Private markets benefited enormously from the post-Great Financial Crisis era of ultralow interest rates that stretched through much of the 2010s and into the early 2020s. Amid regulatory change and muted returns in traditional fixed income during this time, investors were increasingly pushed into alternative areas of capital markets in search of yield.

Every market cycle has its own character, but certain patterns appear frequently enough that they deserve attention. This is especially true when evaluating early-year rallies in small caps.

As the new year begins, one market theme is already attracting plenty of attention, and that is the dispersion and broadening out in the stock market that has occurred during the first two weeks of trading.

Emerging market (EM) equities have seen exceptional outperformance in 2025, with major countries like South Korea and Brazil posting massive gains. The primary driver of this trend has been a weakening U.S. dollar, which historically encourages capital flow outside the United States. The critical question now for investors is whether this dollar weakness marks the start of a multi-year downtrend or is simply a temporary correction.

The equity market has shown remarkable resilience over the past two weeks despite rising U.S.-China trade tensions, a spike in equity market volatility, and growing credit concerns tied to business development company (BDC) and regional bank lending losses.

Global bond markets have sold off recently due to uncertainty surrounding key political changes most notably in France and Japan.

A key theme dominating global financial markets in recent weeks has been the general upward pressure on sovereign bond yields, particularly at the long end of government bond market curves.

Volatility across major asset classes is currently sitting at unusually low levels. While volatility is often viewed as a broad measure of risk in financial markets, its role has evolved significantly in recent years.