LGT Private Banking House View

December 2025 - in a nutshell

US economic resilience reduced expectations for near-term Fed rate cuts, while the euro area reached its inflation target and Switzerland continued to face weak growth and low inflation. Global equities consolidated after recent gains, but Q3 earnings remained solid and emerging markets retained a favourable outlook amid ongoing US dollar weakness. Bond markets stayed robust with US high yield upgraded to "Neutral", and precious metals regained an "Attractive" stance, supported by higher price targets and central bank accumulation.

  • Data
  • Autore Gérald Moser, Head Investment Solutions Europe, LGT Private Banking
  • Tempo di lettura 7 minuto

House View Dezember
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As we approach the end of an eventful year, visibility is finally improving for investors. The resumption of US economic data, after the longest government shutdown in history, provides a more settled foundation for our thinking: the American economy has proven admirably resilient, and global growth - although cooling as 2025 draws to a close - remains on a constructive track for the year ahead.

Despite lingering headline risks - from shifting trade policies to evolving geopolitics - the macro backdrop is broadly supportive. In the US, consumer strength and a healthy labour market are sustaining activity. Across the Atlantic, the euro area is benefitting from contained inflation and steady policy, while Switzerland absorbs the shock of earlier tariffs with trademark stability. In Asia, Japan’s ongoing reforms and political changes are enlivening the investment debate.

Financial markets, meanwhile, have entered a more sober, less euphoric phase after the rally that began in spring. Recent equity volatility - most notably in the technology and AI space - reflects healthy profit taking and the natural process of resetting overextended expectations, rather than any fundamental deterioration. Encouragingly, underlying corporate results and earnings momentum remain robust, and we see current consolidation as technical rather than structural.

Looking ahead, we expect policy patience from the Federal Reserve, with interest rates likely on hold until more decisive progress on inflation. Our positioning remains unchanged: a moderately risk-positive stance is justified by sound fundamentals and the absence of clear excesses in market sentiment. We continue to see a role for both resilience and selectivity - balancing opportunity against remaining uncertainties as we enter 2026.

Macroeconomic environment

The end of the US data blackout reveals a surprisingly resilient economy, reducing the urgency for further monetary policy easing by the Fed. In the euro area, inflation has returned to target and ECB policy now sits near neutral. Switzerland, by contrast, faces unusually low inflation and weak growth, though a gradual recovery is expected without further SNB cuts.

Investment strategy

We maintain a moderate risk-on stance with equities remaining "Overweight" and a continued preference for emerging markets, as neither the macroeconomic backdrop nor corporate fundamentals have worsened in our assessment. Fixed income and alternatives stay "Neutral" while cash is "Underweight", compared to the strategic weight. The gold allocation is kept at the strategic weight after a recent reduction, and emerging-market hard-currency debt remains "Overweight", supported by improving external balances and a constructive technical backdrop. 

Equity strategy

After a strong recovery from the post-Liberation Day lows, the global equity market saw a correction in November as the likelihood of a December Fed rate cut diminished and the sustainability and financing feasibility of announced AI investments were called into question. We view the correction as healthy following the strong performance, and our constructive equity stance remains supported by solid earnings growth, with Q3 earnings again being better than expected. We maintain our preference for emerging market equities, underpinned by ongoing USD weakness and expected Fed rate cuts, and we value the diversification across countries such as China, India, and Korea. The health care sector has performed well thanks to its defensive characteristics and to additional agreements between pharmaceutical companies and the US administration, which further reduce risks related to drug pricing and industry tariffs. With valuations still looking attractive, we maintain our positive view.

Fixed-income strategy

Despite higher volatility, the bond market remains robust and the primary market continues to be extremely active. We now expect the Fed to cap its key interest rate at 3.50% until mid-2026. We view the imminent conclusion of QT measures as an attempt to exert greater control over the yield curve. This is why we are raising our preference for US dollar duration to "Neutral". Simultaneously, we are raising our assessment of US high yield to "Neutral", supported by stable economic data, attractive valuations, and solid investor demand.

Currency strategy

We maintain an "Attractive" stance in EUR/USD and our current FX targets are lifted to EUR/USD 1.20 (6 months) and 1.22 (12 months). At the same time, we have lowered USD/CHF targets to 0.76 (6 months) and 0.75 (12 months). These changes reflect the policy-rate configuration and a downside bias in the US dollar. We are closing our previously "Unattractive" GBP/USD stance after Sterling’s recent losses, which largely reflect softer economic data in the UK.

Precious metals

We re-establish an "Attractive" stance on precious metals and raise our price targets. For gold, we set six- and 12-month targets at USD 4500 and USD 4800, respectively, reflecting the anticipated drift lower in real rates, persistent central-bank accumulation and the likelihood of more investment inflows. For silver, we set six- and 12-month targets at USD 57 and USD 58, respectively, predicated on gold leadership, gradual improvement in industrial demand given policy support and continued market tightness.

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