KPFA Monthly Market Monitor – 07 EN

Monthly Market Monitor July 2026

In a Nutshell

Chart of the Month

A mere eight sentences and 114 words – new US Federal Reserve Chairman Kevin Warsh set an initial communicative example by issuing an unusually short FOMC statement. He thus kept his promise made beforehand that the Fed’s communications would change going forward in line with the motto “less is more.” Investors now have to do some relearning. They had long grown accustomed to receiving a “forward guidance” roadmap laying out the future course of monetary policy.

Fed officials wanted to minimize uncertainty

for markets and to avert any jarring surprises at FOMC meetings. Warsh now is turning the clock back several decades on the Fed’s communication practices. Former Fed Chairman Alan Greenspan (1987 – 2006), who passed away a few days ago, was notorious for his opaque rhetoric (“If I say something which you understand fully (…), I probably made a mistake.”). The dearth of clues from Greenspan prompted journalists back then to invent a “briefcase indicator” (fat briefcase = change in interest rates; thin briefcase =

no change). The departure from an “all risks insured” communication policy can definitely be criticized. It may create an uncertainty premium regarding the future course of interest rates and thus may raise refinancing costs for businesses. It remains to be seen, though, if that will actually happen. But perhaps investors should give Warsh a chance and put faith in the final sentence of the latest FOMC statement, which reads: “The Committee will deliver price stability.”

A brief statement | Less communication is more(?)

Number of words in FOMC statement

450 400 350 300 250 200 150 100 50 0

Jan Mar May Jun Jul Sep Nov Dec Feb Mar May Jun Jul Sep Nov Dec Jan Mar May Jun Jul Sep Nov Dez Jan Mar May Jun Jul Sep Okt Dez Jan Mar Apr Jun 22 22 22 22 22 22 22 22 23 23 23 23 23 23 23 23 24 24 24 24 24 24 24 24 25 25 25 25 25 25 25 25 26 26 26 26

Hike

Hold

Cut

Source: Bloomberg

The Fed’s communications would change going forward in line with the motto “less is more.”

Investors now have to do some relearning.

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Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

Macro Radar

Taking the pulse of economic activity Memorandum of understanding signed: Iran wins?

Central banks: Easy looks different

After weeks of wrangling, on June 17 the USA and Iran signed a 14-point framework agreement to end the Iran war. The agreement sets out the following main provisions: a 60-day ceasefire, a reopening of toll-free ship passage through the Strait of Hormuz, an end of the US naval blockade of Iranian ports, as well as the lifting of sanctions and the release of frozen funds and assets. With regard to the atomic issue, Iran has merely “reiterated” that it has no intentions to build nuclear weapons. By all objective measures, the agreement is a big win for Iran – its maximalist demands were largely met. The Iranian regime has survived and demonstrated that it is capable of closing a vital global shipping route and wresting substantial concessions. The US president, in contrast, ultimately got the short end of the stick – due in no small part to his plummeting public approval ratings and the upcoming midterm elections – and now has to live with criticism of his “deal.”

Central banks across the board are all faced with a similar inflation rollercoaster, but their reactions to it differ. The European Central Bank, not for the first time, reacted quickly in June – perhaps too swiftly – to the energyprice-induced jump in inflation. From today’s perspective, it is not unlikely that this step will have to be corrected in the year ahead in view of the sluggish state of economic activity in Europe and the forthcoming resumption of declining inflation. Inside the US Federal Reserve, half of the FOMC members are likewise speaking out in favor of higher interest rates over the further course of this year.

However, the bar for a rate hike may actually be higher than the financial market is pricing in at present. That’s because the Fed is faced, on one hand, with a divided economy in which a booming technology sector exists alongside struggling small businesses and a weak real estate market. And on the other

Oil price: Back to go In the midst of the latest geopolitical crisis, the price of oil peaked in April in anticipation of an inevitable deal. It then continued to plunge after the signing of the framework agreement to end the Iran war. At the end of June, a barrel of Brent crude oil once again cost just as little as it did prior to the outbreak of the conflict, at a price of less than USD 70. A prospective near-term supply glut on the oil market is likely to be followed by a rebalancing phase in the months ahead. Prices between USD 60 and USD 80 per barrel can realistically be expected and would lay the foundation for a forthcoming disinflationary effect to take hold.

hand, the adoption of artificial intelligence is already resulting in measurable productivity gains, which will exert a damping effect on economic activity in long term.

Germany: Signs of life on the reforms front Good (or at least better) things come to those who wait. The Merz administration appears lately to be making serious efforts to avert Germany’s definitive backslide to the status of being the “sick man of Europe.”

Its planned pension reform, which would limit early retirement, tie the retirement age more closely to life expectancy, and stabilize the existing pay-as-you-go system for the long term, is a positive signal. Cuts to healthcare costs and an overdue income tax reform could contribute in the long term to gradually getting the former growth engine of Europe back on track.

Back to USD 70 (instead of up to USD 200) | The market had the right intuition Brent crude oil price in US dollars per barrel 120 110 100 90 80 70 60 50 01/2025

04/2025

07/2025

10/2025

01/2026

04/2026

Source: Bloomberg

The European Central Bank, not for the first time, reacted quickly in June – perhaps too swiftly – to the energy-price-induced jump in inflation. From today’s perspective, it is not unlikely that this step will have to be corrected in the year ahead in view of the sluggish state of economic activity in Europe and the forthcoming resumption of declining inflation.

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Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

Asset Allocation

Notes from the Investment Committee Stock markets continued their upward trend in the first half of the year. Investors could hardly ignore the topic of “artificial intelligence.” Those providing the foundation for this new technology were among the big winners. Those at risk of being disrupted by

it were the losers. In the future, AI will also have a greater impact on the bond market.

From a technological standpoint, this trend is clearly not a bubble – but whether a bubble is looming in the financial markets remains to be seen.

Asset Allocation Monitor –

+

Cash

Equities

Fixed Income

Global

Sovereign bonds

Switzerland

Corporate bonds

Europe

Microfinance

UK

Inflation-linked bonds

USA

High-yield bonds

Japan

Emerging-market bonds

Emerging markets

Insurance-linked bonds

Alternative Assets

Convertible bonds

Gold

Duration

Hedge funds

Currencies

Structured products

US dollar

Private equity

Swiss franc

Private credit

Euro

Infrastructure

British pound

Real estate

–

+

–

+

Scorecard Macro Monetary / fiscal policy Corporate earnings Valuation Trend Investor sentiment

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Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

Equities: Massive rotations The world equity market treaded water, more or less, in June and registered marginal declines on the bottom line. However, there was an extraordinary amount of movement in individual regions and sectors. The defensive Swiss stock market ranked among the winners for once, advancing 5 % and hitting a new all-time high. The Magnificent Seven, meanwhile, headed south, plunging by around 15 %. Semiconductor stocks, on the other hand, were once again the high flyers as they tacked another up month onto two excellent prior ones. Altogether, the US semiconductor index rose by a possibly record-breaking 80 % in the second quarter.

The massive rotations in recent weeks and months have since led to some extremes on the markets that are hardly sustainable and make a pullback probable. The share-price behavior of several chip stocks, for instance, by now must be deemed inordinate and speculative. The volatility is being fueled in no small part by the soaring volume of leveraged bets on the South Korean chip giants Samsung and SK Hynix via options and ETFs. Leveraged speculation has also surged on the US equity market over the last 12 months. Unprofitable companies of questionable quality are enjoying the same kind of popularity today among (retail) investors as they did in the year 2021. Back in those days, the overshooting of stock prices was followed by an inevitable correction. History doesn’t repeat itself on the stock market, but it often rhymes. In light of the warning signs, investors should review the quality of their stock portfolios once more during the summer break.

Meanwhile, the large share-price declines sustained by the Magnificent Seven can be rated an exaggeration in the opposite direction. The US hyperscalers by now are less expensively valued than the S&P 500 index. Here, too, a retracement appears likely soon. However, an uncertainty premium may stay factored into their stock prices to some degree for now because the question of whether the enormous investments in

AI can be monetized hasn’t been definitively answered yet. What is clear, though, is that hyperscalers will hardly have any money left over for stock buybacks for the time being. In the past, share buybacks were a considerable stock-price driver.

The reporting season for the second quarter is bound to provide the next impulse on the markets. After two consecutive very strong quarters, it will now become harder for companies to surprise significantly on the upside with their earnings and future investment plans. A more restrictive US Federal Reserve monetary policy (rather unlikely from today’s perspective) and the planned mega IPOs by the leading AI companies, which could suction additional capital from the market, rank among the other risk factors for the second half of this year.

Fixed income: AI bubble (also) in the bond sector?

The massive infrastructure spending on artificial intelligence by US hyperscalers is being reflected by now also on the bond market.

Issuers associated with the AI and data center theme, such as Amazon, Meta and Alphabet, for example, may place up to a total of USD 400 billion worth of bonds this year, which would equate to ten times their combined issuance volume in 2024. If this trend continues, which is likely in view of the vast sums of money required to build out AI, in a few years the hyperscalers will become the biggest borrowers in the market for investment-grade bonds, surpassing the traditionally dominant banking and telecom sectors in the high-grade corporate bond space. This trend presents both opportunities and risks. On one hand, the investment universe is being enlarged by rock-solid companies with very good credit quality. On the other hand, though, investors run the risk of losing diversification benefits if they bet on the same theme in both stock and bonds.

SpaceX, in contrast to the highly profitable hyperscalers, has been deep in the red thus far. Nevertheless, the major US rating agencies have assigned the “rockets and

more” conglomerate investment-grade credit scores. The first trading sessions for SpaceX bonds suggested that the ratings may have been a little overgenerous and that the bonds, like the IPO, were potentially overpriced. Shortly after issuance, the credit spreads on SpaceX bonds maturing in 2046 and 2056 widened to 1.93 % and 2.01 % (from 1.65 % and 1.75 %), respectively, and thus approached junk bond territory.

Alternative assets: Entry opportunity in gold?

The price of gold fell again in June and by now has corrected by around 30 % from the peak of USD 5,600 per ounce reached in January.

Gold’s technical indicators accordingly are signaling deeply oversold conditions while bearish sentiment toward gold has reached an almost unprecedented level typically seen only at bottom inflection points. A retracement movement in the third quarter would be anything but surprising. The bad news in the form of raised US Federal Reserve interest-rate expectations and higher opportunity costs due to increased yield levels is probably priced in by now. Meanwhile, demand for gold remains solid as a structural driver for the yellow precious metal: according to a survey conducted by the World Gold Council between February and May, 45 % of the 76 participating central banks stated that they intended to increase their gold reserves over the next 12 months. Viewed from a bird’s-eye perspective, the price of gold could transition to a wide rangebound movement in the quarters ahead. However, the peak price hit at the start of this year in the midst of a speculative binge is likely to remain unattainable for a long time.

Passive investments in commodities reaped investors double-digit percent price gains and substantially outperformed the major stock indices in the first half of this year.

However, closer scrutiny causes a degree of disillusionment: the big gains posted by well-known commodity benchmarks like the Bloomberg Commodity Index (+15 %) and the S&P GSCI Index (+25 %) owe mainly to

The massive rotations in recent weeks and months have since led to some extremes on the markets that are hardly sustainable and make a pullback probable.

5

Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

their heavy weighting of the energy complex.

Other subsectors performed significantly less positively (industrial metals), stagnated (agricultural goods), or registered price declines (precious metals). During the Iran crisis, commodity ETFs were a useful tool for near-term hedging against geopolitical risks. In the long view, though, energy resources in particular are unlikely to see any noteworthy real price appreciation. Widely diversified ETFs therefore are more suitable as a trading vehicle than as a fundamental building block for an investor’s portfolio. Private-market assets, liquid alternative strategies, and gold are better-suited avenues to long-term valueboosting diversification.

Currencies: Widening interestrate differentials weaken the franc

The recent correction in AI stocks shows that investors are increasingly questioning the massive investment spending by hyperscalers. That’s because the question is whether enough money can be earned in the long run with intelligence that is becoming ever cheaper. Until a short time ago, the Silicon Data LLM Token Expenditure Index was signaling a tailwind: although costs per token have fallen by more than 90 % since 2023, total spending on the utilization of large language models (LLM) since the end of 2025 nearly doubled for a while. The falling marginal costs of AI models did not result in less spending, but rather in more utilization: more agents, more automated processes, and more code. Token expenditures increased, and the stock prices of hyperscalers likewise rose. But lately they have been heading downward synchronously.

Concerns are mounting that AI suppliers are hitting a pricing wall for their most advanced models: customers refuse to indiscriminately swallow any additional token charges if employing the most expensive AI models doesn’t pay off for them. If AI budgets get capped, demand for computing power may grow more slowly or may migrate to cheaper Chinese and open-source/open-weight models.

Chart in the Spotlight

The Swiss National Bank left its policy interest rate unchanged for the fifth time in a row at its recent meeting in June. In the wake of the Swiss franc having mildly depreciated in recent months, the SNB, too, has altered its tone and now says that it has a willingness to intervene on the currency market only if it becomes “necessary” to do so. There is no necessity at the moment because the widened interest-rate differentials versus the euro and the US dollar are weakening the franc on their own without any intervention by the central bank. This phase of weakness might

continue for a while. In a longer-term context, though, it is likely to represent merely a pause for breath in the midst of a long-term appreciation trend.

Meanwhile, the US dollar index is at a pivotal juncture from a technical analysis perspective. The index’s rangebound movement over the last 12 months could become the foundation for a major upturn. A sustained breakout to the upside would be required for that to happen. However, the greenback’s overbought technical condition and large long positions in the dollar elevate the risk of a false signal.

More tokens, more misgivings | Monetization under observation UBS Hyperscaler Basket and Silicon Data LLM Token Expenditure Index 110

2.25

105

2.10

100

1.95

95

1.80

90

1.65

85

1.50

80

1.35

75

01/2026

02/2026

03/2026

UBS Hyperscaler Basket (le�-hand axis)

04/2026

05/2026

06/2026

1.20

Silicon Data LLM Token Expenditure Index (right-hand axis)

Source: Bloomberg

In the wake of the Swiss franc having mildly depreciated in recent months, the SNB, too, has altered its tone and now says that it has a willingness to intervene on the currency market only if it becomes “necessary” to do so.

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Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

The Back Page

Asset Classes Performance as of 30 June 2026 Asset class

YTD 1 Month

1 year

3 years*

Index

Cash US-Dollar

1.92%

0.33%

4.10%

4.87%

USD Interest Rate Return

Euro

1.11%

0.20%

2.18%

3.03%

EUR Interest Rate Return

Swiss Franc

–0.02%

0.00%

–0.03%

0.71%

CHF Interest Rate Return

Fixed Income Government Bonds USA

–0.16%

0.25%

2.74%

3.09%

Bloomberg US Govt 7-10 Yr Bond Index (USD)

USA inflation-protected

1.15%

–0.47%

3.42%

3.98%

Bloomberg US Treasury Inflation-Linked Bond Index (USD)

Germany

1.34%

0.69%

0.94%

1.79%

Bloomberg Germany Govt 7-10 Yr Bond Index (EUR)

United Kingdom

0.61%

0.70%

3.00%

4.18%

Bloomberg UK Govt 7-10 Yr Bond Index (GBP)

Switzerland

0.67%

0.78%

1.55%

4.30%

Bloomberg Switzerland Govt 7-10 Yr Bond Index (CHF)

Corporate Bonds US Investment Grade

0.68%

0.11%

3.86%

6.02%

Bloomberg US Corporate 3-5 Yr Index (USD)

EU Investment Grade

1.00%

0.37%

2.43%

5.32%

Bloomberg European Corporate 3-5 Yr Index (EUR)

US High Yield

1.96%

0.27%

5.91%

8.86%

Bloomberg US Corporate High Yield Index (USD)

EU High Yield

1.87%

0.55%

4.43%

7.86%

Bloomberg Pan-European High Yield Index (EUR)

Others Emerging-market bonds

2.61%

0.83%

10.68%

9.84%

JPMorgan EMBI Global Core Index (USD)

Insurance-linked bonds

4.12%

1.06%

12.84%

13.84%

Swiss Re Global Cat Bond Total Return Index (USD)

Convertible bonds

18.38%

–0.68%

30.29%

18.11%

Bloomberg Global Convertibles Index (USD)

Global

9.94%

–0.69%

21.81%

19.76%

MSCI World Gross Total Return Index (USD)

USA

10.21%

–0.95%

22.32%

20.61%

S&P 500 Total Return Index (USD)

Europe

10.86%

2.68%

22.21%

15.23%

STOXX Europe 600 (Gross Return) (EUR)

United Kingdom

7.60%

0.97%

23.64%

15.78%

FTSE 100 Total Return Index (GBP)

Switzerland

9.86%

4.48%

21.05%

10.43%

Swiss Performance Index (CHF)

Japan

18.56%

1.05%

43.26%

23.27%

Topix Total Return Index (JPY)

China

–14.92%

–7.05%

–4.80%

7.96%

MSCI China Gross Total Return Index (USD)

Emerging-markets ex. China

39.01%

0.08%

64.09%

29.10%

MSCI Emerging Markets ex China Gross Return Index (USD)

Equities

Alternatives Commodities

12.30%

–8.83%

20.74%

6.67%

Bloomberg Commodity Index (USD)

Gold

–7.21%

–11.72%

21.34%

27.82%

Gold Spot (US Dollar / Ounce)

Bitcoin

–33.09%

–20.36%

–45.50%

24.50%

XBTUSD Spot Exchange Rate

Real estate USA

12.71%

0.81%

11.07%

5.77%

S&P US All Equity REIT Index (USD)

Real estate Switzerland

0.84%

0.53%

8.12%

11.42%

SXI Real Estate Funds Total Return Index (CHF)

Hedge Funds

5.34%

1.30%

13.64%

11.10%

Bloomberg All Hedge Fund Index (USD)

Private Equity

–16.85%

–7.20%

–16.70%

5.78%

Global Listed Private Equity Index (USD)

EUR/USD

–2.76%

–2.03%

–3.10%

1.54%

EURUSD Spot Exchange Rate

EUR/CHF

–0.81%

1.40%

–1.24%

–1.87%

EURCHF Spot Exchange Rate

GBP/USD

–1.58%

–1.44%

–3.42%

1.45%

GBPUSD Spot Exchange Rate

Currencies

*annualised

7

Kaiser Partner Financial Advisors | Monthly Market Monitor – July 2026

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