​Throughout 2025, the US macroeconomic environment was characterised by a gradual normalisation following the post-inflation shock period of prior years. Inflation was largely brought under control, consistently hovering in a narrow 2-3% range - still above the Federal Reserve’s formal 2% target, but sufficiently contained to reduce its dominance in policy deliberations. As price pressures stabilised, the Fed progressively shifted its focus towards labour-market dynamics, with unemployment emerging as the marginal variable guiding monetary policy decisions. During the first half of the year, policymakers remained deliberately cautious, refraining from early rate cuts amid concerns that premature easing could reignite inflation, particularly given still-historically strong employment conditions, even as unemployment began to trend higher. This stance changed in the autumn and winter months, when a clearer softening in labour markets, combined with inflation remaining at tolerable levels, provided the Fed with sufficient confidence to pivot. Over this period, the central bank implemented three 25 basis-point rate cuts, signalling a controlled transition towards a more accommodative stance while maintaining credibility on inflation containment.

​US inflation has oscillated between roughly 3.5% and 2% since the beginning of 2025, reflecting a push-and-pull between easing goods inflation, slower shelter disinflation, and still-resilient services driven by wage growth and consumption, while energy and food prices added intermittent volatility rather than a sustained trend. Looking ahead, we expect headline inflation to average around 2.5% through 2025, with downside risks toward 1.5% if goods deflation accelerates and shelter inflation cools faster than expected, and upside risks toward 4% should wage pressures, energy prices, or renewed supply-side disruptions re-emerge. The labour market has begun to soften, with unemployment gradually rising but still remaining low by historical standards, signalling cooling rather than distress; we anticipate a further modest uptick before a stabilisation and subsequent decline into the 2026 midterm election cycle as policy easing and fiscal dynamics support activity. On monetary policy, the Federal Reserve delivered rate cuts across 2024 and 2025, bringing the policy rate to around 3.75%, though the easing cycle was notably delayed as policymakers prioritised confidence that inflation pressures were durably contained. Despite a more hawkish tone in recent communications, we expect up to three additional cuts in 2026 as growth moderates and inflation converges toward target, a year that will also be institutionally significant given that the leadership decision regarding Jerome Powell’s succession is scheduled for 2026, potentially shaping the medium-term policy outlook. Figure 1 summarizes the recent developments and expectations for 2026.

​The hedge fund industry has entered a period of renewed strength, supported by a powerful combination of rising assets, substantial inflows and solid performance across several core strategies. Global industry assets have climbed to almost five trillion dollars by the third quarter of 2025 according to HFR, marking the eighth consecutive quarterly increase and the strongest accumulation of capital since before the global financial crisis. Inflows have been driven by a clear shift in allocator behaviour. Investors have been repositioning portfolios to cope with conflicting macro signals, ranging from uneven global growth and persistent policy divergence between major central banks to elevated bond market volatility and ongoing geopolitical tensions. With the traditional balance between equities and bonds failing to provide reliable protection in this environment, institutions have been turning to hedge funds as a source of active risk management and diversification.

​Gold has risen sharply in recent weeks, climbing past $4,000 per ounce and gaining more than 50% since the start of the year, as shown in Figure 1. The rally accelerated after September as investors reacted to a mix of geopolitical and macroeconomic developments. Prices surged as tensions in the Middle East intensified, driving safe-haven demand, but gold briefly lost momentum once a peace deal was reached, reducing immediate global uncertainty. However, expectations of imminent interest rate cuts and renewed tensions between the United States and China over rare earth minerals and retaliatory tariffs quickly offset that effect. Strong central bank purchases, continued ETF inflows, and a softer dollar have added further support, pushing gold to record levels and making it one of the top-performing assets of 2025 so far.