Key Highlights for Third Quarter 2025
- Global equities advanced in Q3 as investors looked past peak tariff uncertainty, focusing on resilient economic activity and earnings growth, ongoing artificial intelligence developments, and a resumption of Federal Reserve rate cuts. These factors contributed to outperformance by emerging markets—particularly within the Asia region—and small caps.
- US Treasury yields declined, as an ostensibly abrupt softening in the US labor market catalyzed the Fed to ease policy. However, non-US sovereign yields generally increased on concerns over rising debt levels. Globally, corporate credit spreads tightened further to near historical lows.
- The US dollar appreciated; however, gains were concentrated in July when the United States inked trade deals with major partners. The greenback subsequently lost momentum due to expectations for Fed rate cuts, escalating pressure to Fed independence, and a looming US government shutdown.
- Real assets were led by gold, which continued its ascent to fresh all-time highs. The yellow metal’s gains over the trailing 12 months have been among the strongest in the past five decades.