This year was the beginning of the end for American exceptionalism in markets, top strategist says

• 2025 may have been the start of the end of America's outperformance, a strategist says.
• Lazard's Ron Temple pointed to concerns about the Fed's credibility and the US debt pile.
• Investors may start to shift away from the US dollar first in currency hedges, he said.

This year might be remembered as the end of a distinct era in markets.

Lazard's top strategist said said he believes 2025 marked the beginning of the end of American exceptionalism in financial markets. That's due to prevailing concerns around America's macro outlook, which could influence investors to begin shifting away from the dollar and, eventually, selling their US assets in the coming years, according to Ron Temple, the chief market strategist of Lazard's advisory and asset management business.

"I think this year is the beginning of the end of American exceptionalism in markets, and we're probably going to see it first in currency, and we're going to see it in other risk assets as we move into 2026," Temple said, speaking to CNBC on Tuesday.

There are several reasons Temple thinks investors are ready to shift their exposure away from the US.

1. Concerns about the Fed. Chatter about the Fed's credibility has picked up this year. The central bank is facing pressure from President Donald Trump to lower rates aggressively, a move that could stoke more inflation.

   The Fed is also facing a tough balancing act to support the job market while keeping a lid on price growth. Central bankers just issued their third rate cut of the year, with inflation hovering above the Fed's 2% target.

2. Concerns about debt. The national debt hit a record $38 trillion this year, adding to the long-standing concern that America is borrowing and spending unsustainably.
   
   That's one reason Treasury yields may be rising even as the central bank cuts rates. Investors see more inflation down the road as the deficit increases and borrowing continues to acclerate.

Investors may first start to shift away from US assets through currency hedges, Temple speculated, citing his conversations with investors who expressed interest in reducing their exposure to the US dollar.

Eventually, investors could begin to sell investments like US Treasurys and risk assets like stocks, Temple added. Investors already got a glimpse of what that could look like in April of this year, he noted, when Trump's tariff announcement caused investors to dump US stocks and Treasurys.

"Frankly, I do think when we look backward, we're going to say 2025 was the first year in many people's lifetimes where we say US Treasurys viewed as a credit asset more than a risk-free asset," Temple added.

America's outperformance has been a topic of debate on Wall Street this year. More have sided with the view that the US market is looking less attractive than it has in the past, thanks to worries around tariffs, the strength of the US economy, and rising deficit spending.

In a note to clients last month, Goldman Sachs said it believed the US market would see some of the worst returns over the next decade compared to other markets around the world.

Forecasters at Bank of America and Apollo have also floated the idea that returns for the S&P 500 could be nearly flat over the next 10 years, with worries mounting over a "lost decade" for the US market.