Wall Street Bets on Dealmaking Rebound as Fed Cuts Rates and Trump Promises Deregulation

Wall Street is betting on a rebound in corporate dealmaking in 2025, buoyed by expectations of lower interest rates and looser regulatory scrutiny under the new Trump administration. The number of deals and their value are both below pre-pandemic levels, but analysts and investors are optimistic that the new administration's policies will stimulate a resurgence in M&A activity.



The Federal Reserve has cut interest rates twice since September 2024, with another rate cut expected in July 2025. This makes borrowing cheaper, reducing the cost of financing mergers and acquisitions (M&A) deals. Lower interest rates also make it more attractive for companies to issue debt to fund acquisitions, as the cost of servicing that debt decreases. For example, in the first five months of 2025, US deal value was $535bn, up nearly 30% from the same period last year, partly driven by lower interest rates.

The new Trump administration is expected to continue its push for deregulation, aiming to lighten the regulatory load on businesses. This could mean less scrutiny from antitrust regulators, potentially leading to more deals being approved. The Trump administration's deregulatory stance led to a surge in M&A activity in the US in 2017 and 2018, with deal value reaching record highs. However, it's important to note that the new administration's regulatory stance is still uncertain, and the actual impact on M&A activity may vary.

The sectors expected to see the most significant increase in deal activity in 2025 are Technology, Media & Telecommunication, Infrastructure, Financial Services, and Consumer and Retail. These sectors are expected to see strong growth driven by continued AI fever, the need for scale and innovation, the increasing demand for infrastructure development and maintenance, and the need to adapt to new trade and geopolitical trends.

However, not everyone is convinced that the dealmaking rebound is a sure thing. Some investors and analysts caution that the new administration's regulatory stance is still uncertain, and the actual impact on M&A activity may vary. Additionally, the global economic outlook remains uncertain, and any unexpected events or changes in market conditions could derail the expected rebound in dealmaking.

In conclusion, Wall Street is betting on a rebound in corporate dealmaking in 2025, buoyed by expectations of lower interest rates and looser regulatory scrutiny under the new Trump administration. However, the actual impact on M&A activity may vary, and the global economic outlook remains uncertain. As such, investors and analysts should remain vigilant and adapt their strategies as needed to capitalize on the potential opportunities and mitigate the risks associated with the changing market landscape.