Global Market and Economic Perspective

Global Economic Commentary

• The release of the official BEA advance estimate of fourth quarter U.S. economic growth is delayed from the government shutdown, but most other sources suggest it remains around 2%, underpinned by strong consumption & AI-related investments. In China, growth for the quarter slowed to 4.5% while export growth remained notably strong. Growth across other major developed markets remains around 1%.
• Inflation in the Eurozone came in slightly below target, while it continued above targets in Japan, the UK and US. Many global central banks, including the Federal Reserve, cut policy rates during the quarter, save for Japan. The Bank of Japan hiked policy rates in December, while its government bond yields continued to rise throughout the quarter. Interestingly, Japan’s government bond yields now actually exceed those in China for the first time in recorded history.
• Unemployment during the fourth quarter remained just off recent lows in most developed countries, while continuing to grind lower in emerging markets economies.

Stairway Partners is an SEC-registered Investment Advisor providing comprehensive investment advice and industry-leading portfolio management solutions. Our firm was created to provide institutions and individual investors with transparent and cost-effective stewardship of their assets. Our sophisticated investment capabilities and a steadfast commitment to the industry’s best practices have allowed us to serve as a valued advisor and trusted fiduciary to clients throughout the United States. For more information, please call (630) 371-2626 or email us at stairwaypartners@stairwaypartners.com.

Global Equity and Currency Commentary

• Global equity markets finished the year with another solidly positive quarter. In the U.S., large cap growth stocks led large cap value stocks, while small cap value stocks were quite strong, leading small cap to edge out large cap for the quarter.
• Non-U.S. developed markets had the best performance for the quarter with positive local market results and even despite notable dollar strength versus the Japanese yen. For the full year in 2025, Canada and Europe local markets both outperformed other developed non-U.S. markets.
• For the full year in 2025, emerging markets finished ahead of developed markets (U.S. and non-U.S.) with significant contributions from each region.

US Fixed Income and Fed Commentary

• In the fourth quarter, the upward-sloping Treasury yield curve steepened, as yields fell more for shorter-maturity than longer-maturity securities. The FOMC cut rates twice in the quarter with expectations for limited, but continued easing in the coming quarters.
• Credit spreads narrowed meaningfully for the quarter and are now quite tight by historical standards across both investment grade and high yield. The combination of the decline in treasury rates and credit spreads led to gains in other investment-grade fixed income. As a result, corporate bonds and tax-exempt municipals performed even better than Treasuries across the maturity spectrum.
• The Fed still projects reducing policy rates toward a neutral posture over the coming 12-18 months and will also transition to a new Fed Chair, with Kevin Warsh’s pending appointment.

---

Stairway Partners, LLC © 2025

This material is based upon information that we believe to be reliable, but no representation is being made that it is accurate or complete, and it should not be relied upon as such. This material is based upon our assumptions, opinions and estimates as of the date the material was prepared. Changes to assumptions, opinions and estimates are subject to change without notice. Past performance is not indicative of future results, and no representation is being made that any returns indicated will be achieved. This material has been prepared for information purposes and does not constitute investment advice. This material does not take into account particular investment objectives or financial situations. Strategies and financial instruments described in this material may not be suitable for all investors. Readers should not act upon the information without seeking professional advice. This material is not a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument.

---