The Top Three Global Macro Themes for 2025: Insights from StoneX Analysts

The Top Three Global Macro Themes for 2025: Insights from StoneX Analysts

Talking Points:

• Natural Resources Day 3.0 hosted in New York City hosted a number of analysts from StoneX and other
• At the Macroeconomic Outlook and Panel Discussion, the conversation covered a wide range of important topics for 2025
• Top themes seemed to center on monetary policy, trade relations and fiscal policies amid shifting political winds

At Natural Resources Day 3.0 in New York City, leading StoneX analysts gathered for the Macroeconomic Outlook Panel Discussion and offered their unique perspectives on the key macroeconomic themes shaping 2025. The discussion included insights from Kathryn Rooney Vera, Chief Market Strategist; Vincent Deluard, Director of Global Macro Strategy; and Jon Hilsenrath, Senior Advisor.

During the panel, the analysts explored three critical themes: US monetary policy, trade relations, and fiscal health. While inflation, tariffs, and government spending was the conversation, the experts offered different perspectives on what lies ahead for 2025.

US Monetary Policy and the Fed’s Next Moves

Kathryn Rooney Vera: The Risk is of Overheating, Not Recession

During the panel, Kathryn Rooney Vera emphasized that the biggest risk for the US economy is not a recession. She argues that persistent fiscal stimulus and a strong labor market will keep inflationary pressures elevated for the foreseeable future, making aggressive Federal Reserve rate cuts unlikely at this stage.

“The risk, in my view, is for overheating rather than a recession,” Rooney Vera explained. “Unless we see a significant deterioration of the labor market—meaning unemployment rising above 5%--I don’t see the Fed aggressively cutting rates. At most, we could see two cuts, but the risk is that they don’t cut at all.”

Rooney Vera argued that Trump-era policies, including extensive tax cuts and aggressive fiscal spending, will amplify inflationary risks that discretionary spending cannot easily offset. The rise in mortgage rates and 10-year yields has made credit more expensive, dampening consumer spending and raising concerns about long-term economic stability. Rooney Vera warned that if these fiscal policies remain unchecked and are further complicated by increased tariffs, the Federal Reserve could resume interest rate hikes, especially if inflationary pressures mount toward the end of 2025.

Vincent Deluard: The Market Is Too Complacent About Rate Cuts

Vincent Deluard challenges the market’s expectation that the Fed will return to easy money policies in 2025. Deluard argues that the markets are too confident in the narrative of “American exceptionalism” and are underestimating the structural risks that will keep interest rates higher for longer. He believes that many believe the US can “do no wrong.”

“People who feared a recession in 2022 and 2023 weren’t wrong—they were just early,” says Deluard.

He denies that we are heading into a traditional recession however, and instead warns that the risks of stagflation are more relevant heading into 2025 and 2026.

Jon Hilsenrath: US Productivity Gains are a Deflationary Force

Jon Hilsenrath offers a more optimistic take, pointing out that the US has entered a “mini productivity boom” that has been driving inflation lower than expected. He highlights that rising US labor productivity has offset price shocks and supported economic growth.

“We went through the shock of work-from-home, supply disruptions, and COVID, and US labor productivity accelerated—that’s something that is pulling inflation down,” Hilsenrath explains.

He also notes the transformative power of AI. “Layered on top of all this conflict is the technological revolution in AI. There’s a lot of energy that needs to be produced to power AI and manage data.”

He cautions, however, that higher interest rates could still be necessary if inflationary pressures resurge due to fiscal policies.

 

Trade Relations: Are Tariffs a Negotiating Tactic or Long-term Strategy?

Kathryn Rooney Vera: Trump 2.0

Rooney Vera views Trump’s potential tariff policies as a major source of market uncertainty, particularly regarding the US-China relationship. She recalls “Trump 1.0” – Trump’s first term in office - where China trade tensions dominated the scene, but notes that there has been silence now from Trump regarding China and a focus instead on Greenland, the Panama Canal, and even Canada. She asked the panel if tariffs are merely a negotiating tactic, or whether they are a viable long-term strategy for “Trump. 2.0”.

Rooney Vera’s argument ties directly into American exceptionalism. Is the US assuming it can weaponize tariffs without meaningful repercussions? If tariffs against foreign countries escalate, could they fuel inflation, disrupt supply chains and trigger retaliation?

Vincent Deluard: The Shift Toward Protectionism and US Imperialism in Trade

Deluard argues that tariffs are not just a strategic plot for negotiations, but also a viable fiscal measure for raising government revenue. He believes that tariffs can cause price-level shocks but do not necessarily result in sustained inflation. However, he points out that they introduce economic frictions, creating inefficiencies in trade.

Retaliation risks from trade partners further complicate these global trade dynamics; Deluard noted the US’s imperialistic approach to global trade, linking it to broader discussions of American exceptionalism. He also criticized Trump’s behavior as a bully with respect to his allies. This behavior has alienated key allies, including Canada, France, South Korea and Japan.

Jon Hilsenrath: Rejection of the Post-WWII Global Order

Jon believes that the market is underestimating the risks of tariffs, because they are viewed as a negotiating tactic. He says, the risk of tariffs across the board is very real. In his view, Trump believes in them and wants to be the McKinley president with tariffs as a useful tool in an adversarial role and a source of revenue for the government.

Hilsenrath provides historical context—the current global economic system was built on free trade and international cooperation after World War II. Jon highlighted how this system is now being rejected by Trump. Despite these challenges, global trade still remains near record highs, and many US trade flows have simply rerouted from China to countries like Mexico and Vietnam.

Trump choosing to reject the current global trade order, however, comes at a cost. Americans have long benefited from and depended on access to cheap goods from countries like China. “Anyone who suggests this reordering is costless is selling you a $3 bill,” Jon warns.

 

Fiscal Health: Debt, Deficits, and Inflation Risks

Kathryn Rooney Vera: In Defense of American Exceptionalism

Rooney Vera argued that the US dollar remains strong, tariffs are dollar-positive, and American economic dominance will continue despite rising debt and deficits. She sees US resilience as a testament to American exceptionalism, which has enabled the country to weather crisis after crisis that might have crippled other economies.

“The dollar is strong, and US economic growth surpasses all its counterparts,” Rooney Vera said. US corporate profits are at record highs, and while unemployment is softening, economic growth remains robust. She argued that the Federal Reserve is unlikely to drastically reduce rates, which keeps the US attractive compared to global counterparts. Furthermore, she believes inflation is unlikely to continue its deceleration trend, reinforcing the Fed’s commitment to keeping rates on the higher side. She estimates that the current trends in growth, dollar strength and Treasury inflows are unlikely to shift unless a significant “detonator” disrupts the status quo.

Vincent Deluard: Risks to US Fiscal Sustainability

Deluard takes a more skeptical view of the U.S. fiscal trajectory, and argues that markets are underestimating the long-term consequences of excessive government spending and deficits. And while the US economy has defied expectations with strong growth and an extremely resilient labor market, he warned that the economic expansion of the last two years, fueled by large deficits, is unsustainable.

Deluard further argues that this unsustainable growth is closely tied to the U.S.'s reliance on global savings to fund its deficits. Historically, global savings have flowed into U.S. credit markets, helping to lower long-term interest rates and support government borrowing. However, since 2014, much of this capital has shifted into U.S. equities, particularly the dominant "Magnificent Seven" tech stocks. Deluard warns that protectionist policies or retaliatory measures by foreign nations could disrupt this dynamic, leading to reduced capital inflows, higher borrowing costs, and greater pressure on the U.S.'s fiscal position.

Jon Hilsenrath: Fiscal Burdens and Market Risks

Regarding fiscal health, Hilsenrath critically examines the Trump administration’s challenges. He identifies the $4.5 trillion cost of extending tax cuts over a decade, emphasizing the difficulty of offsetting such a significant fiscal burden. With key programs like Medicare and Social Security largely untouchable, Hilsenrath notes that there is a lack of flexibility in reducing spending to offset these deficits, which is why tariffs seem like a likely option for the Trump administration to pursue.

Jon also expresses some skepticism about the bond market’s tolerance for prolonged fiscal indiscipline—excessive deficits and debt levels could lead to higher borrowing costs or future market disruptions.

 

Fiscal Health: Debt, Deficits, and Inflation Risks

Interested in attending a StoneX event or webinar with industry experts and analysts alongside your peers? Check the events calendar on StoneX.com and filter for your interests, location or language to find an event that interests you.

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---Written by: Anne Lamedica

---Experts: Kathryn Rooney Vera, Chief Market Strategist; Vincent Deluard, Director of Global Macro Strategy; Jon Hilsenrath, Senior Advisor