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If the markets had a soundtrack this month, it would be pure disco: bold, unexpected, and full of hidden rhythms.
This month, you’ll get a global snapshot of equities, commodities, and currencies—but our spotlight this time is on bonds. They’re not always glamorous, but when they speak, the markets listen. And right now, they’re saying a lot.
We’re also diving into one of our all-time favourite topics: interest rates. With the Swiss National Bank possibly cutting rates below zero again, the implications for savers, borrowers, and investors are big. What does it mean for you? We break it down.
Happy reading!
Table of Contents
The market at a glance: Le Freak
Song of the month: “Le Freak" by Chic
One of the great joys of my job is getting to meet a variety of interesting people across Switzerland. At a recent event in Zurich with the dynamic Ladies Drive community, I had the pleasure of chatting with an incredibly sharp woman who, in the same breath, complimented this newsletter—and questioned my taste in music.
So this month, I’ve handed her the DJ reins. And I have to say - hats off. Her pick doesn’t just bring a welcome dose of energy, it also feels oddly appropriate to describe what’s been happening in the markets lately.
“Le Freak” by Chic, the iconic funk-disco anthem accompanying this edition, is appropriate in more ways than one. Written in 1978, it celebrates the unconventional and reminds us that sometimes, the overlooked shouldn’t be underestimated.
A fun bit of history: the song was born out of frustration. On New Year’s Eve 1977, two of the band’s members were denied entry to the ultra-exclusive Studio 54 club. Back home, they channelled their irritation into a track so wildly successful that it eventually earned them VIP access to the very club that had turned them away.
In the world of finance, the bond market often plays a similar role—quietly operating in the shadows of its flashier sibling, the equity market. But when bonds make headlines, it’s rarely a quiet affair. Their return to the spotlight tends to be dramatic, and impossible to ignore. And in May, they made a striking comeback.
Overall, May was a positive month for markets. However, the same underlying uncertainty persisted—and has now started to surface in the bond market. That’s where we’ll focus our attention this time. But first, let’s take our usual “tour de piste”.
Key takeaways
Smart investing means watching all markets—not just the ones that shine.
Equities rebounded strongly in May, with gains across major global indices.
But bond markets took the spotlight, reflecting investor concerns over U.S. policy direction and global positioning.
Commodities showed strength, while digital assets surged, with Bitcoin leading the charge.
The Swiss franc continued to appreciate, increasing pressure on the SNB ahead of a likely rate cut on June 20th.
Easing trade tensions support a positive short-term outlook, but we’re still keeping an eye on the “freaks” in the system.
What happened with equities
After a rough March and a rather erratic April, May brought a welcome change of pace for equity markets. U.S. stocks led the charge, with the S&P 500 posting its best monthly performance since late 2023, rising by an impressive +6.2%. The upbeat sentiment was echoed globally: Europe gained +4.0%, China +5.3%, and Japan +5.3%. Closer to home, the Swiss Market Index (SMI) also moved higher—albeit more modestly—up +0.9%. But hey, you can’t shine every month.
Several factors helped lift the mood. First, corporate earnings came in strong across the board. While we’ve previously cautioned that this earnings season should be taken with a grain of salt—since many results still reflect the pre-Trump era—it’s nonetheless reassuring to see positive data points.
Second, a temporary easing of political and trade tensions helped calm investor nerves. The partial rollback of U.S.-China tariffs and renewed diplomatic dialogue globally contributed to a more constructive backdrop. Investors also seem to be adapting to Trump’s negotiation style, learning to distinguish between rhetoric and actual outcomes. (Wall Street even coined a tongue-in-cheek acronym for it: “TACO” – Trump Always Chickens Out.)
That said, there’s a risk of becoming too comfortable with uncertainty. So, while we enjoy the equity gains, it’s worth keeping a watchful eye on what could still go wrong.
What happened with bonds
Which brings us to the bond market. We like to remind people—whenever we can—just how vital it is. Too often, it’s overlooked, while attention goes to flashier assets like equities and crypto. But the real chic is the freak.
Larger than the equity market in size, bonds markets are indispensable. They allow companies and governments to finance their activities, keep the global financial system running, and help set the cost of capital.
From what the U.S. government pays to service its multi-trillion-dollar debt, to the mortgage rate a regular American faces when buying a home—it often all starts in the bond market.
In a way, the bond market holds more immediate power than voters—it assigns a price to political decisions in real time. And that’s exactly what we see now. Donald Trump may argue that his strategy is good for the U.S. economy in the long run, but the bond market isn’t convinced.
When investors demand higher yields (or lower prices), it signals doubt. They’re pricing in risk, not confidence. After all, if you truly trust someone, you should be willing to lend them money at a lower rate. All the more so when that someone is the world’s leading economy.
Higher rates are a problem—not just for the president, but for global markets. The last thing we want is a dislocation in the bond market. We’re not there yet, but warning signs are flashing. Even prominent voices like Jamie Dimon have started sounding the alarm.
From here, we see three possible scenarios:
The U.S. administration adjusts its strategy, tensions ease, and bondholders enjoy solid returns.
Rates climb further, and we brace for tougher times.
Markets continue to swing between these two outcomes—just as they’ve done for the past six months (if not longer).
As of now, we lean toward the last two scenarios. But one thing’s for sure—we’re not leaving the freak at the door.
What happened with commodities, currencies, and digital assets
Commodity markets had a brighter tone in May. Oil and gold prices rose as geopolitical tensions eased. Digital assets were on fire—Bitcoin posted another double-digit return, continuing its strong momentum.
Meanwhile, the Swiss franc continued to strengthen, putting added pressure on the Swiss National Bank. Markets are now pricing in another rate cut on June 20th. As for the SNB’s strategy—well, let’s just say some things remain a mystery, even to those of us who enjoy listening to freaks.
To wrap up, May was a good month for markets—and that’s something to appreciate. As investors grow more accustomed to uncertainty and global tensions continue to ease, there’s reason to feel optimistic about the short-term outlook.
That said, we’ll continue listening to what all markets are telling us—not because it’s chic, but because it’s essential.
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Demystification room: Negative interest rates, what does it mean?
The Swiss National Bank (SNB) is scheduled to meet on June 19, and markets are anticipating another interest rate cut—potentially down to 0%, or even into negative territory. But what does this mean, and how might it affect you?
Interest rates are essentially the cost of money. They reward lenders for the risk they take and the time during which they cannot access their funds. Set by central banks, short-term interest rates directly influence borrowing costs and the returns on savings. When the economy overheats, central banks typically raise rates to contain inflation. Conversely, when growth slows or the national currency becomes too strong, they may lower rates to stimulate economic activity. In some cases, rates can even fall below zero.
A negative interest rate means that banks must pay to deposit their excess reserves with the central bank. To avoid this cost, they may pass it on to clients, particularly those with large deposits. However, this is not applied uniformly. Some banks absorb the cost themselves, while others impose it selectively—often targeting corporate clients or individuals with significant balances.
A negative rate environment has wide-ranging implications:
Savers see their returns diminish, as traditional savings accounts offer little to no yield.
Borrowers, on the other hand, benefit from exceptionally favourable financing conditions.
Investors are encouraged to take on more risk in pursuit of higher returns.
While this may seem counterintuitive, the objective is to stimulate the economy by discouraging saving and encouraging borrowing and investment. It’s a strategy the SNB has used in the past—and one it may well consider again.
Higher rates on USD and EUR balances
The Swiss National Bank may lower interest rates, which would impact savings accounts—particularly those in Swiss francs.
However, not all central banks are following the same path. Interest rates remain attractive for savers holding cash in euros or U.S. dollars. That said, there’s a catch: most Swiss banks do not offer interest on EUR or USD deposits. In fact, out of 71 banks in Switzerland, only 18 offer interest on euro deposits and just 7 on U.S. dollar deposits—and even then, the returns are often minimal.
At Alpian, we take a different approach:
We offer a 1% annual interest rate on both USD and EUR cash accounts (up to 500’000 in each currency), with interest paid monthly.
Combined with our competitive foreign exchange mark-up, this makes Alpian an ideal solution for those holding significant foreign currency balances or looking to diversify their currency exposure.
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