Daniel Schoeman

As we entered 2025, we anticipated heightened policy uncertainty. However, few could have predicted the sheer scale and intensity of political developments emanating from the White House – and we are only three months into the year.

Despite the persistent political noise, our focus remains firmly on the fundamental drivers that have historically shaped financial markets and will continue to do so.

At its most recent meeting, the Federal Reserve opted to hold short-term interest rates steady. Market expectations currently point to two or three rate cuts over the next 12 months, driven by concerns over a potential US recession. However, we believe these fears may be overstated. Instead, we expect the impact of tariffs to keep US inflation elevated in the near term, likely compelling the Fed to maintain its current stance on interest rates for longer than the market anticipates.

From a valuation perspective, the US equity market remains expensive, even after the first quarter correction in the S&P 500. Opportunities are more compelling in select international equity markets, particularly outside the US. We are closely monitoring earnings expectations across various markets for any signs of deterioration, which could prompt a more cautious positioning within our model portfolios. Additionally, we continue to identify selective opportunities in both the South African equity and bond markets.