KPPB Monthly Market Monitor – 09 EN

Monthly Market Monitor September 2026

In a Nutshell

Chart of the Month

The US federal debt load surpassed the round number of USD 40 trillion in August, catching the attention of the media. The event was not looked upon with favor by the bond market – the yield on 10-year US Treasury notes climbed to a new year-to-date high of 4.75 % on the news while the yield on 30-year Treasurys spiked to its highest level since 2007. Rising interest expenses are causing the mountain of debt to grow even faster, and an end to the vicious spiral is nowhere in sight. The ugly debt dynamics have now prompted US Treasury Secretary Scott

Bessent to make an attempt at intervening to suppress the market interest-rate level at the long end of the yield curve by stepping up buybacks of long-term Treasury bonds.

Financial markets have exhibited skepticism about whether the intervention will be successful. The US Treasury’s resources are limited. In order to keep buying back long-term bonds, the US Treasury would have to issue more short-term notes. Robbing Peter to pay Paul without lasting success (?) is a form of yield curve control that would certainly not be devoid of costs and side effects. One di-

rect consequence would be a weaker US dollar. It would tend to raise inflation and would not make the US Federal Reserve chairman’s job any easier. However, if the experiment succeeds, it would be a boon to the equity market. The US president would probably then take personal credit for this achievement.

Limitless | Soaring US federal debt US federal debt in USD trillion

40 38 36 34 32 30 28 26 24 22 20 2018

2019

2020

2021

2022

2023

2024

2025

2026

Sources: Bloomberg, Kaiser Partner Privatbank

Rising interest expenses are causing the mountain of debt to grow even faster, and an end to the vicious spiral is nowhere in sight.

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Kaiser Partner Privatbank AG

Macro Radar

Taking the pulse of economic activity Interest-rate hikes in September?

New Federal Reserve Chairman Kevin Warsh made it clear upon taking office that the US central bank would become less opaque in the future – his maiden speech at the annual meeting of central-bank officials in Jackson Hole was thus analyzed all the more scrutinizingly. Warsh stressed once more that there would be no more forward guidance under his stewardship. Otherwise, his message was on the hawkish side. He said that the Fed’s 2 % inflation target was immutable and that the central bank alone was responsible for the last 65 consecutive months of elevated inflation. He remarked, however, that the US labor market was close to full employment at a jobless rate of 4.1 % and did not need any support. The striking thing is what Warsh left open. He recently had argued that enormous productivity gains enabled by AI could make it possible to ease monetary policy going forward. In his Jackson Hole speech, he now called the potential of AI historic, but did not draw any direct conclusions from that. So, financial markets didn’t glean much insight from the speech. Warsh thus perhaps achieved what he wanted – the Fed is unpredictable, and the odds of an interest-rate hike in September are roughly 50 / 50.

increased by 2 % in Q2. German goods were particularly in demand in other EU countries, but part of the demand was probably attributable to hastened ordering as a result of the Iran conflict. Domestic demand in Germany remains weak: personal consumption is flat, construction investment continues to drop, and stepped-up government spending has hardly sparked any private-sector investment thus far. There is a ray of hope, though, in the fact that corporate investment in capital equipment is up year-on-year for the first time since 2023. This means that Germany has probably pulled out of its trough. However, a self-sustaining upturn requires more than billions in public spending and a pickup in sentiment: greater investment spending, increased personal consumption, and structural reforms are crucially needed.

France is the new problem child Italy was long considered the Eurozone’s problem child while France, in contrast, was viewed as a reliable borrower. The two coun-

tries have now swapped roles: the yield on 10-year French government bonds surpassed the yield on comparable Italian bonds this summer. Investors by now are demanding a higher risk premium for Paris than for Rome.

The reason why lies less in Italy’s new strength and more in France’s dwindling credibility.

While Rome has been surprising the markets with budgetary discipline and political stability, Paris is struggling with a fiscal deficit in excess of 5 % of gross domestic product, rising public debt, and contentious budget negotiations. Plus, there’s the upcoming presidential election in 2027: a potential duel between Marine Le Pen and Jean-Luc Mélenchon is likely to stoke concerns about increased public spending. International investors are shifting from French to Italian sovereign bonds.

This is a warning shot for France. The prospect of sound public finances, not past reputation, is what matters on the bond markets.

Italy, in turn, mustn’t rest on the laurels of its newly gained trust. History shows that markets are forgiving of a lot but forget little.

Trading places | France is causing concerns Yield on 10-year government bonds 6% 5%

European economic growth surprises on the upside Germany is back on a growth track, at least at first glance. The country’s GDP rose 0.3 % in Q2 and thus expanded for the third consecutive quarter. Sentiment is also brightening: Germany’s Ifo index rose substantially in August, with the business expectations component particularly improving. The upturn, however, is standing on shaky legs. It is being driven primarily by exports, which

4% 3% 2% 1% 0 -1%

2020

2021

2022

2023

Italy

2024

2025

2026

France

Sources: Bloomberg, Kaiser Partner Privatbank

There is a ray of hope, though, in the fact that corporate investment in capital equipment is up year-on-year for the first time since 2023.

This means that Germany has probably pulled out of its trough.

Monthly Market Monitor – September 2026

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Asset Allocation

Notes from the Investment Committee Equity markets continued to climb higher in August on seasonally low trading volume that habitually prevails during the summer.

AI and semiconductor chip stocks registered an equally typical rebound rally after the prior selloff in July. If the markets continue to behave in line with their recent pattern,

one would expect to see rising volatility and at least a temporary dip in prices in autumn.

The geopolitical risk situation and the upcoming US midterm elections give reason to anticipate no shortage of news that could potentially move stock prices.

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 Privatbank AG

Equities: Calm before the storm?

Blue-chip indices in the USA and Europe hit new year-to-date highs in August on typically thin summer trading volume. A tailwind was provided once more by a stellar reporting season that saw an unusually large number of companies beat analysts’ forecasts and many of them issue constructive outlooks for the year ahead. Even chip-giant Nvidia succeeded in exceeding exceptionally high expectations and actually even accelerated its revenue growth. This doesn’t mean, though, that the AI bubble question is off the table.

Semiconductor chip and AI stocks look set to continue to react extremely sensitively in the future to any news hinting even at merely a slowdown in the boom or at declining profitability. Semiconductor stocks in particular seem inexpensively valued at the moment, but they have a long way to fall if the narrative in the chip sector changes from scarcity economy to overcapacity.

In this market phase in which a continuation of the AI bull market seems equally as possible as a severe correction, diversification in sectors and regions that are less dependent on AI is especially imperative. Just how valuable diversification can be became visible in July when US tech stocks came under heavy downward pressure while European stocks (including in Switzerland) continued to trend upward. The dispersion between individual stocks has been unusually wide lately – this increases the effectiveness of diversification and enables better chances of achieving a significant outperformance through skillful stock picking.

Diversification is an appropriate course of action also with regard to the possibility of a typical seasonal autumn storm occurring on stock markets. The VIX volatility barometer stood at a level of just 14 points at the end of August and looks set to make a run at the 20 mark at the least in September or October.

In any case, sentiment seems susceptible to negative surprises. Bank of America’s Bull & Bear Indicator, which frequently functions well at major inflection points, has been in blazing red territory for quite a while now

and recently climbed to yet another extreme.

A sentiment-cleansing setback in autumn would be not at all unusual and ultimately a healthy development. Given the upcoming US midterm elections and ongoing geopolitical uncertainties, there is likely to be no shortage of news that could potentially move stock prices.

Fixed income: Rising hyperscaler risk premiums Mounting nervousness with regard to the risks and rewards of artificial intelligence is being felt on credit markets. Premiums on credit default swaps on Nvidia und Broadcom rose to new record highs in August, and credit spreads on bonds issued by hyperscalers have also resumed widening lately. The reason why has less to do with fears of bankruptcy and is more the result of the sheer size of the AI arms race. An estimated USD 800 billion looks set to be invested in data centers, semiconductor chips, and energy in 2026, and Alphabet, Amazon, Meta, and Microsoft will raise around half of the needed capital for that on the bond market over the next three years. Those platform companies have profitable core businesses and can curtail investments if speculative AI fantasies get disappointed. The elevated credit spreads are thus potentially more an opportunity than a crisis signal. Independent data centers and single-purpose companies are more vulnerable: they’re a leveraged bet on permanently high capacity utilization, they do not have a second leg to stand on, and they are often backed by complex guarantees.

So, it seems advisable for individual private investors to use only conventional interestbearing instruments to play the AI boom on the bond market and to steer clear of complex financial instruments.

Alternative assets: Bitcoin surprises (on the upside) The price of Bitcoin bobbed up and down throughout the summer in a tight trading range. The volatility of the cryptocurrency fell to suspected record-breaking low levels in early August. In hindsight, as is so often the case, that was the calm before the storm. In

mid-August, the price of Bitcoin broke out explosively to the upside and rocketed 30% in the span of a few days. Many investors were likely caught on the wrong foot once again – this time it was the short sellers who had bet on Bitcoin falling to even lower prices. It remains to be seen whether the latest price advances mark the start of a new bull market or are merely a brief bounce before the next crash. In any case, investor sentiment toward crypto assets has substantially improved in the short term. A recent White House meeting of crypto industry executives, trading venue representatives, and securities-exchange regulatory officials is considered the cause of the price explosion. There appears to be agreement that the crypto universe needs to be embedded in the regulated US financial system. The CLARITY Act aimed at doing just that could make important progress now by as early as September.

Many hedge funds, too, were affected by a stormy U-turn in asset prices in July and posted a negative monthly performance for the second time this year (after a bad March).

The cause in this case was a price turnaround in semiconductor stocks and practically everything connected with the label “artificial intelligence.” Hedge funds focused on Asia in particular overwhelmingly reported double-digit percent price drawdowns. Even multi-strategy funds, which usually are very stable, were unable to escape the selloff. The AI hedge fund Situational Awareness made headlines by completely collapsing. Events of that kind have regularly marked a temporary floor in the past. In this latest episode, investors in hedge funds were reminded once more of just how important diversification is even within the hedge-fund universe itself. A hedge-fund portfolio spread across a diverse selection of uncorrelated strategies withstood even this latest storm unscathed.

Currencies: US dollar fakeout?

The US dollar’s prospects have dimmed in recent weeks from a technical analysis perspective. The US dollar index’s breakout above the 101 mark proved to be a false signal in August. The greenback thus finds itself back

Mounting nervousness with regard to the risks and rewards of artificial intelligence is being felt on credit markets. Premiums on credit default swaps on Nvidia und Broadcom rose to new record highs in August, and credit spreads on bonds issued by hyperscalers have also resumed widening lately.

Monthly Market Monitor – September 2026

5

in the trading range that has been in place for the past year and a half. The most recent downward pressure on the dollar came from intervention efforts by the US Treasury – lower interest rates make the US currency more unattractive. At the same time, omens are shifting again also with regard to interest-rate differentials. Whereas the US Federal Reserve can be more relaxed now with regard to inflation and may refrain from raising its policy interest rate at the next FOMC meet-

ing, an increasing number of officials at the European Central Bank want to hike interest rates in September in view of economic data prints that have recently come in stronger than before. The majority of traders on the futures market had been positioned more on the pro-dollar side lately. So here, too, plenty of market participants were caught on the wrong foot. A downward slide by the US dollar to the bottom edge of the trading range in the weeks ahead would not be surprising.

One valuation metric is currently causing queasy feelings: the Shiller price-to-earnings ratio has climbed to above 40 ×, a level last reached during the dotcom bubble. Does this mean that the equity market is on the cusp of the next crash? Not necessarily, because the metric has a problem: it compares apples with oranges. Accounting rules have radically changed since the 1990s. Asset write-downs and depreciation are recorded more strictly today, and investments in research and software are often booked directly as operating expenses. This depresses reported earnings and artificially drives up the Shiller P / E. Basing the P / E ratio instead on more broadly and consistently compiled corporate earnings over time puts the picture in a more accurate perspective. The valuation is still high, but is less extreme than the headlines suggest. If interest rates, growth, and inflation are additionally factored in, the overvaluation amounts to around 20 %. By comparison, in the past the model didn’t emit a serious warning signal until the overvaluation reading exceeded a level of around 35 %. This doesn’t mean that stocks are cheap, but rather that investors should brace themselves for lower long-term returns going forward. But high valuations alone do not trigger a stockmarket crash, and anyone who sells hastily in view of them could potentially miss out on the usually exceptionally profitable final stage of the bull market.

Chart in the Spotlight This time is different (?) | Those were costly words in the past US Shiller P/E (cyclically adjusted P / E ratio) 45 40 35 30 25 20 15 10 5 0 1900 1906 1912 1919 1925 1938 1945 1951 1958 1964 1971 1977 1984 1990 1997 2003 2010 2016 2023

Sources: Bloomberg, Kaiser Partner Privatbank

Does this mean that the equity market is on the cusp of the next crash? Not necessarily, because the metric has a problem: it compares apples with oranges. Accounting rules have radically changed since the 1990s.

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Kaiser Partner Privatbank AG

The Back Page

Asset Classes Performance as of 31 August 2026 Asset class

YTD 1 Month

1 year

3 years*

Index

Cash US-Dollar

2.61%

0.32%

4.02%

4.78%

USD Interest Rate Return

Euro

1.54%

0.21%

2.25%

2.95%

EUR Interest Rate Return

Swiss Franc

-0.02%

0.00%

-0.03%

0.61%

CHF Interest Rate Return

Fixed Income Government Bonds USA

-1.39%

0.14%

0.38%

3.13%

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

USA inflation-protected

0.51%

0.04%

1.08%

4.03%

Bloomberg US Treasury Inflation-Linked Bond Index (USD)

Germany

-1.31%

-0.64%

-1.61%

0.79%

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

United Kingdom

-0.71%

0.21%

2.50%

3.30%

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

Switzerland

-1.76%

-2.16%

-0.59%

3.09%

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

Corporate Bonds US Investment Grade

0.52%

0.25%

2.25%

5.74%

Bloomberg US Corporate 3-5 Yr Index (USD)

EU Investment Grade

0.21%

-0.07%

1.03%

4.48%

Bloomberg European Corporate 3-5 Yr Index (EUR)

US High Yield

2.69%

0.97%

4.88%

8.52%

Bloomberg US Corporate High Yield Index (USD)

EU High Yield

2.15%

0.51%

3.26%

7.39%

Bloomberg Pan-European High Yield Index (EUR)

Others Emerging-market bonds

1.73%

0.81%

6.70%

9.43%

JPMorgan EMBI Global Core Index (USD)

Insurance-linked bonds

7.56%

2.22%

12.71%

13.72%

Swiss Re Global Cat Bond Total Return Index (USD)

Convertible bonds

14.53%

1.37%

20.80%

16.79%

Bloomberg Global Convertibles Index (USD)

Global

13.40%

2.60%

20.83%

20.62%

MSCI World Gross Total Return Index (USD)

USA

13.14%

2.72%

20.38%

21.04%

S&P 500 Total Return Index (USD)

Europe

12.83%

0.51%

22.01%

16.07%

STOXX Europe 600 (Gross Return) (EUR)

United Kingdom

11.75%

0.22%

21.60%

17.33%

FTSE 100 Total Return Index (GBP)

Switzerland

10.38%

-0.25%

18.95%

11.10%

Swiss Performance Index (CHF)

Japan

23.39%

3.85%

38.28%

24.12%

Topix Total Return Index (JPY)

China

-7.54%

-0.34%

-5.96%

10.65%

MSCI China Gross Total Return Index (USD)

Emerging-markets ex. China

36.64%

4.41%

59.81%

28.66%

MSCI Emerging Markets ex China Gross Return Index (USD)

Equities

Alternatives Commodities

28.88%

7.05%

37.53%

10.06%

Bloomberg Commodity Index (USD)

Gold

2.73%

9.67%

28.70%

31.75%

Gold Spot (US Dollar / Ounce)

Bitcoin

-10.03%

25.37%

-27.74%

44.72%

XBTUSD Spot Exchange Rate

Real estate USA

12.04%

-2.86%

8.31%

6.17%

S&P US All Equity REIT Index (USD)

Real estate Switzerland

-1.06%

-0.71%

3.11%

11.62%

SXI Real Estate Funds Total Return Index (CHF)

Hedge Funds

4.31%

-0.50%

9.06%

10.54%

Bloomberg All Hedge Fund Index (USD)

Private Equity

-5.09%

6.81%

-8.39%

9.85%

Global Listed Private Equity Index (USD)

Currencies EUR/USD

-1.09%

0.79%

-0.58%

2.33%

EURUSD Spot Exchange Rate

EUR/CHF

0.90%

0.94%

0.38%

-0.66%

EURCHF Spot Exchange Rate

GBP/USD

0.55%

0.49%

0.33%

2.25%

GBPUSD Spot Exchange Rate

*annualised

Monthly Market Monitor – September 2026

7

Kaiser Partner Privatbank continues on its steady growth path in the first half of 2026 Kaiser Partner Privatbank can look back on a successful first half of 2026. In a challenging market environment, the business once again performed well. Assets under manage­ ment reached a new high of CHF 10.3 billion. At the same time, revenue and profit continued to rise. This result reflects the trust placed in us by our clients, as well as our long-term commitment to personalised advice, corporate responsibility and sustainable growth.

Revenues (in CHF million)

Profits (in CHF million)

+3.5%

+14.7%

Assets under Management (in CHF billion)

Employees

Net New Assets (YTD): 497 million

The full half-year report of Kaiser Partner Privatbank can be found at: kpartner.co/2026-en

This document constitutes neither a financial analysis nor an advertisement. It is intended solely for informational purposes. None of the information contained herein constitutes a solicitation or recommendation by Kaiser Partner Privatbank AG to purchase or sell a financial instrument or to take any other actions regarding any financial instruments. Furthermore, the information contained herein does not constitute investment advice. Any references in this document to past performance are no guarantee of a positive future performance. Kaiser Partner Privatbank AG assumes no liability for

+5.6%

the completeness, correctness or currentness of the information contained herein or for any losses or damages arising from any actions taken on the basis of the information in this document. All contents of this document are protected by intellectual property law, particularly by copyright law. The reprinting or reproduction of all or any parts of this document in any way or form for public or commercial purposes is expressly prohibited unless prior written consent has been explicitly granted

by Kaiser Partner Privatbank AG.

Publisher: Kaiser Partner Privatbank AG Herrengasse 23, Postfach 725 FL-9490 Vaduz, Liechtenstein HR-Nr. FL-0001.018.213-7 T: +423 237 80 00, F: +423 237 80 01 E: bank@kaiserpartner.com Editorial Team: Oliver Hackel, Head of Private Markets & Liquid Alternatives Design & Print: 21iLAB AG, Vaduz, Liechtenstein

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