Guggenheim Investments

10 Macro Themes for 2025

10 Macro Themes for 2025

Macro Themes is a quarterly publication from our Macroeconomic Research and Market Strategy Group that updates
our baseline economic outlook and spotlights key areas of research. At the beginning of each year, we take the Anne Walsh, JD, CFA
opportunity to present themes for the year ahead. In the following pages, we share our top 10 macro themes for 2025. CIO, Guggenheim Partners
Investment Management

1. Popular Discontent Will Disrupt Global Policy, Elevate Volatility Macroeconomic Research and
Market Strategy Group
2. A Shifting Geopolitical Landscape Will Realign the Global Economy
Patricia Zobel
3. U.S. Economy Will Outperform, as Other Economies Face Headwinds Senior Managing Director,
Head of Macroeconomic
4. Reshoring, AI, and Power Needs Will Fuel Strong U.S. Investment Research and Market Strategy

Matt Bush, CFA, CBE

5. Global Disinflation Will Allow Central Banks to Ease Further
Managing Director,
U.S. Economist
6. Runup in Equities Will Show Signs of Fatigue
Maria Giraldo, CFA
7. U.S. Yields Will Remain in a Higher, More Normal Range Managing Director,
Market Strategist
8. Investor Demand and Strong Fundamentals to Contain Spread Widening
Paul Dozier
9. Fiscal Consolidation Will Take on New Urgency Director, Economist

Chris Squillante
10. Attractive Opportunities for Active Fixed-Income Management Director, Market Strategist

Nicola Zaniboni
Director, Quantitative Research

Jerry Cai
Vice President, Economist

Margaret Kleinman, CAIA

Vice President

Guggenheim Investments 2
Popular Discontent Will Disrupt Global Policy, Elevate Volatility

 Voters around the world delivered a

Voter Satisfaction With Governments Has Fallen Centrist Parties Are Losing Influence strong mandate for change in 2024,
% satisfied with democracy in their country (Pew) Far left + far right party seats in government* with incumbent political parties being
tossed out in record numbers. The
2021 2024 result is a shifting global policy
70% environment that is likely to elevate
35%
market volatility and create
opportunities for investment.

60%  Voter satisfaction with governments

has been falling for years. Unpopular
government policies during the
pandemic appeared to accelerate this
50% 30% decline. Increasing reliance on social
media also fueled polarization,
contributing to dissatisfaction.

40%  In democracies globally, this discontent

led to election outcomes where parties
on both the left and the right gained
influence. Newly installed governments
30% 25%
are likely to focus more on the
domestic concerns of voters and less
on international cooperation.
20%  Polarized politics and transitioning
governments will create significant
policy swings in 2025, resulting in
20% heightened market volatility as
10%
investors respond to incoming
information.

 But new policies will also generate

0%
trading opportunities, as the shifting
environment creates winners and
losers on the company, industry, and
15% country levels.
1970 1980 1990 2000 2010 2020

Source: Guggenheim Investments, Pew Research, ParlGov. *Political left/right dimension based on criteria established in various academic studies; simple mean of observations from Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Sweden, Switzerland, Turkey, and U.K.

Please See Disclosures and Legal Notice at End of Document. 3

A Shifting Geopolitical Landscape Will Realign the Global Economy
 After decades of rising global trade,
Global Trade, % of GDP financial, and technological integration,
Three-Year Moving Average greater fragmentation in the
geopolitical landscape will shift
alliances and alter trading relationships
60% in 2025.

 Rising discontent with globalization

and economic challenges are
encouraging major powers to focus on
50% domestic agendas. Geopolitical
tensions and supply chain disruptions
in recent years also elevated national
security concerns relative to economic
efficiency considerations.
40%
 Broad-based protectionism would be a
risk to global growth. However,
targeted tariff negotiations—which we
view as more likely—could enhance
30% trade terms for the United States and
secure strategic imports. Investors can
profit by identifying sectors that stand
to benefit from new policies.

 Shifting global relationships lift the

20%
potential for geopolitical tensions.
More contentious and protectionist
economic policy and less predictable
foreign policy could create conflict,
potentially resulting in shocks to global
10%
financial markets.
World Wars and Resistance to
Industrialization Trade Liberalization  The United States has been more
Protectionism Globalization
resilient than most other countries to
global shocks, owing largely to its
0% limited export intensity and energy
1870 1890 1910 1930 1950 1970 1990 2010
independence. Still, should shocks
emerge that markedly shift the global
outlook, U.S. growth will not be
immune.
Source: Guggenheim Investments, Our World in Data, Klasing and Milionis (2014), Penn World Table, World Bank. Data as of 12.31.2023.

Please See Disclosures and Legal Notice at End of Document. 4

U.S. Economy Will Outperform, as Other Economies Face Headwinds

 Since the onset of the COVID

Real GDP in U.S. Dollars MSCI U.S. vs MSCI World Excluding U.S. pandemic, the U.S. economy has
Q1 2010 = 100 Re-indexed, with 2006 = 100 outperformed other advanced
economies. Strong underlying
U.S. Canada U.K. Forward EPS Total Return fundamentals should continue to
Eurozone Japan bolster relative U.S. performance in
2025, even if global growth falters.
150 310
 In recent years, robust consumer
spending and investment, fueled in
part by fiscal expansion, supported
280
U.S. growth. At the same time, Europe
140 faced headwinds from high energy
costs and a global manufacturing
250 slump, and China struggled under a
property downturn.
130
 The U.S. economy is entering 2025
220 with momentum. Wealthy U.S.
households and large businesses have
strong fundamentals, and the labor
120 190 market, while cooler than in 2023, is
still solid. U.S. AI investment has also
U.S. outpaced other countries, supporting
Outperformance
asset performance and lifting longer
160 term productivity estimates.
110
 Slower global growth in 2025 could
ultimately weigh on U.S. growth, but
130
even in a downturn, the U.S. should
fare better than others.
100
100

90 70
2010 2012 2014 2016 2018 2020 2022 2024 2006 2010 2014 2018 2022

Source: Guggenheim Investments, Bloomberg, World Bank. Data as of 9.30.2024 for real GDP and 12.31.2024 for yields. EPS = earnings per share.

Please See Disclosures and Legal Notice at End of Document. 5

Reshoring, AI, and Power Needs Will Fuel Strong U.S. Investment

 GDP growth got an important boost

Three-Year Growth Rate of Construction Put in Place by Structure Type from construction of nonresidential
Manufacturing vs Total of Transportation, Communication, and Power structures in 2024, fueled by fiscal
incentives and AI investment. As this
growth moderates, we expect follow-
Manufacturing Transportation, Communication, and Power on investments in equipment and
power infrastructure to rise, supporting
250% GDP growth in 2025.

 Manufacturing construction tripled in

2024 compared to three years ago.
200% Data center construction is running at a
$30 billion annualized pace and likely to
remain elevated. We are entering the
phase where construction gradually
150% reaches completion, but improvements
in transportation, communication, and
power sectors are still needed to
complete projects.
100%
 Power demand, in particular, is
increasing faster than anticipated,
largely due to energy-intensive data
50% centers and semiconductor
manufacturing. This may require over a
trillion dollars in investment by 2030 to
meet growing demand. But the sector
0% has faced meaningful challenges from
regulatory hurdles, review backlogs,
and limited grid capacity. Deregulation
and “all energy” policies could ease
-50% some of these bottlenecks.

 These trends create opportunities for

infrastructure-related investments,
-100% which we see offering attractive yield,
1998 2001 2004 2007 2010 2013 2016 2019 2022 stable income, and uncorrelated
performance with other assets.

Source: Guggenheim Investments, Haver Analytics, Census Bureau. Data as of 10.31.2024.

Please See Disclosures and Legal Notice at End of Document. 6

Global Disinflation Will Allow Central Banks to Ease Further
 Inflation around the world has cooled
World CPI Inflation and Central Bank Policy Rates (Weighted by Purchasing Power Parity GDP) considerably from its peak and should
moderate further in 2025, allowing
central banks to ease restrictive policy.
Inflation: Historical Inflation: Bloomberg Consensus Policy Rate
9%  In the United States, much of the
remaining heat is in lagging categories
like rents and insurance, and in non-
market categories like financial services.
8% Fundamentals point to further disinflation
in 2025, particularly a cooler labor market
and strong productivity growth.
7%
 Internationally, economic growth
remains lackluster in major economies
like China and the eurozone, while
6%
commodity prices are benign. Both
factors point to more downside for
inflation this year.
5%
 With this backdrop of lower inflation,
global central banks have room to reduce
4% rates further, helping to alleviate pressure
on rate-sensitive sectors and provide
some cushion to economic growth.
3%  While U.S. tariff policy could interrupt the
disinflationary trend, we expect tariffs
will be targeted and used as negotiating
2% tools, and any impacts may be partially
offset by factors like dollar appreciation
and slower growth.
1%  Even with inflation falling, investors
should not expect a return to a pre-
pandemic environment when inflation
0% ran consistently below target. Secular
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 forces like rising investment mean that
even with near-term disinflation, the
economy is broadly in a reflationary
environment.
Source: Guggenheim Investments, International Monetary Fund, Dallas Fed. Data as of 10.22.2024 for inflation estimates, 11.30.2024 for policy rate, 1.3.2025 for 2025
consensus inflation.

Please See Disclosures and Legal Notice at End of Document. 7

Runup in Equities Will Show Signs of Fatigue

 U.S. equities soared in 2024, reflecting

S&P 500 Equity Risk Premium S&P 500 Earnings Growth
positive news about the U.S. economy
Trailing earnings yield minus 10-Yr Treasury yield Actual and Average Analyst Expectations and AI advancements. However, this
runup has left valuations elevated, with
S&P 500 ERP (4 bps) Mag 7 (-123 bps) Realized Expected little cushion to protect against
ex-Mag7 (56 bps) downside risks.

800 bps 16%  The S&P 500 equity risk premium

suggests investors are now accepting
15% almost no compensation over risk free
700 bps rates for taking the additional risk of
14% 14%
equity investment. Elevated valuations
600 bps leave little room to absorb earnings
disappointments or external shocks.
12% 11%
500 bps  Analyst expectations for corporate
earnings growth in coming years also
appear lofty at 15 percent for 2025 and
400 bps 10% 10% 14 percent for 2026. With margins
already elevated relative to the past
300 bps decade, it may be difficult for
8% companies to meet these expectations,
particularly in an environment of
200 bps
slowing global growth.

100 bps 6%  Companies with the largest

Excluding capitalization, in particular, have
Magnificent 7 valuations that rely heavily on
0 bps 4%
expectations for exceptional earnings
4%
growth and may be subject to
-100 bps disappointment if AI adoption
advances more slowly than expected or
2% 2%
competition from abroad heats up.
-200 bps Magnificent 7
 Given this backdrop, we view the runup
in equity valuations as showing signs
-300 bps 0% of fatigue, and see attractive risk-
2022 2023 2024 2025 2026 2027 adjusted returns in U.S. fixed income.

Source: Guggenheim Investments, Bloomberg, Factset. Data as of 01.15.2025.

Please See Disclosures and Legal Notice at End of Document. 8

U.S. Yields Will Remain in a Higher, More Normal Range
 After over a decade during which U.S.
150 Years of Long-Term Rates Implied Interest Rate Volatility since 2010 10-year yields stayed mostly below 3
10-Year U.S. Treasury Yield MOVE Index; Average Since 2010 percent, yields have risen and are
trading in a higher range. With strong
10-Yr U.S. Treasury Yield MOVE Index 2010-2024 average long-term U.S. fundamentals and
stable inflation expectations, we see
16 % 160 yields broadly remaining in this new
range.

 Deleveraging after the Global Financial

14 % 140 Crisis combined with below-mandate
inflation weighed on the neutral fed
funds rate and Treasury yields. The
12 % 120 recent rise in yields reflects reflation
and a return to more normal
expectations for long-term growth.
10 % 100  Looking over a long history, recent
yields appear more typical than the
prior decade. And, with inflation
8% 80 expectations anchored, yields seem
unlikely to rise markedly further.

 Our base case is for the 10-year yield to

6% 60 trade in a range of 3.75–4.75 percent,
reflecting gradual easing by the Fed
and a modest rise in term premiums to
4% 40 make room for more government debt.

 Volatility is likely to remain higher than

the suppressed levels observed during
2% 20 the decade following the GFC. We
anticipate considerable noise as
policies of a new administration take
0% 0 hold, but view larger yield swings as
1870 1898 1929 1959 1990 2020 2010 2012 2014 2016 2018 2020 2022 2024 opportunities to tactically add or
decrease duration exposure.

Note: Stable Rate Periods are broadly defined as 10 or more years of interest rates staying within a range of 100 bps.
Source: Guggenheim Investments, Bloomberg, Robert Shiller, Òscar Jordà, Moritz Schularick, and Alan M. Taylor. “Macrofinancial History and the New Business Cycle Facts” (2017), Lawrence H. Officer, "What Was the
Interest Rate Then?" MeasuringWorth (2024).

Please See Disclosures and Legal Notice at End of Document. 9

Investor Demand and Strong Fundamentals to Contain Spread Widening
 After a year of positive U.S. risk asset
Fixed-Income Aggregate Index Yield to Maturity Investment-Grade Corporate Spread Percentiles performance, credit spreads are near
U.S., Euro Area, and Asia Pacific Current OAS and Spread to Interest Coverage all-time tights. Although we view
modest decompression as possible in
Euro Aggregate Index Yield Current Spread Percentiles 2025, widening is likely to be contained
U.S. Aggregate Index Yield Spread to Interestfor
Adjusted Coverage
Interest Percentiles
Coverage by robust investor demand and strong
Asia Pacific Aggregate Index Yield fundamentals.

6% 40%  Investors continue to favor U.S. fixed

income because of its attractive yields
relative to other advanced economies.
35% The Bloomberg U.S. Aggregate Bond
35% Index yield is 5.1 percent, which is 2
5%
percentage points higher than in
Europe and over 3 percentage points
30% higher than in Asia.
4%
 U.S. corporate fundamentals still look
solid, supported by steady economic
25%
growth and positive earnings growth.
3% Leverage ratios have declined
20% substantially since the pandemic peak
20% and interest coverage for most
17% corporate rating sectors is at or above
2% 16% historical average levels. These
15% 15%
15% 14% dynamics should help anchor spreads
12% in a range.
1%  For active investors, excess returns are
10% 9% available in less competitive fixed-
income sectors, like structured products.
Careful credit selection can also
0% 5% maximize value in corporate credit, and
protect against downside risk.
2%
 While there is potential for more notable
-1% 0% spread widening if investor risk appetite
2010 2012 2014 2016 2018 2020 2022 2024 IG AAA AA A BBB wanes or the outlook deteriorates, high
all-in yields provide considerable cushion
against negative returns.

Source: Guggenheim Investments, Bloomberg, S&P Global Ratings. Data as of 01.10.2025 for yield. IG spread-to-coverage ratio is based on 12.31.2024 spreads and Q3 2024 fundamentals, using the reciprocal of interest coverage.

Please See Disclosures and Legal Notice at End of Document. 10

Fiscal Consolidation Will Take on New Urgency

 The fiscal trajectory for the U.S. is

U.S. Federal Debt to GDP by Investor Type Federal Outlays as a Share of GDP unsustainable, and budget adjustments
CBO and U.S. Financial Accounts CBO Historical Data and Projections will need to be a priority for the
incoming administration. Our base
case is for Treasury term premiums to
All Other Holders Mandatory Spending (LHS)
widen modestly, but there is risk of a
Discretionary Spending (LHS) more pronounced move if confidence
Held by Fed, Foreign Official, Commercial Bank, Interest w/TCJA Extension (RHS) in fiscal responsibility is challenged.
and Money Funds Interest (RHS)
35 5  Federal debt to GDP is projected to
140% reach 122 percent by 2034, higher than
Inc. TCJA
CBO Projection at any point in U.S. history. Interest
extension
expense could climb to almost 4.5
CBO 4.5
30 percent of GDP if the Tax Cuts and
120%
Baseline Jobs Act (TCJA) is extended.

4  The new administration could create a

25 credible long-term plan for fiscal
100%
adjustment, but the choices will be
Percent of GDP 3.5 difficult. Abrupt spending cuts would
disrupt US growth. Gradual
80% 20
adjustments would ease the transition,
3 but may require changes to mandatory
programs or higher taxes, which are
15 politically challenging.
60%
2.5  The U.S. has more capacity to sustain
high debt levels than almost any other
40% 10 country due to its deep markets and
2 reserve currency status. However, price
sensitive investors have absorbed a
larger share of debt in recent years.
20% 5
1.5
 We expect investors to demand
modestly higher yield premiums in
response to growing issuance, and see
0% 0 1 a small risk of a sharper move.
2000 2004 2008 2012 2016 2020 2024 2028 2032

Source: Guggenheim Investments, CBO Historical and 10-year Projection July 2024, CBO Alternative Assumptions May 2024, Federal Reserve Z-1 Financial Accounts. The SOMA Holdings database contains data on the
Federal Reserve's domestic securities holdings from 2003 to the present.

Please See Disclosures and Legal Notice at End of Document. 11

Attractive Opportunities for Active Fixed-Income Management
 With strong U.S. fundamentals and
Fixed-Income Spread and Yield Percentiles (Based on Data Since January 2000) attractive all-in yields, we view actively
Select Fixed-Income Sectors, Sorted from Cheapest to Richest on a Historical Basis managed U.S. fixed income as an
attractive destination for investors this
Yield Percentile Since Jan 2000 Spread Percentile Since Jan 2000 year, and an essential element of
diversified portfolios.
0% 20% 40% 60% 80% 100%  Elevated U.S. yields currently provide
strong income opportunity, and in
many sectors are well above their
historical medians. With inflation under
10-year Treasury Yield 4.79 greater control and central banks
easing, we view yields as likely to stay
in a range or trend modestly lower.
Agency MBS ZV Spread 6.07 130  Managers with expertise in fixed-
income segments beyond the indexed
universe can find stable excess returns,
Agency MBS Current Coupon OAS 48 6.07 even in an environment where overall
spreads are tight relative to history. In
our view, agency MBS and structured
AAA CLOs 106 5.36 credit still offer compelling value. Real
asset lending can also provide stable,
uncorrelated returns.
AA-BBB ABS 159 6.12
 In a shifting global policy landscape,
heightened volatility and uncertainty
429 8.54 may also provide attractive entry points
B Loans
in fixed income over the course of the
year. Deep credit analysis will help
identify new opportunities as the policy
High Yield Corporates 278 7.59 environment shifts, and protect against
downside risk.

Investment Grade Corporates 81 5.54  All told, it’s a good time to be an active
0% 20% 40% 60% 80% 100% fixed-income investor.

Source: Guggenheim Investments, Credit Suisse, Bloomberg, ICE BofA, JP Morgan, Palmer Square. Data as of 01/13/2025. History based on monthly data since January 2000. Index Legend: Treasury yield and MBS data based
on Bloomberg data. AAA CLOs based on the Palmer Square CLO Index. Prior to 2012, historical CLO spreads were provided by Bank of America Research and yields are approximated by Guggenheim by adding spreads to 3m
Libor. AA-BBB ABS is the ICE BofA ABS Master AA-BBB Index, B Loans based on the UBS S&P Leveraged Loan Index, high yield corporates is the Bloomberg U.S. High Yield Index and investment-grade corporates is the
Bloomberg U.S. Corporate Index.

Please See Disclosures and Legal Notice at End of Document. 12

Disclosures and Legal Notice
This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing
advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy
or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding
your specific situation.

This material contains opinions of the author or speaker, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward
looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources
believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions
based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.

Forward Looking Statements. This discussion material contains forward-looking statements, which give current expectations of market activities and market performance. Any or all forward-looking statements in
this material may turn out to be incorrect. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Although the assumptions underlying the forward-looking statements
contained herein are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurances that the forward-looking statements included in this discussion material will
prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation that the
objectives and plans discussed herein will be achieved. Further, no person undertakes any obligation to revise such forward-looking statements to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.

Investing involves risk, including the possible loss of principal. Investments in fixed-income instruments are subject to the possibility that interest rates could rise, causing their values to decline. High yield and
unrated debt securities are at a greater risk of default than investment-grade bonds and may be less liquid, which may increase volatility.

© 2025 Guggenheim Partners, LLC. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. Guggenheim
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 Guggenheim’s Investment Process
Guggenheim’s fixed-income portfolios are managed by
a systematic, disciplined investment process designed to mitigate
behavioral biases and lead to better decision-making. Our investment
process is structured to allow our best research and ideas across
specialized teams to be brought together and expressed in actively
managed portfolios. We disaggregated fixed-income investment
management into four primary and independent functions—
Macroeconomic Research, Sector Teams, Portfolio Construction, and
Portfolio Management—that work together to deliver a predictable,
scalable, and repeatable process. Our pursuit of compelling risk-adjusted
return opportunities typically results in asset allocations that differ
significantly from broadly followed benchmarks.

Guggenheim Investments Guggenheim Partners

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1. Guggenheim Investments assets under management as of 9.30.2024 and include leverage of $14.8bn. Guggenheim Investments represents the following affiliated investment management businesses of Guggenheim Partners,
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