2025 Recap and Planning Considerations

2025 has undoubtedly been an exciting ride for global financial markets. In this commentary, let’s take a look back at the standout trends, events, and market movements that have shaped the year so far. We’ll also highlight just how much the markets have fluctuated and share some practical, friendly year-end tax planning tips to help you make the most of your investments.

Equity Markets

Stock markets around the world kept climbing in 2025, but not without their fair share of ups and downs. For instance, the S&P 500 danced within an 18% range year-to-date, with some impressive rallies in the first half and a few pullbacks as monetary policy and global news changed course. European markets saw similar swings, with the VIX—the so-called "fear index"—popping above 20 during more uncertain weeks. In Japan, stocks bounced within a 15% band, driven by currency moves and central bank updates, while Chinese equities fluctuated up to 22% amid shifting economic and regulatory conditions.

Fixed Income

Bonds were a bit calmer but still had their moments. U.S. Treasury yields moved between 3.8% and about 4.5% as investors debated where interest rates might land. Most credit spreads stayed tight, signaling ongoing investor confidence, though commercial real estate saw spreads widen by as much as 25 basis points during rough patches. While not as bumpy as stocks, the bond market was still more lively than in calmer years past.

Currency Markets

The currency arena saw its own shakeups. The U.S. dollar index ranged from 98 to 107—about a 9% swing—reflecting changing economic tides. The euro moved within a 6% range, and the Japanese yen even lost more than 10% at times. Emerging market currencies were all over the map, with some climbing or dropping as much as 15% depending on commodities and capital flows.

Commodities

Commodities weren’t left out of the action. Oil prices hopped between $68 and $92 per barrel—a swing of around 35%. Gold glittered between $1,890 and $2,250 per ounce (about 19%), and industrial and agricultural commodities had their own dramatic ranges of 12–30% as weather and global demand shifted throughout the year.

Key Themes

• Central Bank Policy: Central banks moved from tightening to neutral or even easing, which kept both stocks and bonds on their toes and added to market ups and downs.
• Geopolitical Developments: International events and trade talks caused occasional volatility spikes, especially during big announcements or sudden changes.
• Technology and Innovation: Sectors focused on AI, green tech, and digital infrastructure led the way, especially in the U.S. and Asia, contributing to some of the year’s biggest market moves.
• Inflation and Growth: Inflation cooled in most major economies, boosting consumer spirits, though some sectors still felt price pressures that created uneven results and market swings.

Year-End Tax Planning Tips

• Harvest Tax Losses: If you have investments that didn’t perform as hoped, consider selling them to offset gains made elsewhere in your portfolio.
• Maximize Retirement Contributions: Make sure you’ve added as much as possible to your retirement plans (like 401(k)s or IRAs)—these contributions can lower your taxable income.
• Consider Charitable Giving: Charitable donations before year-end can reduce your tax bill. If you donate appreciated assets directly, the tax benefits can be even greater.
• Review Required Minimum Distributions (RMDs): If you’re at the age where these are required, double-check that you’ve taken them by December 31 to avoid penalties.
• Assess Tax Brackets and Timing: If your income can vary, think about whether to defer income or accelerate deductions to land in the most favorable tax bracket this year.
• Check Flexible Spending Accounts (FSAs): Use up any FSA balances by year-end, since unused amounts may not carry over.
• Review Estate and Gift Planning: Make annual tax-free gifts or update your estate plan if there have been changes in tax rules or your family’s situation.

As we approach the close of 2025, remember that a little planning and awareness can go a long way.  By understanding how the markets have moved and tuning up your tax strategy, you’ll be in a strong position to make the most of what’s ahead. Here’s to a successful year-end and a bright start to 2026!  

Unitl Next Time,

Darin & Greg