From Policy Shifts to Credit Risks: What Lies Ahead in 2025

2025 begins amid heightened global uncertainty, with the incoming Trump administration poised to drive market volatility and reshape economic policies. Key questions remain about the effectiveness of US fiscal discipline and the implications for bond yields and asset markets. Diverging global trends—rising bond yields in the US versus declining yields in China—highlight the complexity of the current environment.

Meanwhile, Australia faces unique challenges, from refinancing pressures in corporate credit to emerging issues in private credit, exacerbated by rising delinquencies and a restrictive interest rate environment. Investors must exercise caution, recognising the risks hidden beneath promises of high returns in private credit markets.

As central banks, including the RBA, are expected to cut rates to combat slowing growth and moderating inflation, portfolio diversification will be essential. With policy uncertainty at unprecedented levels, adaptability will be crucial for navigating the surprises that 2025 is sure to deliver. https://lnkd.in/g6RkWFQz