Contributors:
Colby McFadden
Justin Singletary
Patrick Morehead
December, 2025
What a year 2025 turned out to be. Despite the constant drumbeat of market noise—tariff concerns, inflation headlines, Federal Reserve speculation, and early signs of employment softening that had many investors wondering if we were headed for stagflation—the markets delivered strong performance for disciplined investors.
In this outlook, we’ll provide our perspective on where we see opportunities and potential challenges as we enter 2026. We’ll cover our views on interest rates, equity markets, precious metals, the U.S. dollar, and sectors that may benefit from ongoing developments in artificial intelligence and the current administration’s focus on deregulation.
The year proved our investment discipline pays dividends. The U.S. 10-year Treasury yield remained comfortably within what we call our “Goldilocks Range” of 3.5% to 4.5% throughout the year (currently trading around 4.1% as of early December), making rate-sensitive investments accretive for portfolios seeking both income and growth.
Our January assessment that certain technology stocks appeared overvalued proved prescient. The market’s April and May “tariff tantrum” created exactly the type of opportunity we look for—allowing us to increase exposure to growth sectors at more attractive valuations. Through the third quarter, the S&P 500 posted a total return of approximately 14.8%, with the index hitting all-time highs 28 times. By maintaining our process and avoiding panic, we positioned portfolios to capture these gains.
The precious metals story was equally compelling. Gold rallied approximately 30% to reach new highs above $3,500 per ounce in April, while silver delivered an even more impressive performance, gaining roughly 45% year-to-date to reach $42 per ounce by September. A weaker U.S. dollar—which fell approximately 10.7% in the first half of 2025, marking its worst first-half performance in over 50 years—provided significant tailwinds for metal prices.
As we enter 2026, we maintain our view that the U.S. 10-year Treasury yield should remain range-bound within our Goldilocks range of 3.5% to 4.5%. Current market conditions don’t suggest any compelling reason to change this outlook, which means rate-sensitive investments may continue to offer attractive opportunities for portfolios seeking income and growth in early 2026.
The Federal Reserve is expected to continue its measured approach to rate adjustments, with markets pricing in 2–3 additional cuts through next year. This environment should support our tactical approach to fixed income positioning.
Here’s where we need to balance optimism with reality. Equity markets enter 2026 from historically elevated valuation levels, which historically has been associated with increased volatility potential. It’s worth noting that 2026 represents the second year of the presidential cycle with midterm elections—a period that historically has shown weaker performance and heightened volatility due to political uncertainty. According to research from the Stock Trader’s Almanac, the second year of a president’s term has averaged returns of only 4.6%, well below the historical average, though the fourth quarter of midterm years has often shown improvement.
That said, we don’t currently see glaring recession signals on the horizon as we start the year. While there are pockets of weakness at the economy’s edges, the fundamental picture remains reasonably sound. We’ll continue monitoring economic indicators closely and will keep you informed as the year progresses.
Our focus remains on identifying opportunities within sectors that show relative strength and structural tailwinds—particularly those related to AI innovation and the administration’s deregulation initiatives, where we see potential for differentiated returns.
The dollar’s weakness throughout 2025 was remarkable, but all trends eventually shift. As we look ahead to 2026, investors should prepare for the possibility of a more stable or stronger dollar. The U.S. Dollar Index (DXY), which fell to levels around 98–99 by year-end 2025 after starting the year above 106, may find footing as other central banks continue aggressive rate cuts while the Fed takes a more measured approach.
This potential dollar stabilization has implications for precious metals. Gold and silver’s relentless rise in 2025 was significantly amplified by dollar weakness. While structural factors like central bank buying and industrial demand remain supportive, 2026 may be a year when metal prices consolidate or take a breather from their extraordinary run. We’ll be actively managing our metals allocation, looking for opportunities to capture profits while maintaining exposure to this important portfolio diversifier.
As we position portfolios for 2026, we’re emphasizing sectors demonstrating the greatest relative strength: Technology, Healthcare, Utilities, Small Caps, and names benefiting from regulatory shifts. These sectors have shown resilience and our portfolios maintain elevated exposure to these areas as we begin the new year.
The ongoing development of AI applications—moving from infrastructure build-out to practical monetization—presents compelling opportunities for selective investment. Similarly, potential regulatory changes could benefit specific industries that have faced headwinds in recent years.
Markets never move in straight lines, and 2026 will undoubtedly present both opportunities and challenges. What separates successful long-term investing from speculation is maintaining discipline, staying focused on fundamentals, and having the patience to let sound investment processes work through various market environments.
We remain committed to active portfolio management, continuous monitoring of market conditions, and transparent communication with you throughout the year. As always, we’ll provide updates as material developments warrant.
Thank you for your continued trust in Quiver Financial.
Past performance is not indicative of future results. All investments involve risk, including the potential loss of principal. The information provided is for educational purposes only and should not be construed as specific investment advice. Economic and market forecasts presented are subject to change without notice and may not come to fruition. Indices mentioned are unmanaged and cannot be invested in directly. Index performance does not reflect fees, expenses, or sales charges.
This material does not constitute an offer to sell or a solicitation of an offer to buy any securities. Please consult with a financial professional regarding your specific situation before making any investment decisions.
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