The indicator for the assessment of the current economic picture remained practically unchanged in June at the -67.7 level (up 0.9 points). Inflation expectations increased noticeably again this month, with the corresponding indicator rising by 30.5 points to the 22.6 threshold. In this month's ‘special’ question, among other things, the financial market experts were asked to convey their opinions regarding the specific timing of when the central banks would probably commence their interest rate-hiking cycles again. The largest share of respondents (57%) predict that the initial rate hikes will likely kick off already in the first half of 2010, while one-third of the analysts regard the second half of 2010 as the most probable timeframe.

The latest survey conducted in conjunction with the Financial Market Test Switzerland reveals that forecasts on the part of the experts regarding economic momentum on the medium-term horizon in Switzerland continue to brighten.

Accordingly, roughly one-third of the financial market analysts surveyed regard an improvement of the economy in the coming six months as a probable scenario. The proportion of respondents who expect the economic outlook to deteriorate in the next half-year edged down slightly to nearly 23%. However, almost half of the participants (45.1%) foresee no changes in the medium term. The relevant Credit Suisse ZEW indicator thus increased by 13.6 points to the 9.7 mark and has climbed back into positive territory for the first time since September 2006. In contrast, extremely negative assessments continue to prevail regarding the evaluation of the current economic picture, with 67.7% of the experts assessing the present economic situation in Switzerland as "bad" and 32.3% as "normal." None of the analysts regards the economic environment as "good." The corresponding balance ticked upward just a little, however, by 0.9 points to the -67.7 level.

Turning to short-term interest rates, most of the respondents (87.1%) still expect rates to hold steady at the same level. The pertinent balance dipped by 5.3 points to the 6.5 mark. The balance of indicators for the differential in short-term interest rates between Switzerland and the Eurozone went up 12.6 points to reach -3.4. The majority of survey participants (70%) continue to see no change in the interest rate spread. Forecasts for long-term interest rates hardly changed either, with most of the experts (61.3%) regarding an increase as the most likely scenario. On the other hand, 29% of the respondents still expect no change and 9.7% anticipate a decrease in long-term interest rates. The corresponding balance edged up slightly month-on-month by 6.5 points to the 51.6 level.

Regarding the Swiss Market Index (SMI), positive sentiment prevailed among the analysts this month. Hence, the majority of participants (67.7%) expect the SMI to gain ground. Merely 12.9% of the experts believe the Swiss benchmark index will lose ground. The relevant balance surged by 32.3 points and is now hovering at the 54.8 mark.

The price for a barrel of crude oil (North Sea Brent) temporarily climbed to the USD 73 plateau in June. Nearly half of the specialists (48.4%) presume that oil prices will continue their ascent, while 35.5% assume prices will remain unchanged in the medium term and only 16.1% expect descending crude-oil prices. In contrast, the financial market experts still expressed mixed views regarding the price of gold: 32.3% predict that the price of the precious metal will continue to rise, compared with 35.5% who think any further uptick in gold prices is unlikely.

This month's survey results paint a slightly brighter picture for the corporate earnings situation in Switzerland. Consequently, 16.1% (up 6.1%) of the participants reckon with an improvement in the earnings trend in a six-month timeframe, while the share of experts who forecast that the earnings situation will worsen shrank in June by 10.8% to 45.2%. The financial market analysts predict that the climate on the Swiss labor market will deteriorate in the months ahead, with the lion's share of respondents (96.8%) regarding a spurt in the unemployment rate in the medium term as the most probable scenario. The relevant balance now stands at the 96.8 level.

Within the scope of this month's ‘special question,’ participants in the Financial Market Test Switzerland were asked to express their views regarding the course of the economic recovery. Half of the experts anticipate that a renewed correction is forthcoming on the heels of the current economic revival (i.e. a W-shaped recovery), while roughly one-fourth of the respondents expect to see a U-shaped recovery.