Trust Investment Management
Looking back on 2025, markets spent the year moving away from high inflation and rapidly rising interest rates toward a more stable environment. Inflation eased, interest rates declined, and economic growth remained steady. This improvement in the backdrop helped support stronger market performance as the year progressed.
Inflation and Federal Reserve policy played a central role throughout 2025. Early in the year, uncertainty about how long rates would remain elevated contributed to volatility. As inflation continued to ease, the Fed shifted toward a more supportive stance, and interest rates moved lower over the course of the year. That shift helped reduce uncertainty and supported stronger market confidence, particularly in the second half. Looking ahead, markets generally expect rates to continue trending lower in 2026, though at a gradual pace rather than a return to the unusually low levels of the past decade.
Equity markets delivered solid returns in 2025 supported by improving inflation trends, steady economic data, and resilient corporate earnings. While markets moved higher in the fourth quarter, gains were more selective. Investors increasingly favored companies with clear business models, consistent cash flows, and strong balance sheets. Valuations in some areas of the market remain elevated, so future gains may depend more on how companies perform than on broad market momentum.
Artificial intelligence continued to be an important theme throughout the year. While excitement around AI remained high, investors became more discerning by late 2025, focusing on which companies could turn innovation into real, sustainable profits. Over time, AI is likely to influence productivity and business growth, but its investment impact is expected to develop gradually rather than all at once.
As we enter 2026, markets face a more demanding environment. Inflation has moderated and interest rates are trending lower, but valuations in many areas of the market remain elevated after several years of strong returns. Periods of sustained gains such as we have experienced are relatively uncommon, which suggests that future returns may be more uneven and driven more by company fundamentals than by broad market momentum. In this setting, diversification, realistic expectations, and a disciplined investment approach remain especially important.
We want to sincerely thank you for the trust you place in us. We understand that investing is about more than markets; it is about confidence, partnership, and long-term goals. Your relationship is deeply valued, and we remain committed to working with you and guiding you through changing markets with care and perspective.
