Investing.com -- UBS sees a mixed outlook for financial markets in 2025 as investors grapple with uncertainty over the economic policies of a second Trump administration. Key questions center on whether the approach will lean more populist MAGA or fiscally conservative DOGE, with significant implications for markets and the broader economy.
MAGA policies, characterized by tariffs, deregulation, and deficit expansion, could benefit labor but strain capital. While, DOGE-leaning measures, focusing on deficit reduction and private sector-driven growth, may offer a more constructive investment environment.
UBS predicts a tilt toward DOGE, citing Trump’s history of supporting markets and curbing excessive reflationary policies.
However, intra-party divisions and fiscal policy debates, including upcoming budget and debt ceiling negotiations, add to the uncertainty. Markets are likely to experience volatility and remain range-bound until policy clarity emerges.
UBS expects 2025 to feature solid U.S. GDP growth, gradual disinflation, and further Federal Reserve rate cuts, which should ultimately support equities and bonds. While near-term uncertainty may keep markets on edge, UBS believes Trump 2.0 policies are more likely to benefit financial markets in the long run.