How are the economy, interest rates, equities and currencies evolving? Our experts analyse the most important developments in financial markets and explain what they mean for investors.
These assessments are based on the latest analyses by Swiss Life Asset Managers and reflect Swiss Life’s current house view. As of: November/December 2026. Editorial deadline: 29 October 2026.
Key takeaways at a glance:
- Equities remain attractive. We continue to see opportunities particularly in the United States, selected emerging markets and Europe.
- Demand for safe-haven investments has increased. Government bonds and the Swiss franc have been among the main beneficiaries.
- Further interest rate hikes are expected in the United States and the eurozone. Within fixed income, shorter maturities currently appear more attractive.
- Swiss equities have recently outperformed, supported by defensive, high-quality companies.
- Expectations for artificial intelligence remain high, but markets are taking a more critical view of when these investments will begin to generate meaningful returns.
Interest rates & bonds
AI trade unwind supports government bonds
USA
In October, US Treasury yields declined due in part to weak labour market data and worries regarding AI-overinvestment. USD credit spreads widened, with CCC spreads underperforming the most.
US inflation remains above the central bank’s target amid a resilient labour market. We expect the Federal Reserve to deliver two additional rate hikes.
Eurozone
German Bund yields declined in October, supported by safe-haven demand amid concerns over French sovereign risk. EUR IG and HY spreads widened more noticeably than their US counterparts.
The ECB kept the policy rate unchanged in October, as expected. We anticipate one additional rate hike, likely in December 2026.
Switzerland
Swiss 10-year government bond yields also declined in October, while IG spreads remained unchanged.
The relatively weak CHF and improved economic data provide an opportunity for the SNB to normalize monetary policy to some extent. We expect two interest rate hikes of 25 basis points in 2027.
Equities
The earnings season delivers
USA
US equities gained slightly in October despite high bond yields and geopolitical uncertainties. The market was supported by solid earnings (see main text).
Market leadership remains concentrated in largecap technology stocks, while valuations remain above long-term averages.
Eurozone
Eurozone equities declined in October, continuing to lag the US year-to-date performance amid rising bond yields in France and lower economic growth expectations compared to the US.
Valuations remain reasonable, with high-dividend stocks still offering attractive income.
Switzerland
Swiss equities rebounded strongly in October and outperformed most developed markets.
Defensive sectors and heavyweight quality stocks were the main drivers of performance.
Emerging markets
Emerging markets fell significantly in October, with weakness in China and India outweighing gains in parts of Latin America.
Valuations remain attractive, although index concentration in Asian technology and AI-related stocks remains elevated.
Currencies
Stabilisation in the EUR after recent sell-off
USA
On a trade-weighted basis, the USD moved sideways in October. The meeting of the US Federal Reserve, which held policy rates stable in October, did not give any fresh impetus for the greenback.
The US economic outperformance, which was evident in the very strong Q3 GDP data, as well as the favourable interest rate differential, still speak in favour of the USD. We thus expect renewed USD appreciation against most major currencies apart from EUR, which already depreciated substantially in October.
Eurozone
The EUR showed the worst performance of all major currencies in October due to French bond market turmoils and an uncertain ECB monetary policy outlook (see main text).
After the strong EUR sell-off, we have now adopted a neutral view on EUR/USD and EUR/CHF.
Switzerland
The CHF appreciated in October as it benefitted from its safe haven status.
We shift our view on EUR/CHF from negative to neutral after the strong move in October.
Asset allocation
Risk takes a reality check
October in review
Global equity markets delivered a mixed performance in October as concerns about AI weighed on sentiment. Emerging markets, China and technology stocks led the decline, while Japan and Switzerland bucked the trend and delivered positive returns.
Sovereign bond yields moved in different directions across markets. US Treasury yields moved lower across the curve. French yields rose substantially amid political turmoil. German yields declined.
Credit spreads widened, reflecting a more cautious risk environment. The move was particularly pronounced in high-yield and emerging-market credit, while investment-grade spreads widened more moderately.
The USD was flat on a trade-weighted basis.
Current asset allocation views
We maintain an overweight in equities. The recent correction has taken some of the excess out of the market and, in our view, represents a healthy reality check rather than a fundamental change in the outlook. Underlying support remains intact, with continued strong earnings momentum. Valuations have become somewhat more reasonable and positioning less stretched.
Within global equities, we favour US and emergingmarket equities for their strong fundamentals, as well as European equities given Germany’s improving economic backdrop.
We remain neutral on government bonds, but prefer shorter duration, as resilient growth and concerns about longer-term fiscal sustainability warrant some caution at the long end of the curve.
We remain underweight credit, as we see a more attractive risk/reward profile in equities and real assets.
For CHF portfolios, we continue to favour Swiss NAV-based real estate and infrastructure and are tactically increasing our exposure to Swiss traded real estate.
Economy: Key takeaways
USA: growth is being driven not only by AI but is becoming increasingly broad-based.
Germany: robust growth despite a difficult situation
France: rising interest rates are impacting the private sector
Switzerland: appreciation of the franc is slowing imported inflation
China: new infrastructure programme helps revive subdued investment activity