Monthly report

CIO Report - November 2025

Markets

Global equity markets showed some mixed performance in November. The broad US market moved sideways, while technology stocks lost ground. Japan and China also came under pressure, whereas Latin America advanced. Europe likewise showed no clear trend. German equities weakened, France and the UK were little changed, and Italy, Spain and Switzerland closed up or even significantly higher. Overall, the strong and homogenous upward trend seen so far this year partly lost momentum as global liquidity dynamics declined sharply and US bank reserves fell. This monetary headwind could not be fully offset by the globally stable to solid economic environment and the interest rate cuts implemented by various central banks. The combination of resilient economic activity, high government spending and stubborn inflation pushed long-term government bond yields higher, especially in Japan. Concerns about possible rate hikes by the Bank of Japan added to the upward pressure. Europe and China also saw a moderate rise in yields at the long end of the curve. Only US yields moved sideways. The slightly inflationary environment supported gold and especially silver prices, as well as economically sensitive copper. In contrast, cryptocurrencies collapsed. The suspected reason is weakening liquidity momentum. Bitcoin in particular is strongly correlated with global liquidity conditions.

Outlook

Global liquidity developments are the leading main driver not only for equity and credit markets, but also for economic activity, inflation and therefore long-term interest rates. Global liquidity continues to rise for now despite slowing momentum, providing solid structural support for equity and credit markets as well as for the global economy. Since liquidity leads markets, significant risks would only emerge once liquidity flows decline markedly for at least two to three months. However, the currently still rising liquidity cycle could reach its peak in the first half of 2026 and then turn downward. The reasons for this include a relatively regular cyclical pattern of five to six years. This rhythm results from corporate borrowing via bonds with maturities in this range. The last cyclical peak occurred in the pandemic year of 2020. At that time, many corporate bonds were issued due to low interest costs, and these now need to be refinanced. This refinancing requires temporary liquidity as a catalyst from markets. The upcoming refinancing wave is therefore referred to as the “debt maturity wall” and could represent some risks for equity markets as well. For now, however, the global liquidity environment remains broadly supportive for risky assets. Temporary spikes in volatility are nevertheless possible, as the Fed has been allowing bank reserves to decline for some time, creating direct stress in money markets and crypto markets. The reduction in bank reserves is intended to partly offset the potentially inflationary impact of the Fed’s earlier rate cuts. This has affected equity markets in the US and, to some extent, globally. A technical market correction is very likely. Given the still solid global economic backdrop, high government debt and persistent inflation, there is a general upward bias in long-term government bond yields in the US, Europe and Japan.

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