies and those implemented by the new administration, and the extent of the U.S. economic slowdown could exceed current expectations. She stated, "The conflict between politics and policy could be as tumultuous as ping-pong, causing significant volatility in this year's investment themes."
