As I sit at my desk this December, watching the final trades of a truly volatile 2025, it is clear that we have lived through a year that defied almost every baseline expectation. Investors entered the year anticipating a predictable normalization, yet markets were instead pulled from one narrative to the next, by sweeping tariff announcements and hastily brokered trade deals, by a president openly guiding sentiment and signalling when markets had gone “too far,” and by geopolitical headlines that proved impossible to price with any durability. What emerged was not disorder, but a new kind of uncertainty, one shaped less by economic data and more by political reaction functions.

In recent years, private equity buyout funds and private credit vehicles saw unprecedented growth in fundraising and deal activity. However, a sharp shift in the macroeconomic environment has introduced significant challenges. Higher interest rates and a sluggish IPO market have made it harder for buyout firms to exit investments and return cash to investors, which in turn impedes new fundraising as pension funds and other allocators face tighter capital and more attractive alternatives. At the same time, many institutional portfolios have become overexposed to illiquid private assets after the 2022 market downturn, forcing a reassessment of liquidity and returns expectations.

July did not break the trend, it tested its depth. After a record-setting first half, global markets entered a phase of quiet recalibration. The S&P 500 edged slightly higher, with leadership rotating out of mega-cap tech and into laggards such as utilities and industrials. While volatility stayed low, earnings exceeded expectations and tariffs began to look more like a tax on efficiency than a structural threat.