Monthly outlook
April 25, 2025
Vanguard has updated its forecasts for broad asset class returns through a March 31, 2025, running of the Vanguard Capital Markets Model® (VCMM). The probabilistic return assumptions depend on market conditions and change with each running over time. Forecast changes relative to the December 31, 2024, running of the VCMM are attributable both to market movements and enhancements to our model itself.
Changes related to our model enhancements include:
Among our forecast changes related to market movements in the first quarter, domestic equities in local currency terms were boosted by material valuation contractions in the U.S., Japan, Canada, and Australia.
A fuller discussion of our methodology enhancements, as well as our forecasts of annualized asset class returns and volatility levels over 10-year and 30-year horizons, is available on our economics and markets hub.
The anticipated impact of tariffs and related policy uncertainty led us recently to lower our forecast of economic growth and increase our forecasts for unemployment and inflation.
We now expect:
The Bank of Canada has paused its interest rate-cutting cycle, but we forecast a couple more rate cuts by year-end.
We expect:
The region faces economic challenges due to elevated tariffs and related uncertainty, which are likely to counteract the gains from German fiscal stimulus.
We expect:
The economy is facing challenging domestic forces, with core inflation falling more slowly than expected and the labor market deteriorating.
We expect:
An upward wage-price spiral leaves intact our view that the Bank of Japan will continue its gradual rate-hiking cycle, even amid elevated trade uncertainty.
We expect:
China's economy had a strong first quarter, but the global trade environment suggests challenges ahead.
We expect:
We have advanced our expectation for the timing of the next Reserve Bank of Australia rate cut, from the third quarter to May.
We expect:
Recent economic conditions in Mexico have been negatively affected by trade-related uncertainty, leading to an economic contraction in the fourth quarter of 2024.
We expect:
All investing is subject to risk, including the possible loss of the money you invest.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Investments in stocks and bonds issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.