Quarterly Report: July 2025

The first half of 2025 has been marked by a series of shocks related to fiscal, trade, and geopolitical decisions. From the tariff escalation in the U.S. to the expansionary turn in fiscal policy and renewed international tensions, investors have had to navigate an increasingly uncertain environment. However, beyond the media noise, data reveal an economic picture more resilient than headlines suggest.

A Noisy Environment, but with Solid Fundamentals
Three events defined the second quarter: the initial impact of new tariffs, the approval of the “Big Beautiful Bill” —a $3.4 trillion fiscal package— and the temporary spike in oil prices driven by geopolitical concerns. While these factors triggered short-term volatility, macro fundamentals remained strong. Employment is holding up, corporate margins remain healthy, and disinflation is progressing.

KEY FACT: The S&P 500 rebounded 24% from its April lows, despite policy-related uncertainty.

The key takeaway is that markets have started filtering out noise and refocusing on underlying data. The reaction to trade tensions was sharp but short-lived, while fiscal expansion has helped support demand and economic resilience.

From Trade to Debt: A Shifting Market Narrative
With the initial tariff shock absorbed, attention has turned to fiscal sustainability. In the U.S., a combination of aggressive stimulus, social spending cuts, and rising federal debt raises questions about long-term discipline. Meanwhile, Germany has moved away from austerity, prioritizing defense and infrastructure spending and reshaping the European fiscal framework.
This evolution is being reflected in bond markets, where long-dated yields now carry higher risk premiums. Still, financial conditions remain supportive thanks to a more accommodative monetary stance. Expectations of rate cuts from both the Fed and the ECB are boosting the appeal of quality bonds.

Investing with Conviction, Managing Risk
In an environment marked by volatility in economic policymaking and global tensions, portfolios should be grounded in quality, diversification, and active management. Fixed income continues to offer value, particularly outside the U.S., while in equities the focus should be on solid earnings rather than multiples. Real assets and private markets are gaining traction as alternative sources of stability and return.

STRATEGIC POSITIONING
• Fixed Income: favor intermediate duration, investment grade, and structured credit.
• Equities: tactically neutral with a tilt toward quality, innovation, and resilient business models.
• Private Markets: opportunities in private credit, infrastructure, and evergreen strategies.
• Currencies: actively manage dollar exposure, with greater allocation to the euro, Swiss franc, and gold.

Conclusion
Staying invested doesn’t mean ignoring risks —it means managing them with discipline and foresight. In a landscape shaped by evolving economic policies and global dynamics, the key lies in filtering signal from noise, remaining flexible, and building portfolios that can absorb shocks without missing long-term opportunities.

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