Model portfolios – Swiss focus

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High expectations

Despite the already muted prospects of numerous interest rate cuts by the US Federal Reserve (Fed) this year, there was a great deal of tension in the run-up to the interest rate decision in June. Accordingly, information relevant to monetary policy caused ups and downs on the bond markets. However, the US equity markets, particularly technology stocks, were unimpressed by this and continued to rise. Very high expectations for these stocks are now likely to be priced in. In addition, the US economy is likely to have passed its peak, while the European economy continues to lack any positive impetus. We therefore continue to favour the defensive Swiss equity market and emerging market equities over US and European equities. We are also sceptical about the technology-heavy US equity market and continue to overweight value stocks.