Our Investment Strategy for July 2025

Middle East conflict drives up oil volatility more than crude oil prices: the introduction of the US into this conflict raises the stakes for the global oil market and economy. However, the latest ceasefire has calmed oil prices, allowing global stocks to return close to all-time highs.

Domestic US Treasury bond demand stimulated by bank deregulation: the bond market remains the key financial market to watch, given rising US deficits. We advise benchmark or below-benchmark maturities in government and corporate bonds and buying on weakness.

Continued pressure on US dollar: despite the 13% appreciation of the euro vs. the US dollar this year, we expect a further long-term decline against major currencies and against gold. The potential repatriation of capital from the US to Europe and Asia remains a powerful force.

Upgrade European equities to Positive: eurozone economic momentum has improved, we begin to see lower uncertainty over US tariffs, and we expect economic benefits from the German infrastructure & defence spending plans. European and German mid-caps should benefit from stronger domestic economic momentum.

Residential property rallies: lower ECB benchmark rates boost mortgage demand, while rental demand remains robust in key European cities. Expected average annual return over the next 5 years is 7%-8%, based on a 4% rental yield and above-inflation rental growth.