Money market rates peaked in early 2024, as cooling inflation prompted central banks to lower short-term interest rates. Inflation is expected to decline through mid year, easing rates, though are boundin emerging market inflation, especially in South Africa, may limit the extent of rate cuts.

South African capital markets rallied on election-year optimism following the formation of the 'GNU', creating favourable bond investing conditions amid subdued inflation. Equities recovered after years of under performance, but 2025 will be a true test for the new administration. South Africa faces mounting challenges, with municipal finances and water services nearing crisis levels.

This is likely to require a government intervention. However, signs of improvement emerge as Eskom stabilises power supply, fuel prices remain steady and rate relief bolsters consumer. In the US, equities remain strong, supported by robust corporate earnings and consumption.

While the market reassesses "tech" stock valuations after the AI rally, earnings growth suggests positive returns ahead.