LPL Financial releases midyear outlook predicting economic slowdown

LPL Financial LLC (NASDAQ: LPLA) released its Midyear Outlook 2025 report on Tuesday, forecasting economic challenges in the second half of the year driven by trade policy effects and Federal Reserve positioning.

The report anticipates that delayed impacts from trade policy will slow economic growth, reduce labor demand, and push inflation higher during the remainder of 2025. These conditions are expected to keep the Federal Reserve in a cautious stance on monetary policy for an extended period.

"The base-case view is an economy that will begin to show more definitive adverse effects from trade policy with slower labor demand, weaker growth and an uptick in inflation," said Marc Zabicki, Chief Investment Officer at LPL Financial.

The outlook identifies several key factors affecting markets in the second half of 2025. Debt concerns, trade uncertainty, and Federal Reserve caution are projected to keep Treasury yields range-bound. The report suggests that declining cash yields will make bonds increasingly attractive as the Fed eventually begins cutting short-term rates.

For equity markets, the report indicates that gains may be modest given current valuations already reflect positive expectations. The stock market outlook will depend on trade negotiations, artificial intelligence developments, interest rate changes, and tax policy decisions.

The report recommends tactical portfolio management that balances risk management with emerging opportunities. It suggests diversifying across asset classes, regions, and alternative investments to enhance portfolio resilience during expected market volatility.

Zabicki noted that policy-driven uncertainty may have peaked, suggesting that stability could gradually return and create new investment opportunities. The report emphasizes the need for investors to balance risk mitigation with positioning for long-term growth opportunities.

LPL Financial supports over 29,000 financial advisors and approximately 1,200 financial institutions, managing approximately $1.8 trillion in brokerage and advisory assets for about 7 million Americans.

You May Also Be Interested In

• Musalem: strong growth and investment influencing bond market - CNBC
• Richardson Electronics to deliver 18 battery storage systems in Alaska
• BJ's Wholesale Club (BJ) call put ratio 1.3 calls to 1 put into quarter results