Zurich Roundtable: What Ten Experts say about inflation, rates and recovery
The SFED (Swiss Forum for Economic Dialogue) held its Q2 2025 meeting at the Schweizerhof in Zurich to exchange views on macro-financial outlooks. On this occasion, around ten experts participated in the discussions, including representatives from Zürcher Kantonalbank, Schwyzer Kantonalbank, Vontobel, ODDO BHF, Divas, Axioma, Zurich Insurance, and Maverix. The summary below reflects the key takeaways from these discussions. These views represent an average consensus and should not be attributed to any individual institution.
Ahead of the meeting, the strategists responded to a survey. Strong convictions emerged around a return of USD/CHF to 0.80, U.S. inflation exceeding 3% by the end of 2025, the continued mainstream adoption of artificial intelligence, and the outperformance of Chinese equities over U.S. equities this year. Uncertainty prevailed regarding the likelihood of gold reaching $3,700 per ounce by the end of 2025, the potential return of negative interest rates in Switzerland as early as September, and whether Swiss equities would outperform their European counterparts this year. Finally, the strategists agreed that current valuations do not justify taking on additional risk, that the U.S. federal debt-to-GDP ratio will not decrease, that the yield curve inversion is not a reliable signal of recession, that a return to 0% tariffs is unlikely, that U.S. 10-year yields will not exceed 5%, and that a recovery in mid-cap stocks is plausible.
The conversations revealed a nuanced yet broadly constructive view of the current economic and financial environment. A broad consensus is emerging around the scenario of a soft landing in the United States, supported by the downward revision of U.S. growth forecasts, now expected at around 1.4% compared to over 2% initially. This deceleration, seen as manageable, would allow for a slowdown without recession, in a context where inflation continues to normalize.
However, several strategists point to a divergence between weakening leading indicators – notably the PMIs – and the resilience of financial markets. This dichotomy fuels a deeper debate about the nature of the economic cycle. Some believe that markets are already pricing in a structural increase in productivity driven by artificial intelligence, which would reduce the volatility of the traditional cycle and lessen the relevance of classic macro signals. Others remain more cautious, citing growing risks related to U.S. fiscal policy, particularly the potential adoption of an expansive fiscal plan, the resurgence of protectionism through tariffs, and a broader American strategy focused on reshoring capital.
The prevailing scenario is one of a “Goldilocks” environment – combining moderate growth with contained inflation – but seen as fragile. A positive surprise could come from stronger-than-expected U.S. consumer resilience, while a geopolitical shock in the Middle East or a new protectionist escalation are cited as downside risks. The year 2026 is also beginning to appear on strategists’ radars, particularly with regard to the appointment of the next Chair of the Federal Reserve, which is seen as potentially market-defining.
On equities, the tone is broadly positive, supported by solid earnings and a rotation into cyclical sectors such as technology and financials. This risk-on environment contrasts with the relative underperformance of defensive stocks and fuels debate around whether to overweight U.S. equities versus Europe. Some prefer to maintain strong U.S. exposure, arguing that American markets better reflect technological transitions and provide greater earnings visibility. Others favor a more diversified approach, highlighting, for example, the UK, whose energy and defensive exposure provides a potential hedge in the event of external shocks.
Swiss equities, meanwhile, remain divisive: their high weighting in pharmaceutical stocks raises concerns, particularly regarding sector-specific regulatory risks. Positioning in small caps is also mixed: some are overweighting them in anticipation of a cyclical rebound, while others are underweighting them, arguing that the cycle remains too uncertain for such a volatile segment. Meanwhile, the weak dollar is boosting interest in emerging markets, where several strategists see attractive entry points.
In fixed income, caution remains but positioning is evolving. The strategists surveyed now favor credit over sovereign bonds, with strong interest in emerging markets, particularly Latin America. This segment is viewed as offering a good balance between yield and macroeconomic stability, especially thanks to monetary policies that are often ahead of the curve. If the Fed refrains from cutting rates, some do not rule out a Twist operation, which would involve selling short-term securities to buy longer maturities, thereby influencing the yield curve without changing the policy rate. Convertible bonds were also mentioned as an attractive asset class in a transitional environment, combining yield with equity exposure in an asymmetric structure. Duration remains a sensitive topic, with a general preference for intermediate maturities while awaiting clearer signals from the Fed. Finally, to address the context of negative CHF yields, some strategists mentioned several alternatives: increasing credit exposure (including high yield), extending duration, or partially shifting fixed income exposure to the Swiss real estate market.
Real estate and gold are subject to more contrasting views. On real estate, strategists are divided. Some point to the strong past performance as a reason for caution, suggesting that upside potential may now be limited. Others, on the contrary, highlight that macro fundamentals remain highly favorable, especially in regions where supply is constrained. Gold retains a strategic role in portfolios as a protective asset amid geopolitical uncertainties and sustained demand from central banks. Its inclusion in allocations is seen as justified, particularly as institutional demand remains strong.
Finally, positioning on the dollar is shaped by several overlapping dynamics. The current trend of dollar weakness could continue, particularly if U.S. rates stabilize or begin to fall. The Trump administration’s monetary realignment strategy remains a potentially structural risk, which is likely to continue supporting the appreciation of the Swiss franc.
Insights from the Roundtable:
- Ross Hutchison, Head of Eurozone Market Strategy & Economics, Zurich Insurance: « To say uncertainty is elevated is an understatement. The global trade environment is profoundly changing, and free movement of capital is being questioned. Yet, despite the whirlwind of news, we still see normality in many macroeconomic conditions. Global growth is reasonable, and inflation continues to normalise. We see scope for global equity markets to move higher still, spurred on by profound technological advances. There are exceptions. Highly rated fixed income, particularly in Europe, looks attractive as the the risks skew near-term towards disappointment on the much-discussed European growth renaissance.«
- Vincent Lagger, Asset Manager Active Solutions, Zürcher Kantonalbank: « The current market environment is very challenging and should remain so in the foreseeable future. In such a context, it is appropriate to construct a portfolio along a more granular and flexible grid within the main asset classes. In the case of equities, emerging markets should benefit from a weaker USD and a stabilization of the Chinese economy. At the same time, the US technology sector should remain broadly insulated from fiscal and trade policy gyrations out of the US administration. The UK stock market offers attractive diversification in a global context while delivering dividend yield and an optionality on rising oil price via its sectorial bias. Convertibles and Australian government bonds represent appealing opportunities within the fixed income universe. »
- Maurizio Porfiri, Chief Investment Officer, Maverix: « Our base case for the remainder of 2025 remains a soft landing for the US economy. Hard data suggests a moderate cooling, with recession risks now at just 30%. Despite rising global tariffs, inflation should continue to ease gradually, allowing the Federal Reserve to begin lowering rates. We remain constructive on US and European equities, supported by solid earnings momentum. We favour an overweight equity allocation with downside protection against geopolitical and policy-related shocks. Global interest rates are expected to decline further in the second half. While the upside for gold appears limited, ongoing diversification away from the US dollar continues to support inflows. »
- Arthur Jurus, Head of Investment Office, ODDO BHF Switzerland: “Our central macroeconomic scenario anticipates a global slowdown in 2025 driven by protectionist trade policies. We maintain a slight overweight in equities, with a targeted underweight in U.S. equities and a selective overweight in European and Swiss equities, particularly large and mid caps. In credit, we are increasingly constructive on high-quality corporate bonds and short-duration high yield, while remaining cautious on longer-duration exposures. The Swiss franc is likely to continue appreciating, and we are even more positive on Swiss real estate, supported by the renewed prevalence of negative interest rates. Finally, we expect the euro to appreciate against the dollar and maintain a positive view on crude oil.”
