Global strategy 4Q 2025

The third quarter brought positive developments for most asset classes. Agreements reached by the US with many countries on trade deals removed uncertainty from the market. The market shrugged off the US president's obvious attempts to influence US monetary policy. The focus remained on rising corporate earnings and a better-than-expected economy. The fourth quarter should be similar. Although political uncertainty remains considerable, there are no signs of an end to the resilience of the economy and companies.

Economy: Although economic growth in the eurozone slowed significantly in the second quarter, this must be seen in the context of strong growth in the first quarter and distortions caused by US tariffs. Overall, the economy has performed better than expected, and data for Q3 to date justify cautious optimism. The US economy, on the other hand, has suffered from US policy. Consumer confidence has fallen significantly, which was reflected in slower growth and, subsequently, a weaker labor market. We expect stable development at a low level.

Bonds: We generally expect bond markets to move sideways. Key interest rates in the eurozone should remain unchanged, and we believe that the effects of the upcoming German fiscal package are already correctly priced into the bond market. Only yields on longer maturities should fall slightly. In the US, key interest rates are likely to continue to fall, but we believe the bond market is correctly pricing in a slow approach by the US Fed in an environment of temporarily rising inflation and a weakening labor market. For EUR corporate bonds, we expect the best performance in the high-yield segment, i.e., for weaker credit ratings.

Currencies: A narrowing of the interest rate differential between the eurozone and the US and a persistently uncertain political environment in the US, not least due to Donald Trump's influence on the US Federal Reserve's decision-making body, suggest to us that the dollar will weaken further. We expect the Swiss franc to strengthen marginally. The price of gold should continue to rise. Lower US interest rates and global uncertainty should maintain high demand for the precious metal.

Equities: Although there will be differences between sectors, we expect the positive trend on the stock markets to continue. In general, our earnings forecasts justify the current valuations. The US technology sector, and hardware in particular, should continue to benefit from the rapidly growing demand for AI services, and the figures for financial and industrial stocks, among others, should also continue to develop positively. We expect price gains for the emerging markets of India and China.

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