Situation Assessment & Outlook for the next six months
Our short-term assessment of the development of the financial markets and asset classes.
Review - Q2 2025
The past quarter began with a significant development when US President Donald Trump announced excessive import tariffs against the United States' trading partners. Investors' concerns about a global economic downturn led to considerable uncertainty and sharp fluctuations on the financial markets. The US government subsequently adopted a more conciliatory tone, triggering a gradual recovery. What remains is a loss of confidence in the US, which is reflected in the weakness of the US dollar. The erratic approach of US fiscal policy has also contributed to this. In that regard, the desire to save quickly gave way to the stimulus-driven expansion, further increasing the national debt burden.
Meanwhile, the downward trend in inflation continued in the leading industrialised countries. The European Central Bank and the Swiss National Bank responded with further interest rate cuts. In contrast, the US Federal Reserve kept key interest rates stable at a high level in view of the possibility of higher tariffs and an associated rise in inflation. The situation was similar for long-term interest rates: while they fell in Europe, they remained broadly stable in the US.
Apart from Switzerland, European stock markets performed well. US equities regained their original strength after a disappointing first quarter of 2025. In an environment marked by geopolitical hotspots (Ukraine, the Middle East) and further uncertainties (tariffs, the economy, government debt), gold extended its upward trajectory. The currency market was largely dominated by the weakness of the US dollar. Against the euro and the Swiss franc, the US dollar's losses in the first half of 2025 amounted to a double-digit percentage.
Current situation assessment & outlook for the next six months
After the global economic environment showed solid development compared to the historical average until midyear 2025, growth will lose momentum in the coming six months. This is due to ongoing uncertainty among consumers and businesses, triggered by the continuing lack of clarity regarding US trade policy.
Inflation figures remain at their current level in both Europe and the US. The European Central Bank appears to have reached the end of its cycle of interest rate cuts, and further cuts by the Swiss National Bank are also unlikely before the end of 2025, following the recent move to 0.00%. In the US, where the Federal Reserve has left its key interest rate unchanged since December 2024, more than one interest rate cut is expected in the next six months.
The stock markets are generally stable. In the US, high valuations are justified by robust corporate earnings. For European equities, the low interest rate environment combined with an improving economic sentiment is providing positive upside potential. The outlook for the US dollar is mixed, resulting in a neutral assessment. The high trend deviation suggests a potential rebound of the US currency, while the current strong momentum and the expectation that the loss of confidence in the US cannot be reversed in the short term argue against it.
Disclaimer - legal notice
This publication was produced by the Investment Office of the Colin&Cie Group. The information and opinions contained in this document are based on sources we believe to be reliable. However, we cannot guarantee the reliability, completeness or correctness of these sources. All information and quoted rates are only up-to-date at the time of this publication and are subject to change at any time without notice. The content is based on numerous assumptions made by the Colin & Cie Group. It should be noted that different assumptions can lead to materially different results. The forecasts and assessments are only current at the time this publication is prepared and can change at any time without prior notice. Past performance of an investment is not a guarantee of future results. Certain investments can experience sudden and substantial losses in value. This information and views do not constitute a solicitation, offer or recommendation to buy or sell investment instruments or to carry out any other transactions. We recommend interested investors to consult their personal advisor before making decisions on the basis of this document so that personal investment goals, financial situation, individual needs and risk profile as well as further information can be duly taken into account as part of a comprehensive consultation. The information contained in this publication is marketing material that is distributed for advertising purposes only.
