The Schwab Center for Financial Research (SCFR), which provides top-quality research, timely market insights and practical guidance for investors, today released its annual market outlook, Schwab Market Perspective: 2025 Outlook, which highlights the most important economic and market trends that investors should consider for the year ahead.

The Schwab Market Perspective: 2025 Outlook provides perspectives on U.S. stocks and the U.S. economy, fixed income, corporate bonds, municipal bonds, and a global outlook. SCFR also released its 2025 Planning and Wealth Management Outlook, which provides guidance on how to stay on track in 2025 to help reach your financial goals.

2025 U.S. Stocks and Economy Outlook

“There will likely be myriad economic crosscurrents at play in 2025, stemming from uncertainty around tariff, immigration, and tax policies. On the pro-growth side, the prospect of less-stringent regulations and lower taxes are at odds with the prospect of aggressive hikes in tariffs on imported goods and a major reduction in the labor force. For U.S. equities, the upside is that momentum and breadth are strong heading into the new year; but that doesn’t rule out more volatility at the index level, which we think is much more likely given the increased likelihood of stickier inflation and more wobbles in the labor market.”

Liz Ann Sonders, Chief Investment Strategist, and Kevin Gordon, Senior Investment Strategist, Charles Schwab & Co., Inc.

2025 Fixed Income Outlook

“It looks like another bumpy ride is in store for fixed income investors in 2025, with a wide range of potential outcomes. The bond market is caught between the Federal Reserve's plans to cut interest rates, and the risks to higher inflation and debt levels in 2025 from potential policy decisions made in Washington D.C. We are taking a cautious approach to duration and credit risk but recognize that periods of high volatility and rising yields can provide an opportunity for investors looking to capture more income over the long run.”

Kathy Jones, Chief Fixed Income Strategist, Charles Schwab & Co., Inc.

2025 Corporate Bond Outlook

“Our 2025 corporate bond outlook in a nutshell: Strong fundamentals, rich valuations. Like the resilient economy, corporations generally remain strong as profits grow and cash balances rise. That's been a key driver of the outperformance so far this year, as falling credit spreads have pulled up corporate bond prices relative to Treasuries. That performance will be tough to replicate because spreads are so tight, but we still have a favorable view on corporate bond investments given the strong economic backdrop.”

Collin Martin, Fixed Income Strategist, Charles Schwab & Co., Inc.

2025 Municipal Bond Outlook

“We expect the muni market to be characterized by a tale of two half-years in 2025. Changes to tax policy will likely dominate the first half of the year and then munis should adjust over the second half of the year. We're cautious about longer-term bonds and lower-rated issuers going into 2025. The outcome of the election has raised the probability that inflation and yields move higher. Credit conditions for most issuers are favorable and many issuers are entering 2025 with strong reserves that they can tap into if there's a slowdown in revenues.”

Cooper Howard, Fixed Income Strategist, Charles Schwab & Co., Inc.

2025 Global Outlook

“2025 may bring hurdles for stocks in the form of uncertain trade policy, tighter fiscal policy, and slower than average growth in the global economy and corporate earnings. All these may drive volatility. But improving growth, along with a rise in stock valuations, may support solid returns overall for international stocks in 2025, with differing opportunities by region.”

Jeffrey Kleintop, Chief Global Investment Strategist, Charles Schwab & Co., Inc.

2025 Planning and Wealth Management Outlook

“With a new administration in Washington that could bring changes to tax policy and influence some economic factors, 2025 will likely be a year of 'shifting gears' for investors. Perhaps that is a gradual shift, for example, in how investors plan for taxes and manage concerns about inflation. As a result, it’s our view that some investors may choose to make small adjustments to their wealth management plans in 2025, but in general, investors should keep in mind that the most effective plans take the long view.”

Rob Williams, Managing Director of Financial Planning, Retirement Income, and Wealth Management, Charles Schwab & Co., Inc.

Learn more about the Schwab Center for Financial Research’s 2025 Market Outlook here and 2025 Planning and Wealth Management Outlook here.

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Disclosures:

The information here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The type of securities and investment strategies mentioned may not be suitable for everyone. Each investor needs to review a security transaction for his or her own particular situation.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk, including loss of principal. International investments involve additional risks, which include differences in financial accounting standards, currency fluctuations, geopolitical risk, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks.

Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors. Lower rated securities are subject to greater credit risk, default risk, and liquidity risk.

Tax-exempt bonds are not necessarily a suitable investment for all persons. Information related to a security's tax-exempt status (federal and in-state) is obtained from third parties, and Charles Schwab & Co., Inc. does not guarantee its accuracy. Tax-exempt income may be subject to the Alternative Minimum Tax (AMT). Capital appreciation from bond funds and discounted bonds may be subject to state or local taxes. Capital gains are not exempt from federal income tax.

The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market.

Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

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Kaitlyn Campisi Charles Schwab 929-318-7957

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