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Q4 2024 MARKET & ECONOMIC UPDATE

February 3, 2025 - Here are five key takeaways from our fourth-quarter market update:

  1. CAPITAL MARKETS: HighGround's Capstone Fund posted positive returns and exceeded its benchmark for the year.
    • Global capital markets advanced for the second consecutive year, driven by falling short-term rates, a resilient U.S. economy and sustained enthusiasm for rapid advancements in artificial intelligence (AI).
    • In a sharp reversal from the third quarter, the U.S. dollar strengthened considerably during the fourth quarter, rising 7.7% (ICE U.S. Dollar Index). This surge was fueled by rising interest rate differentials, a robust economic outlook and anticipation of higher tariffs. For the year, the dollar rose 7.1% with strong gains against the euro (+6.3%), the yen (+10.3%) and most other currencies.

  2. U.S. ECONOMIC GROWTH:  U.S. economic growth remained robust in 2024, supported by strong consumer spending and a stable labor market, with fourth-quarter GDP growing at an annualized rate of 2.3%. However, forward-looking indicators suggest potential challenges to economic growth in 2025. Key risks include slowing manufacturing activity, the trajectory of Federal Reserve monetary policy, rising long-term yields, the implementation of the new Administration’s policy agenda, and shifting geopolitical tensions.

  3. U.S. INFLATION: Headline U.S. inflation, as measured by the Consumer Price Index (CPI), ended the year at 2.9% year-over-year. Shelter (rent) remains the largest contributor, increasing 4.6% for the year, but is showing signs of deceleration. Other notable increases in 2024 included motor vehicle insurance (+11.3%) and medical care (+2.8%).

  4. U.S. LABOR MARKET: The U.S. labor market remained healthy, with the national unemployment rate ending the year at 4.1% as the economy added 2.2 million jobs in 2024.

  5. GLOBAL ECONOMIC GROWTH: Globally, a significant divergence persisted between economic growth rates in the U.S. versus the rest of the world, as growth weakened in Europe, Japan and China due to heightened geopolitical tensions and a slowdown in manufacturing and consumer spending.


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