Our positioning: Skyrocketing prices

The surprisingly clear re-election of Donald Trump as US President energized the financial markets, which had been quite subdued since October. In fact, prices on the US stock markets actually skyrocketed. Sectors and companies that especially stand to benefit from the tax cuts and deregulation announced by Trump during the election campaign made strong gains. They included financial stocks and businesses owned by Trump confidant Elon Musk. By contrast, there was little joy on the stock exchanges in Europe and China. Trump’s expected protectionist economic policy, in particular, with its trade and punitive tariffs, appeared to dampen sentiment, bringing both the European and Chinese stock markets down significantly month-on-month.

US stock markets reacted to Donald Trump’s re-election as US President with skyrocketing prices. This positive momentum may continue for the time being. We are therefore reducing our underweighted position in US equities.

Momentum on the US equity market is likely to continue in the short term

The positive momentum on the US equity market may continue for the time being. The tax cuts for companies announced by Trump and the continuation of the tax cuts for private households introduced during his term of office look set to keep the US economy ticking over in the short term. We are therefore reducing our underweighted position in the US equity market.

However, there is a considerable risk that price pressure on goods and services under Trump will take longer to disappear than some voters are hoping. Excluding volatile components such as energy and food prices, inflation currently stands at 3.3 percent. The overall inflation rate rose recently to 2.6 percent. Against this backdrop, it will probably take far longer for inflation to fall back below the target of 2 percent. 

US capital market interest rates at a higher level

US capital market interest rates have already reacted to this trend. Following the US elections, yields to maturity on 10-year US government bonds rose to over 4.4 percent. In mid-September, yields to maturity were still at around 3.6 percent. Expectations regarding further policy rate cuts in the US have also declined sharply, with market participants currently expecting a rate of 4 percent for summer 2025. In mid-September, the figure was still 3 percent. The financial markets are therefore assuming that monetary easing will be carried out far more slowly. This view was reinforced by the comments made in mid-November by US Federal Reserve Chairman Jay Powell, who stressed that the Fed was in no hurry to reduce policy rates. It means long-term capital market interest rates are also likely to remain higher for the time being.

US government bonds with attractive yields

With a current yield to maturity on 10-year US government bonds of over 4.4 percent, government bonds remain very attractive. Before the tightening of monetary policy in spring 2022, interest rates at these levels were last seen before the financial crisis. We are therefore maintaining our overweighted position in US government bonds at the expense of bonds in Swiss francs. At the same time, long-term capital market interest rates, which are significantly higher than in mid-September, are likely to limit the performance of the US equity market in the medium and long term. So far, both share prices and long-term interest rates in the US have risen. However, higher interest rates mean that companies’ future cash flows are worth less today, which indicates that sooner or later, share prices will come under pressure. It means we’re keeping a very close eye on developments, particularly in the US.

Performance of asset classes

Currencies1 month in CHFYTD in CHF1 month in LC YTD in LC
Currencies
EUR
1 month in CHF
–0.0%
YTD Year-to-date: since the start of the year in CHF

0.8%

1 month in LC Local currency
–0.2%
YTD Year-to-date: since the start of the year in LC Local currency
0.8%
Currencies
USD
1 month in CHF
3.3%
YTD Year-to-date: since the start of the year in CHF
5.3%
1 month in LC Local currency
3.3%
YTD Year-to-date: since the start of the year in LC Local currency
5.3%
Currencies
JPY
1 month in CHF
–0.9%
YTD Year-to-date: since the start of the year in CHF
–4.5%
1 month in LC Local currency
–0.9%
YTD Year-to-date: since the start of the year in LC Local currency
–4.5%

Equities1 month in CHFYTD in CHF
1 month in LC YTD in LC
Equities
Switzerland
1 month in CHF
–3.9%
YTD Year-to-date: since the start of the year in CHF
6.9%
1 month in LC Local currency

-3.9%

YTD Year-to-date: since the start of the year in LC Local currency
6.9%
Equities
World
1 month in CHF
4.4%
YTD Year-to-date: since the start of the year in CHF
26.7%
1 month in LC Local currency
1.0%
YTD Year-to-date: since the start of the year in LC Local currency
20.4%
Equities
USA
1 month in CHF
6.7%
YTD Year-to-date: since the start of the year in CHF
33.3%
1 month in LC Local currency
3.3%
YTD Year-to-date: since the start of the year in LC Local currency
26.6%
Equities
Eurozone
1 month in CHF
–4.6%
YTD Year-to-date: since the start of the year in CHF
7.3%
1 month in LC Local currency
–4.4%
YTD Year-to-date: since the start of the year in LC Local currency
6.5%
Equities
United Kingdom
1 month in CHF
–2.2%
YTD Year-to-date: since the start of the year in CHF
12.6%
1 month in LC Local currency
–2.7%
YTD Year-to-date: since the start of the year in LC Local currency
7.1%
Equities
Japan
1 month in CHF
–0.9%
YTD Year-to-date: since the start of the year in CHF
11.8%
1 month in LC Local currency
0.0%
YTD Year-to-date: since the start of the year in LC Local currency
17.1%
Equities
Emerging markets
1 month in CHF
–2.6%
YTD Year-to-date: since the start of the year in CHF
14.9%
1 month in LC Local currency
–5.7%
YTD Year-to-date: since the start of the year in LC Local currency
9.1%

Fixed income1 month in CHFYTD in CHF
1 month in LC YTD in LC
Fixed income
Switzerland
1 month in CHF
1.1%
YTD Year-to-date: since the start of the year in CHF
4.3%
1 month in LC Local currency

1.1%

YTD Year-to-date: since the start of the year in LC Local currency
4.3%
Fixed income
World
1 month in CHF
0.9%
YTD Year-to-date: since the start of the year in CHF
4.2%
1 month in LC Local currency
–2.3%
YTD Year-to-date: since the start of the year in LC Local currency
–1.0%
Fixed income
Emerging markets
1 month in CHF
2.6%
YTD Year-to-date: since the start of the year in CHF
12.4%
1 month in LC Local currency
–0.7%
YTD Year-to-date: since the start of the year in LC Local currency
6.8%

Alternative investments1 month in CHFYTD in CHF
1 month in LC YTD in LC
Alternative investments
Swiss real estate
1 month in CHF
1.3%
YTD Year-to-date: since the start of the year in CHF
11.4%
1 month in LC Local currency

1.3%

YTD Year-to-date: since the start of the year in LC Local currency
11.4%
Alternative investments
Gold
1 month in CHF
1.4%.
YTD Year-to-date: since the start of the year in CHF
31.6%
1 month in LC Local currency
–1.9%
YTD Year-to-date: since the start of the year in LC Local currency
25.0%

Our positioning – Swiss focus

LiquidityTAA old TAA new
Positioning
Liquidity
CHF
TAA old Tactical asset allocation: short- to medium-term positioning
1.0%
TAA new Tactical asset allocation: short- to medium-term positioning
1.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Liquidity
Money market CHF
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
0.0%
Positioning Positioning compared to long-term investment strategy
Heavily underweighted
Liquidity
Money market JPY
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Overweighted
Liquidity
Total
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
3.0%
Positioning Positioning compared to long-term investment strategy
Underweighted

Equities
TAA old TAA new
Positioning
Equities
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
25.0%
TAA new Tactical asset allocation: short- to medium-term positioning
25.0%
Positioning Positioning compared to long-term investment strategy
Overweighted
Equities
USA
TAA old Tactical asset allocation: short- to medium-term positioning
8.0%
TAA new Tactical asset allocation: short- to medium-term positioning
10.0%
Positioning Positioning compared to long-term investment strategy
Underweighted
Equities
Eurozone
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Underweighted
Equities
United Kingdom
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Equities
Japan
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Equities
Emerging markets ex China
TAA old Tactical asset allocation: short- to medium-term positioning
7.0%
TAA new Tactical asset allocation: short- to medium-term positioning
7.0%
Positioning Positioning compared to long-term investment strategy
Overweighted
Equities
China
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Equities
World value
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Overweighted
Equities
Total
TAA old Tactical asset allocation: short- to medium-term positioning
50.0%
TAA new Tactical asset allocation: short- to medium-term positioning
52.0%
Positioning Positioning compared to long-term investment strategy
Overweighted

Fixed incomeTAA old TAA new
Positioning
Fixed income
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
15.0%
TAA new Tactical asset allocation: short- to medium-term positioning
15.0%
Positioning Positioning compared to long-term investment strategy
Underweighted
Fixed income
World
TAA old Tactical asset allocation: short- to medium-term positioning
10.0%
TAA new Tactical asset allocation: short- to medium-term positioning
10.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Fixed income
Emerging markets
TAA old Tactical asset allocation: short- to medium-term positioning
6.0%
TAA new Tactical asset allocation: short- to medium-term positioning
6.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Fixed income
US government bonds 
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Positioning Positioning compared to long-term investment strategy
Overweighted
Fixed income
Total
TAA old Tactical asset allocation: short- to medium-term positioning
33.0%
TAA new Tactical asset allocation: short- to medium-term positioning
33.0%
Positioning Positioning compared to long-term investment strategy
Neutral

Alternative investmentsTAA old TAA new
Positioning
Alternative investments
Swiss real estate
TAA old Tactical asset allocation: short- to medium-term positioning
7.0%
TAA new Tactical asset allocation: short- to medium-term positioning
7.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Alternative investments
Gold
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%
Positioning Positioning compared to long-term investment strategy
Neutral
Alternative investments
Total
TAA old Tactical asset allocation: short- to medium-term positioning
12.0%
TAA new Tactical asset allocation: short- to medium-term positioning
12.0%
Positioning Positioning compared to long-term investment strategy
Neutral
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