LGT Private Banking House View

September 2025 - in a nutshell

In recent weeks, global markets have continued to test our ability to adapt and remain vigilant. While the initial shock of new tariffs and heightened political uncertainty seems to be subsiding, fresh challenges have emerged - inflationary pressures are reappearing, and economic momentum in the United States is beginning to moderate. With the US labour market cooling and long-term rates in the spotlight, volatility remains close at hand, adding another layer of complexity to portfolio decisions.

  • Date
  • Auteur Gérald Moser, Head Investment Solutions Europe, LGT Private Banking
  • Temps de lecture 7 minutes

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Europe’s story is one of resilience against a shifting backdrop. Export-dependent countries remain under pressure from weaker external demand, but domestic consumption and targeted fiscal measures offer a welcome buffer. As monetary policies evolve and rate cut expectations move closer, the economic outlook hinges more than ever on flexibility and ongoing data interpretation.

Equity markets are still riding a favourable wave, thanks to robust earnings and fading uncertainty from earlier tariff disputes. However, with high valuations and evidence of slowing momentum, September may well bring the return of some classic seasonality and consolidation. Accordingly, our investment stance balances opportunity with caution: we are holding the portfolio risk at a neutral level while refining our fixed- income allocations, increasing our exposure to emerging market bonds and further emphasising alternatives like gold, which continues to deliver diversification and resilience.

As always, the coming weeks will demand patience and objectivity. Whether driven by political headlines, inflation surprises, or shifts in monetary policy, episodes of volatility are sure to persist. Now more than ever, clear analysis and discipline remain the foundation of sound decision-making.

Macroeconomic environment

US growth is moderating amid trade-related uncertainties, as inflation pressures begin to resurface and the labour market shows initial signs of cooling. Export-driven economies, particularly in the eurozone, continue to face weakening external demand but are supported by recovering domestic consumption and fiscal measures. Looking ahead, heightened uncertainty means that economic prospects remain closely tied to incoming data, requiring flexibility as new trends and signals develop.

Investment strategy

The LGT Private Banking Europe Investment Committee held its monthly meeting to assess the current market environment and tactical positioning. Given favourable market momentum and strong corporate fundamentals, the committee decided not to reduce portfolio risk, but due to deteriorating economic activity and high valuations, also refrained from increasing it. As a result, the committee is maintaining a neutral risk stance, keeping the strategic "Neutral" allocation to equities and fixed income unchanged. Alternative investments remain "Overweight" due to an "Overweight" in gold, while cash remains "Underweighted". Within fixed income, investment-grade corporate bonds have been downgraded to "Underweight", while hard currency emerging market bonds are now "Overweighted". 

Equity strategy

Global equity markets have developed positively in recent weeks, supported by strong earnings momentum, anticipated rate cuts, and fading uncertainty from US tariffs. However, given the anticipated slowdown in economic activity and elevated valuations, a consolidation phase appears likely. Below-average performance in September would not be unusual, as September has historically been the weakest month of the year, with an average return of -1.9% over the last ten years. We remain positive on emerging markets, as they are expected to benefit from rate cuts and a stronger US dollar. On the other hand, we stay cautious on the Japanese equity market due to a slowdown in global economic activity and tighter monetary policy. Sector-wise, financials and real estate remain "Attractive", while consumer sectors stay "Unattractive" due to weak demand and tariff risks. Our allocation balances cyclicality and defensiveness.

Fixed-income strategy

The risk of a renewed increase in long-term US interest rates is growing. Although Fed Chair Powell has indicated an end to the long interest rate pause, the combination of political pressure, rising government debt and dwindling market liquidity is making it difficult to control the long end of the yield curve. Investors are therefore likely to demand higher risk premiums for long-term US government bonds, which could result in a more permanent increase in the yield curve. Against this backdrop, we are downgrading US dollar duration from "Neutral" to "Unattractive". At the same time, credit risk premiums have narrowed significantly since April. While investment grade (IG) bonds offer low excess returns compared to government bonds due to tight spreads, emerging market hard currency (EM HC) bonds are attractive due to higher current income, improved fundamentals, and structural advantages such as a weaker US dollar and monetary policy leeway for central banks. We therefore see a more attractive risk/return profile for EM HC and are upgrading it to "Attractive", while downgrading IG Credit to "Unattractive".

Currency strategy

The EUR/USD pair is expected to stabilise (six months target of 1.17) and trend higher toward 1.20 over the next twelve months, supported by a combination of Federal Reserve rate cuts, a cautious ECB stance, and improving eurozone fundamentals. Meanwhile, the USD/CHF pair is forecasted to remain relatively stable around 0.79-0.80, with the Swiss franc’s safe-haven status balancing the drag from weaker Swiss growth and subdued inflation. Investors should remain vigilant for episodic volatility driven by political and economic developments, particularly in the United States. While the euro and Swiss franc are expected to perform well in this environment, the risks of sudden market shifts underscore the importance of maintaining a balanced and flexible approach to FX.

Precious metals

Amidst ongoing global uncertainty and inflation in 2025, gold remains a robust portfolio diversifier, supported by record demand, strong technical momentum, and increased central bank purchases, prompting a bullish price forecast of USD 3600 to USD 3700 over the coming year. Investment demand has surged as jewellery demand moderates, with expected US interest rate cuts further boosting gold’s appeal. Meanwhile, silver’s renewed focus stems from soaring industrial demand, especially in solar energy, and a structural supply deficit; prices are forecasted to climb to USD 41 - USD 44 per ounce within a year. Gold and silver offer investors attractive diversification, resilience, and a unique opportunity to participate in the quest for value preservation.

LGT Private Banking House View August 2025 - in a nutshell Tous les articles LGT Private Banking House View October 2025 - in a nutshell
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