Investors never have a shortage of things to worry about, but in 2024 it really boiled down to just two: Treasury yields and tech stocks. Markets rode the wave of both factors, mostly up but occasionally down, through the year, and likely face the same fate in 2025 as both serve as vital catalysts for the fate of risk assets, according to a DataTrek Research analysis. We continue to believe that U.S./global stocks are in a classic mid-cycle market (i.e.
, no recession at hand), and the relevant lessons from 2024 are that 10-year Treasury yields and Big Tech stocks will share the stage as costars in 2025,' Nicholas Colas, DataTrek's co-founder, wrote in his daily market note Friday. 'Barring an exogenous shock that either creates a recession or materially increases the probability of an economic contraction, we expect 2025 will look very much like 2023 and 2024,' he added. On yields, the past year saw peaks and valleys , sometimes in usual places. All told, the benchmark 10-year Treasury yield started the year low, burst higher amid signs that inflation would be more stubborn than expected, then tumbled in the summer as inflation fears subsided and the unemployment rate rose to a level that kindled recession fears. September, though, brought another spike after the Federal Reserve cut its key borrowing rate , with another leg higher after the November election. From a market view, Colas points out that increased yields coincided with strong large-cap stock performance, while declines saw small-caps shine. US10Y .SPXIN 1Y line 10-year yield vs. the S & P 500 'This relationship is not a coincidence, and in our view, it is the key to thinking about global and U.S. market cap-based equity allocations for 2025,' Colas wrote. 'Global investors need to see U.S. rates decline to have the confidence required to place riskier bets on small caps or rest of world stocks. Without that backdrop, they will stick to U.S