A lot can happen in a year. Inflation remained a hot topic as the Federal Reserve cautiously ended the longest pause after a rate hiking cycle in the Fed's history by cutting rates in September, the economy proved resilient, and equities delivered a strong performance.

Given how these moments (and others) shaped the current environment, we believe that the margin for error in financial markets is slim in 2025. With equities largely priced to perfection, discretion will be of paramount importance in pursuing opportunities, but also managing risk.

The ball hasn’t dropped yet, so before we put the year in the rearview mirror and move into 2025, let’s pause for a moment and look back at 12 charts—one for each month—that defined 2024.

1 / 12

Inflation has been a dominant factor in global markets for several years now. Its rise brought about an aggressive hiking cycle and its trajectory from here will help determine the scale of the easing cycle we see both domestically and abroad.

2 / 12

Unemployment has been ticking higher in the US. So much so, that in the back half of the year, the Federal Reserve pivoted toward focusing on the employment side of its dual mandate.

3 / 12

While the rise in the unemployment rate is concerning, the message from initial claims continues to be far more sanguine.

4 / 12

Despite inflation still running above its target level, softness in the labor market and a downward trajectory in inflation gave the Federal Reserve enough reason and confidence to cut its policy rate after the longest pause in the institution’s history.

5 / 12

As financial markets digested incoming developments ranging from inflation to growth to fiscal policy, Treasury yields reflected investors’ uncertainties.

6 / 12

Traditionally thought of as one of the strongest indicators of impending economic weakness, the 10-2 yield curve un-inverted this year for the first time since 2022.

7 / 12

While not quite a wrecking ball, the US dollar did strengthen throughout the course of the year, providing a headwind to foreign equity returns and commodities.

8 / 12

Despite the backup in yields and the strength of the dollar, gold delivered strong returns.

9 / 12

US equity markets continued their strong run of outperformance versus the rest of the world.

10 / 12

The S&P 500 crossed 6,000 for the first time in history as it continued to press higher throughout much of the year, consistently making new highs.

11 / 12

Valuations look stretched, and counting on multiple expansion from these levels may well prove to be problematic.

12 / 12

On a cyclically adjusted basis, valuations have reached levels that typically see lower-than-normal long-term forward returns.

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