The Swiss economy remains stable in the second quarter, but is under increasing external pressure. Falling interest rates and solid corporate profits are supporting the economy and the domestic stock market. Despite global uncertainties, the Swiss stock market remains attractive - supported by defensive business models, stable margins and high earnings visibility. We find the SPI Extra, which tracks medium-sized and smaller listed Swiss companies, particularly interesting. In the past, stocks in this segment have proven to be particularly adaptable to currency movements and benefit from their agility, innovative strength and strong roots in their home market.
The Swiss economy recorded stable growth in the first half of 2025, driven largely by the services sector and the pharmaceutical industry, in particular by significant exports to the US. However, this momentum is expected to weaken as the year progresses. Advance demand is declining, the new US tariffs of 10.00% are having a negative impact and the strong Swiss franc currency poses a further problem for the export industry. At the same time, investment sentiment among companies has deteriorated. Below-average GDP growth of 1.30% is forecast for 2025. Private consumption is having a stabilizing effect, supported by low inflation and continued immigration. The service sector and the construction industry are also showing continued robustness.
The Swiss National Bank recently lowered its key interest rate to 0.00% in response to declining price pressure. In May, inflation stood at -0.10% for the first time in years. If there are no major economic upheavals or an escalation of the trade conflict and the Swiss franc remains stable, particularly against the euro, the SNB is unlikely to make any further interest rate changes.
SECO economic forecasts
GDP 2025 1.30%
Inflation 2025 0.10%
Guiding interest rate 0.00%
Dino Marcesini, Partner
Sources: Chefinvest, ZKB, SECO
As at: 07.07.2025
Profits of European companies should rise significantly again next year and valuations are at the long-term average. We expect the European equity market to rise slightly.
In the 1st quarter of 2025, seasonally adjusted gross domestic product (GDP) in the eurozone and the European Union (EU) rose unexpectedly strongly by 0.6% compared to the previous quarter. Compared to the same quarter of the previous year, it increased by 1.60% in the EU and 1.20% in the eurozone. The data published so far for Q2 2025 suggest a normalization after the pull-forward effects in Q1 (trade with the US/industrial production/exports). We expect stagnation.
According to its spring forecast, the European Commission expects economic growth of 1.10% in the EU and 0.90% in the eurozone in 2025. In 2026, growth in the EU should then accelerate to 1.50% and in the eurozone to 1.40%.
Inflation is currently at the Governing Council's medium-term target of 2.00%. The European Central Bank (ECB) expects headline inflation in the eurozone to fall further to 1.60% by 2026 before rising again to 2.00% in 2027. Core inflation, which excludes volatile energy and food prices, is estimated at 2.30% in 2025 and is expected to fall to 1.90% in 2026 and 2027.
The European labor market is robust, with a record 1.7 million new jobs in 2024. The unemployment rate should fall to a new all-time low of 5.70% in 2026 due to another 2 million jobs.
GDP growth 2025 + 0.90% (E)
EU inflation 2025 + 2.00% (E)
Current 3-month Euribor + 1.98%
Tight cooperation in Europe
In Europe, strong fiscal stimulus measures are imminent and the ECB has reduced key interest rates to such an extent that monetary policy will at least no longer be slowed down. The European States have been forced into ever closer economic and military cooperation. EU loans amounting to EUR 150 billion are being granted for financing and the EU financial budget regulations have been amended to allow additional defense spending of EUR 650 billion over the next four years. Germany will achieve an increase of 1.00% of their GDP by 2030 with a EUR 500 billion infrastructure package. The increase in spending and potential realignment of the European manufacturing base will boost potential growth. On the negative side, the increase in defense spending in Europe will increase budget deficits and social spending will have to be cut significantly unless higher tax revenues are generated from structurally higher economic growth. It is still unclear how much the tariff conflict with the US will impact the economy.
Daniel Beck, Member of the Executive Board of Chefinvest International AG
Sources: European Commission, Statista, HCOB, S&P Global
As at: 07/07/2025
Moderate economic growth, a further slight decline in inflation rates and productivity increases due to increased AI applications in the operating processes of the companies represented in the S&P 500 are positive components and drivers of the current handsome stock market valuation. We assume that the customs dispute will not escalate any further, but continue to expect increased volatility until it is resolved.
With the passing of the 'Big Beautiful Bill (BBB)' by Congress and its signing by Donald Trump, the President is implementing further election promises. As some of the tax cuts are only temporary, the majority of economists believe that the BBB will have a slightly positive effect on growth in the first few years and a slightly negative effect on economic output thereafter. However, the US will not be able to avoid bringing its increasingly excessive national debt back into balance over the next few years.
The economy remains on track
At its June meeting, the Fed reduced its GDP estimate for 2025 from 1.70% to 1.40% and for 2026 from 1.80% to 1.60%, but is still assuming moderate growth. This is also confirmed by the S&P Global US Composite PMI (purchasing managers' index) for June 2025 with a value of 52.9 points (-0.1 points compared to May). It is also positive to note that the value for the manufacturing industry is now clearly above the expansion threshold of 50 points again. In June, unemployment fell from 4.20 to 4.10% and 147,000 new jobs were created outside of agriculture, which is almost exactly the 12-month average of 146,000 jobs.
Inflation and interest rates
Inflation stood at 2.40% in May 2025 and core inflation at 2.80%. The decline in inflation into the Fed's target range (2.00%) thus appears to be continuing, but the 'last mile' seems to be stubborn. Accordingly, the US central bank is cautious with further interest rate cuts. In view of the solid labor figures and the potentially price-driving effect of the new trade tariffs, this is hardly surprising. Nevertheless, two further key interest rate cuts of 0.25% each to a target range of 3.75 - 4.00% are possible by the end of the year. Of course, it is important that the tariff dispute does not escalate further, as this could give inflation a noticeable boost again.
GDP2025 (IMF): +1.80% (E)
Inflation2025 (IMF): +3.00% (E)
Fed Fund Rate: +4.25-4.50%
Dr. Patrick Huser, CEO
Sources: Trading Economics, FuW, US Bureau of Labor Statistics, Statista, IMF, FMOC
Status: 07.07.2025
Export growth is slowing down. Thanks to circumvention strategies via other countries and government measures, the trend is surprisingly stable. The tariff conflict has not been resolved and tensions are therefore likely to persist, which will keep the volatility of Chinese equity investments high.
In May, the Chinese economy recorded a surprisingly strong increase in retail sales, which was due in particular to the May Day holiday and the Dragon Boat Festival. Government purchase subsidies and the early 618 shopping festival led to an increase in consumption, particularly in the electronics, furniture and jewelry sectors. Some regions have already fully exhausted their subsidy funds, but around half of the state subsidies are still available. It can therefore be assumed that consumption will remain high in the short term.
This contrasts with a weak trend in investments: Private spending remained stable, while government investment recorded a significant slowdown in growth. In addition, industrial production recorded lower growth in the middle of the quarter, which is partly due to the declining demand for exports. The latest trade talks between China and the US did not lead to any significant rapprochement, which continues to make a rapid recovery in foreign trade more difficult.
Dino Marcesini, Partner
IMF Economic Forecasts
GDP 2025 4.00%
Inflation 0.00%
Shibor 3mt 1.58%
Sources: IMF, ZKB, Chefinvest
As at: 07.07.2025
Neutral, we recommend holding an allocation within the emerging market allocation in the portfolio.
The Japanese economy is currently showing a mixed picture. The OECD is forecasting real GDP growth of only around +0.70% in 2025 and a moderate +0.40% in 2026. The first quarter of 2025 even saw a mini recession, mainly due to weak export data as a result of US tariff policy. Domestic demand, on the other hand, is being supported by solid wage growth.
Inflation & monetary policy
The Bank of Japan raised its interest rate to 0.50% at the beginning of the year - the first time it has been in positive territory for decades. However, Governor Ueda makes it clear that underlying inflation is still below 2.00%, which is why further interest rate moves will be very cautious. BOJ member Takata is already in favour of continuing the normalization if inflation consolidates. The yen is still on a weak course, at over 140 ¥/USD, which benefits exporters but makes imports more expensive.
Corporate and financial market sentiment
Despite global uncertainties, Japanese industrial companies are slightly more optimistic according to the BOJ survey, with a sentiment index of +13. Analysts are also positive about the stock markets: Nikkei forecasts are +5.00% by the end of the year (≈39,600 points) and a return to new all-time highs in 2026. Structural reforms - improvements in corporate governance, significant share buybacks - are further boosting confidence.
Expected GDP 2025 0.70%
Expected inflation 2025 2.40%
Japanese key interest rate 0.50%
Mimi Haas, Lic. rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: OECD, Bank of Japan and IMF
As at: 07.07.2025
We consider the current market environment to be selectively challenging, but also rich in opportunities. The days of broadly diversified, index-oriented investments are over. The current market reality calls for a focused, high-quality and currency-conscious investment strategy. Recommendations:
In the middle of 2025, the global economic environment is differentiated. In the USA, there are increasing signs of an economic slowdown. Private consumption is losing momentum, the unemployment rate is falling slightly, but the labor shortage in the service sector is nevertheless beginning to ease. At the same time, the new US government's large-scale fiscal package - the "One Big Beautiful Bill" - is causing unrest on the capital markets. Tax relief and spending cuts are intended to stimulate growth in the short term, but are massively increasing the structural budget deficit. Estimates assume additional government debt of up to USD 5.5 trillion over the next ten years.
In Europe, the first signs of a cyclical bottoming out are emerging. Leading indicators are stabilizing, inflation rates are falling noticeably, at the same time, the unpredictable US tariff policy is improving the competitiveness of European exports outside the US. The fiscal policy framework and infrastructure and climate neutrality programs - such as in Germany, Italy and Spain - are also being interpreted more expansively again. In China, on the other hand, the economic recovery remains fragile. Switzerland is fundamentally robust, but is increasingly suffering from the persistent strength of the Swiss franc, which is becoming a burden for large export-oriented companies.
The financial markets recorded mixed developments in the second quarter of 2025. The regional differences become particularly clear when the performance is adjusted for currency effects. The US dollar has lost over 13% of its value against the Swiss franc since the start of the year. For CHF and EUR investors, this means that nominally positive developments on the US stock markets have often turned into negative returns in real local currency terms. The Dow Jones, the S&P 500 and the Nasdaq recorded losses of between 7% and 9% from the perspective of a Euro or Swiss Franc investor.
The second quarter was also mixed in Europe. The STOXX EUROPE 50 fell by 2 %, the French CAC 40 and the Swiss SPI by 1.6 % each and the SMI even lost 5.4 %. At the same time, individual markets performed well: the DAX rose by 7.9 % and the Austrian ATX by 8.7 %. The Spanish IBEX and the Norwegian OBX both rose by 6.5%, while Japanese equities were among the global winners with +13.7%.
These developments show that simple benchmark-related or broad index investments are no longer sufficient to ensure capital preservation and real returns.
The company's own opportunity barometer (CAIB) remains positive for equities overall, but is selectively weighted. The international market reports - in particular the analyses by UBS (House View) and the CIO Strategy Bulletin (Citi) - confirm this assessment.
Geographic focus: European markets - in particular Germany, Italy, the UK, Austria, Spain and Italy - are weighted more heavily. Active economic programs, solid corporate balance sheets and political stability speak for above-average potential there. Switzerland should be assessed selectively, particularly with regard to export-oriented SMI companies that are suffering from the strong franc in terms of their balance sheets. A neutral stance is adopted for US equities, whereby new investments in innovative companies with a currency-hedged structure are recommended. Politically unstable and currency-sensitive emerging markets, such as Brazil, remain underweighted.
In addition, the focus is clearly on quality stocks. Preference is given to growth companies with stable cash flows, high pricing power and resilient business models. These include medical technology companies, infrastructure providers, software companies and reinsurers in particular. High-dividend stocks from the telecommunications and utilities sectors offer additional stability. Cyclical consumer stocks, automotive stocks and commodity-dependent companies remain critical as they react strongly to global demand and geopolitical developments.
The recent weakness of the US dollar once again highlights the importance of structured currency management. For new exposures in USD, supplementary hedging appears advisable; alternatively, an overarching reduction of the USD allocation in other asset classes can be considered.
Rico Albericci, CEFA
Sources: Citi Wealth, UBS, Chefinvest, Marketmap
As of: 07/07/2025
We expect government bonds and investment grade bonds to be neutral. High yield offers attractive yield opportunities and is an interesting addition. For risk-tolerant investors, we recommend a diversified exposure with a focus on high-quality issuers and a balanced allocation between hard and local currency securities.
Government bonds
The government bond market is currently under considerable pressure. In the USA in particular, rising budget deficits, the prospect of expansionary fiscal policy and structural debt problems are causing increasing uncertainty. According to a UBS survey, around 50% of the central banks surveyed already consider a restructuring of US government debt to be possible - a previously unthinkable scenario. At the same time, yields remain at an elevated level, with 10-year US Treasuries in particular hovering around 4.5%. The markets are reacting sensitively to political signals: fiscal easing and possible tariffs under the new US government could fuel inflation again and lead to a new rise in interest rates. Defensive positioning remains advisable in the short term. Short-dated bonds such as US T-bills offer attractive yields with low duration. In the medium term, however, a slowdown in the economy and weaker inflation could lead to a fall in interest rates - giving longer maturities potential. In Europe, interest rate pressure is currently lower, which makes quality bonds from core eurozone countries particularly attractive. Overall, a balanced duration with a focus on quality and flexibility is recommended in order to be able to react tactically depending on macroeconomic developments.
Conclusion: We take a neutral view on government bonds.
Investment grade bonds (IG)
The market for corporate bonds in the investment grade segment is currently stable, albeit with limited yield potential. Spreads are close to historical lows, which indicates that valuations are already very ambitious. Nevertheless, these bonds continue to benefit from a solid macroeconomic environment, particularly due to the easing fear of recession in the USA and the prospect of stable or even slightly falling interest rates. Issuers' fundamentals are considered robust and issuing activity remains high, which indicates a healthy financing environment.
Short-dated investment-grade bonds offer an attractive opportunity for defensive positioning with low duration. At the same time, longer maturities could also benefit in the medium term if there is a turnaround in monetary policy later in the year. However, the upside is limited: The narrow spread difference to government bonds argues for a selective choice of securities, whereby the focus should be on quality and creditworthiness. Overall, the segment remains a fixed component in the portfolio for reasons of stability, but requires increased discipline when selecting securities.
Conclusion: We are neutral on IG bonds.
High yield bonds (HY)
The high-yield market has been surprisingly dynamic so far this year. With an index yield of around 4%, high-yield bonds significantly outperformed traditional government bonds. This development was boosted by the robust US economy, falling default rates and issuers' high liquidity levels. Nevertheless, the segment remains heavily dependent on the macroeconomic environment: initial earnings weakness in Q1-2025 and geopolitical tensions increase the risk of a change in sentiment.
The current valuation appears attractive from a relative perspective, but risk premiums are narrow, which limits the buffer in the event of an economic downturn. Political factors such as US tariffs or fiscal policy could lead to volatility in the short term. Selective allocation is therefore crucial: companies with stable cash flows and sectoral resilience should be favored.
In the short term, high-yield bonds offer an interesting addition, especially in combination with defensive investment-grade securities. In the medium term, however, the potential remains closely linked to the further development of the US economy and interest rate policy. A cautious weighting within a broadly diversified bond portfolio is therefore advisable.
Conclusion: HY bonds will continue to offer attractive yield opportunities in 2025. Careful stock selection, diversification and active management are key to investing successfully in this environment. This asset class should therefore be added to the portfolio through actively managed funds in order to minimize risks.
Emerging markets bonds (EM)
The EM bond market remains structurally attractive in mid-2025, driven by increased bond issuance in the first half of the year (over USD 190 billion) despite global uncertainties. The upward pressure on local and hard currency yields is supported by investor demand and diversification trends, including a noticeable de-dollarization.
Hard currency bonds (hard currency) benefit from a possible interest rate catalyst through Fed cuts and falling US yields. Swiss and US asset managers see low spread tightening risks, meaning that although HC securities are unlikely to catch up in the short term, they should remain stable.
Local currency bonds (local currency) are benefiting from a weaker dollar phase, stable domestic real interest rates and positive exchange rate momentum.
The risks include geopolitical tensions such as the threat of US tariffs under the new Trump presidency and fragile global growth - both of which could cause volatility in the short term Conclusion: We currently advise against actively building up positions here.
Conclusion: We recommend a diversified exposure with a focus on high-quality issuers and a balanced allocation between hard and local currency securities.
Mimi Haas, Lic.rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: MarketMap, Bloomberg and DWS
As of: 07.07.2025
The trend of USD weakness against the EUR and CHF will level off and we expect a sideways movement here. The strength of the Swiss franc against the EUR will continue.
EUR/USD (07.07.2025: 1.17)
For the first time in four years, the euro exceeded the USD 1.17 mark in June. Since the low of EUR/USD 1.014 in February, the euro has been on a steep upward trend against the US dollar. Even during the escalation of the Middle East conflict in mid-June, there was little change.
More and more market participants are now talking about a structural change ("turning point") on the currency markets. In contrast to previous years, relative interest rate differentials are becoming less important, while capital flows are gaining in relevance. The financing of the US budget and the current account deficit are likely to remain market-determining factors. The suspected headwind for the US dollar - which is likely to persist for a while - is coming from various directions.
Conclusion: The trend will level out and we expect a sideways movement.
EUR/CHF (07.07.2025: 0.94)
A departure from zero and negative interest rates in Switzerland would not only have been premature, but also unwise. The SNB therefore lowered the key interest rate to 0% in June, as expected. As a result, most market participants in the swap market expect a return to negative interest rates, albeit at a less low level from 2015 to 2022.
Conclusion: We expect the Swiss franc to remain strong against the EUR.
USD/CHF (07.07.2025: 0.80)
The interest rate differential between the two currencies has widened even further and central banks are pursuing different directions. America is struggling to get its inflation down, while Switzerland has achieved the exact opposite. In addition, structural capital flows and geopolitical risk premiums are also influencing the depreciation of the USD against the CHF.
Conclusion: The trend will level out and we expect a sideways movement.
Mimi Haas, Lic.rer.pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: MarketMap and Bloomberg
As of 07.07.2025
Due to the continuing oversupply, we expect the WTI oil price to remain within a range of USD 55 to 75 per barrel in the coming months.
Following the attack by Israel and the USA on Iranian nuclear facilities, the WTI oil price briefly rose from USD 62 to USD 78 per barrel in June. Since then, prices have fallen again and are currently hovering around USD 67 per barrel again.
The reason for this is that the oil-producing countries (such as OPEC+ but also the USA) can replace a shortfall in Iranian oil exports without major problems. On July 5, OPEC+ decided to increase oil production by a further 548,000 barrels per day from August (having already increased oil production by 411,000 barrels per day in May, June and July). However, WTI oil production in the USA has also reached a record level of 13.47 million barrels per day.
Dr. Patrick Huser, CEO
Sources: OPEC, FuW, MarketMap,International Energy Agency (IEA)
Status: 07.07.2025
Neutral. Gold remains a valid strategic portfolio component in the current macroeconomic environment. The mix of geopolitical uncertainty, central bank demand and inflation hedging provides a solid basis for defensive positioning - as long as interest rate and dollar risks are closely monitored.
Despite slight price corrections, gold remains in demand - primarily because global uncertainties such as trade disputes, geopolitical tensions and US tariffs continue to lead to uncertainty and volatility. These factors provide stable support for the gold price in the current environment.
Central banks are continuing to build up their gold reserves: According to the World Gold Council, around 95% of institutions are planning new purchases; Beijing, for example, has been buying gold for seven months. This systematic demand has a stabilizing and supportive effect in the long term.
Relatively high interest rates in America are limiting the short-term gold rally. The US Federal Reserve is not signaling a rapid turnaround in interest rates, which means that no support for the higher gold price can be seen from this side. Short-term technical signals point to a consolidation phase: The price is currently hovering between around USD 3,300 and USD 3,375.
Conclusion: Neutral, gold remains a valid strategic portfolio component in the current macroeconomic environment. The mix of geopolitical uncertainty, central bank demand and inflation hedging provides a solid basis for defensive positioning - as long as interest rate and dollar risks are closely monitored.
Mimi Haas, Lic. rer. pol. HSG, M.A. in Banking and Finance HSG, Partner
Sources: Degussa, Reuters and Financial Times.
As of: 07.07.2025
United Kingdom