1、We expect the second Trump admi ni strati on to bri ng hi gher Chi na and autontari ffs,much lower i mmi grati on,some fresh tax cuts,and regulatory easi ng.I fso,the US economy should grow 2.5%i n 2025,outperformi ng consensusexpectati ons and other DM economi es for the thi rd year i n a row.The b

2、i ggestri sk i s a large across-the-board tari ff,whi ch would li kely hi t growth hard.We have cut our Euro area GDP forecast to a below-consensus 0.8%,reflecti ngnongoi ng structural headwi nds and a hi t from trade poli cy uncertai nty.We havealso shaved our 2025 Chi na GDP forecast to 4.5%becaus

3、e of hi gher US tari ffsthat are only parti ally offset by easi er macro poli ci es.Ri sks i n both Europe andChi na are on the downsi de i f tari ffs i ncrease beyond our baseli ne.US core PCE i nflati on should slow to 2.4%by late 2025,hi gher than our pri ornforecast of 2.0%but sti ll beni gn.Our

4、 forecast would ri se to around 3%wi th anacross-the-board tari ff of 10%.I n the Euro area,we expect core i nflati on to slowto 2%by late 2025 and are less concerned about upsi de ri sks even wi th abroader trade war.Lowflati on ri sks have abated i n Japan.We expect si gni ficant further rate cuts

5、 over the next year.The Fed i s li kely to cutnto 3.25-3.5%,wi th sequenti al moves through Q1 and a slowdown thereafter.We have shaved our ECB forecast to 1.75%on the back of our growthdowngrade and also see si gni ficant room for poli cy easi ng i n EMs.However,weexpect the Bank of Japan to li ft

6、i ts poli cy rate to 0.75%by yearend.Our baseli ne forecast i mpli es a beni gn ri sk backdrop and US outperformance.nWe expect modest posi ti ve returns across equi ti es,commodi ti es,and DMbonds,alongsi de gradual USD appreci ati on.But markets have already moved along way i n a ri sk-posi ti ve