Highlights
– US Debt Risks Remain Unresolved
Persistent deficits and rising interest costs deepen the debt burden and constrain policy flexibility.
– Yen Weakness Raises Global Market Risks
Further monetary policy tightening and Japanese capital repatriation could lift global yields and amplify cross-asset volatility.
– Europe’s Competitiveness Decline Reflects Over-Financialisation
Research on Europe’s largest firms links weak competitiveness to capital shifting from productive investment toward financial assets and shareholder payouts.
– Monetary Expansion Erodes Real Wealth
As monetary expansion redistributes wealth toward financial assets, real assets can provide exposure to tangible value outside the fiat system.
– Market Risk Signal Supports Balanced Positioning
Portfolio allocation has shifted towards income and stabilisation as investors selectively increase growth exposure while reducing protection.
Developments in Financial and Commodity Markets
Persistent US budget deficits and rising interest costs remain a major policy challenge. Fiscal tools such as financial repression, which involves using inflation and low real rates to reduce the value of debt, may delay a more disruptive adjustment but is unlikely to resolve the underlying imbalance. In Japan, yen weakness may prompt further tightening, while efforts to encourage domestic investment could lead institutions to repatriate overseas capital. Together, these shifts could raise global bond yields and market volatility, strengthening the argument for diversification and active portfolio management. Chinaʼs focus on high-tech and advanced manufacturing is creating new economic momentum as it seeks to offset property-sector weakness. Overcapacity, price competition, and geopolitical restrictions remain risks; nevertheless, these sectors retain long-term growth potential. Research from UCLʼs Institute for Innovation and Public Purpose demonstrates that Europeʼs competitiveness decline reflects two decades of over-financialisation, sharpening the distinction between companies extracting value and those reinvesting to build it.
Switzerlandʼs middle-income population remained broadly stable between 1998 and 2023, accounting for 55.2% of permanent residents last year, according to the Federal Statistical Office. The middle-income bracket includes single individuals earning between CHF 4,228 and CHF 9,061 per month, or families with two children earning between CHF 8,880 and CHF 19,028 monthly. However, the data reveal growing financial disparities, even within this cohort.
In 2024, 10.5% of lower-middle-income households spent more than 40% of their disposable income on housing costs, compared with just 3.5% among the upper-middle class.
Additionally, 25% said they could not cover an unexpected CHF 2,500 expense, 14.1% said making ends meet by monthend was difficult or very difficult, and more than 11% were unable to afford a holiday for financial reasons. Although outright arrears on bills remained relatively limited, the findings suggest that financial strain is increasingly extending into parts of Switzerlandʼs traditionally stable middle class. Against this backdrop, gold may retain its appeal among households with available savings as a long-term store of value and a means of preserving purchasing power amid greater financial uncertainty.
SpaceXʼs reported surge above a USD 3 trillion valuation intensified concerns that prices were detaching from fundamentals. With only 4.3% of shares publicly floated, buying pressure initially drove a single-session gain of roughly USD 650 billion despite ongoing losses. However, this momentum reversed as the valuation plummeted by USD 1 trillion over 5 weeks, with shares dipping below their USD 135 IPO price. The decline followed an aborted Starship launch and growing concern over lock-up expiries covering 911.5 million shares. The reversal reinforced warnings that a limited float, elevated valuation, and options-driven feedback loops could generate extreme volatility and increasingly concentrate systemic market risk.
Precious Metals and Commodities
In the short term, precious metals, copper, and oil are expected to trade broadly within established ranges, while agricultural prices face stronger upward pressure. Over the medium to long term, momentum is expected to strengthen across all commodity markets.
Market Risk Signal
Index Performance in Gold Terms
Measuring equities in gold terms strips out currency debasement and monetary distortion, revealing whether gains truly increased purchasing power or merely reflected inflation and FX effects. Performance is calculated using gold priced in each indexʼs native currency.
Year-to-date performance of equity benchmarks in gold terms:
