27 August 2025

The US administration announced tariffs on Swiss exports of 39% and although the tariffs exclude the crucial pharma sector and there may be subject to renegotiations, the actual rate was higher than expected. That said, the economic impact does not equal Swiss equity market impact, due to the global operation of Swiss multinationals and given that a significant part of production already takes place in the US for the US market: the Swiss equity market and Swiss franc impact was minimal.

Differences in debt developments and inflation have led to differences in monetary policy normalization speeds. With that, it has also contributed to differences in bond yields, where UK and US yields have remained relatively high while Swiss yield have been moving lower. Given the different macro environment between regions, we expect that yield differentials will likely remain high.

A significant shift in European fiscal policy in combination with the support of monetary policy and an expectation of structural reform has improved investors’ sentiment towards the Euro zone. European equities have significantly outperformed this year, and the euro has benefited likewise. So far, the rally has been primarily limited to certain sectors and even after the sizeable move, valuations in the Euro area are not expensive relative to its own history, and European equities continue to trade at a discount versus the broader US market.

In our "Investment Insights" video series, Dr. Pascal Koeppel – Chief Investment Officer and Head Investment Management Vontobel SFA – Dr. Pieter Jansen – Chief Investment Strategist Vontobel SFA – in this episode along with Laura Prina Cerai – Senior Portfolio Manager – give an update.