T. Rowe Price: Midyear Investment Outlook 2025

In a world grappling with deglobalization and shifting trade dynamics, careful navigation of market opportunities and risks is paramount for investors.

BALTIMORE, June 9, 2025 – T. Rowe Price, a titan in the global investment management arena and a well-regarded name in retirement planning, has just unveiled its midyear outlook for the remainder of 2025. The report paints a picture of a financial landscape rapidly evolving, largely shaped by the accelerated trend of deglobalization, a tariff-driven reshuffling of international trade, and a potential shift in the stock market, looking beyond the confines of U.S. equities and the tech giants. This is all punctuated by a bond market regime change, influenced by evolving trade policies and fiscal moves in Germany.

The 2025 Midyear Market Outlook provides crucial insights:

Economics: The global economy is facing headwinds from various angles. Potential trade wars could stall global growth. U.S. fiscal and tax policies are predicted to take center stage in the latter half of the year, leading to possible rising business costs and reduced consumer spending.
Equities: Expect equity markets to become more diverse as they move beyond the concentration of the U.S. market and mega-cap stocks. The focus is predicted to shift towards value stocks and select emerging markets.
Fixed income: A fundamental shift is occurring in the global fixed income landscape, manifested in above-target inflation in developed markets, particularly in the U.S.. Corporate bonds may be approaching an economic downturn and are positioned defensively due to their high credit quality.
Multi-asset: T. Rowe Price’s multi-asset portfolios will be re-emphasizing inflation protection and equity diversification. Inflation-protected bonds and real assets offer an effective shield against expected inflation. Simultaneously, international and value equities are becoming more attractive, as suggested by their valuations, which will inform asset allocation decisions.

In this evolving market environment, with higher interest rates, greater market volatility, and increased policy uncertainty, the stage is set for active managers to potentially outperform.

EXCERPTS FROM THE REPORT

Blerina Uruçi, chief U.S. economist

“The U.S. administration’s tariffs – coupled with any retaliatory actions from its trade partners – will introduce a supply shock for the U.S. and a demand shock for the rest of the world, including China and Europe. The scale of these shocks hinges on the ongoing trade talks and legal challenges, but it seems likely that the world’s two largest economies, the U.S. and China, will experience lower economic growth than initially projected. These ramifications will be felt globally, notwithstanding individual trade agreements.”

Josh Nelson, head of Global Equity

“The path to an expanded opportunity set in stock markets was already clear before last year’s U.S. presidential election; the subsequent trade policies have simply expedited the process. We foresee an increase in investable stocks both in the U.S. and internationally. We anticipate a return to an investment climate where multiple sectors and regions have the potential to yield significant returns – a scenario that demands diversification and favors active management. Further broadening of equity market leadership will likely benefit value stocks and specific emerging markets.”

Ken Orchard, head of International Fixed Income

“The U.S. administration’s tariffs and the extensive German fiscal expansion have upended historical norms and reshaped the global fixed income landscape. This is reflected in a more pessimistic outlook for developed market sovereign bonds and a brighter one for credit and certain emerging markets. The chances of a global recession, potentially led by the U.S., have also risen. However, the scenario that may unfold, especially in the U.S., may not be a classic recession, but a prolonged period of subdued growth, characterized by both higher unemployment and persistent inflation.”

Tim Murray, Capital Markets strategist

“In times of significant geopolitical flux, we tend to rely more heavily on asset class valuations when making portfolio decisions. Despite the recent selling pressure on growth stocks and the relative outperformance of value in early 2025, value stocks still appear more attractive than growth stocks moving forward. In a typical economic downturn or a recession, we expect U.S. equities to perform relatively better than international stocks. However, the underlying dynamics of this year’s slowdown may be different, prompting us to lean modestly towards non-U.S. shares.”

ABOUT T. ROWE PRICE

Established in 1937, T. Rowe Price (NASDAQ: TROW) is a global powerhouse with a mission to help people worldwide achieve their long-term investment objectives. As a significant player in global asset management, known for its investment excellence, retirement leadership, and independent proprietary research, the firm has built a culture firmly rooted in integrity and a commitment to prioritizing client interests. Investors depend on T. Rowe Price’s expertise in retirement planning and its active management approach across equities, fixed income, alternatives, and multi-asset investment strategies. As of April 30, 2025, T. Rowe Price manages USD $1.56 trillion in assets under management and serves millions of clients worldwide. Stay informed on the latest updates via Facebook, Instagram, LinkedIn, X, YouTube, and troweprice.com/newsroom.

IMPORTANT INFORMATION

This material is furnished for general informational and/or marketing purposes only. The material does not provide or constitute advice of any kind, including fiduciary investment advice, nor is it intended as the primary base for making investment decisions. Investors are advised to seek independent legal, financial, and tax advice before making any investment decisions. T. Rowe Price group of companies, including T. Rowe Price Associates, Inc., and/or its affiliates, generates revenue from T. Rowe Price investment products and services. Past performance is not indicative of future results. The value of an investment and the income from it can fluctuate, potentially leading to losses. Investors may not recover the full amount of their investment.

T. Rowe Price Investment Services, Inc., distributor. T. Rowe Price Associates, Inc., investment adviser. T. Rowe Price Associates, Inc., and T. Rowe Price Investment Services, Inc., are affiliated companies.

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