Unveiling 2025’s market surprises: Insights from Jurrien Timmer - October 27, 2025
Fidelity’s Director of Global Macro, Jurrien Timmer, shared his insights on the evolving investment landscape of 2025, highlighting surprising sector performances, global diversification, strong earnings momentum, liquidity dynamics and the Federal Reserve’s policy outlook.
Here are some of the key points from his commentary.
Unexpected sector leaders and market breadth
2025 has seen surprising leaders in the equity space. Gold miners and Bitcoin-sensitive equities have topped performance charts, reflecting investor interest in hard assets. Utilities, typically seen as bond proxies, have also performed strongly (some driven by nuclear and AI-related themes). Other notable performers include meme stocks, non-profitable tech, retail favorites and European banks.
Despite the dominance of the MAG7 tech giants, Jurrien highlighted the emergence of a broader market story. While some sectors like REITs, energy and pharmaceuticals have lagged, the diversity of outperforming assets suggests a healthy dispersion of market leadership.
Global bull market and international resilience
Jurrien emphasized the global nature of the current bull market. Non-U.S. developed and emerging markets are holding their own, with international stocks showing strength despite the concentrated gains in the S&P 500. European banks, for example, have rebounded from deep undervaluation through strategic buybacks and balance sheet improvements.
He noted that global liquidity and a weaker dollar have helped unlock value in international markets, with companies becoming more adept at delivering shareholder returns (even without high earnings growth).
Earnings strength and margin divergence
Earnings season has been robust. Of the 150 companies that have reported so far, 85% have beaten estimates by an average of 8 percentage points. However, Jurrien pointed out a divergence in operating margins: large-cap companies are seeing margin expansion (15–16%), while mid and small caps remain stagnant (5–7%).
This “haves and have-nots” dynamic suggests that while earnings breadth exists, margin strength is concentrated in larger firms.
Liquidity, risk appetite and signs of froth
Jurrien discussed the abundance of global liquidity and its role in supporting equity markets. While the S&P 500 continues to hit new highs, only 5% of its stocks show strong price momentum, indicating narrow leadership. He noted signs of froth in thematic baskets like Bitcoin-sensitive stocks, meme stocks and AI-related equities, with some trading at extremely high valuations.
Though not yet a bubble, Timmer cautioned that risk appetites are rising and comparisons to past bubbles (like the late 1990s) are increasingly relevant.
Federal reserve policy and inflation dynamics
The Fed’s current rate is 4%, with expectations for two more cuts this year, potentially bringing it to 3%. Despite inflation printing at 3% (above the Fed’s 2% target) markets have responded positively, interpreting it as a green light for easing.
Jurrien noted that “3 is the new 2” in terms of inflation expectations. He also discussed the Fed’s long-term neutral rate assumption of 3%, though he personally believes it should be closer to 4% given current inflation levels.
Gold and bitcoin: hard assets in rotation
Gold and Bitcoin continue to alternate leadership as hard assets. Jurrien remains bullish on both, viewing them as complementary components of a diversified portfolio. He noted that gold may have overshot its fundamentals, peaking around $4,400 before correcting. Bitcoin, meanwhile, has gained ground recently, reflecting their negative correlation and rotational behavior.
Conclusion: A market of contrasts and opportunities
2025’s market is defined by contrasts, sector surprises, global breadth, strong earnings and a complex monetary backdrop. Jurrien’s insights suggest that while risks remain, the environment offers diverse opportunities for investors willing to adapt and stay informed.
