Monthly Market Monitor August 2026
In a Nutshell
Chart of the Month
South Korean investors have a strongerthan-average natural disposition to take risks compared to other investors around the world. Short-term gains rather than sustained investment success stand in the foreground for more than a few of them. After South Korea’s equity market ranked among the big winners in 2025 due to the rally in market-dominating semiconductor chip stocks, interest on the part of speculators increased again this year. Instant riches seemed tangibly within reach, particularly thanks to double-leveraged ETFs. However, hardly an investor is likely to have
read the risks and side effects listed in the information leaflet prior to purchasing these instruments. As a result of the mechanics of double-leveraged ETFs – they deliver two times the positive or negative daily return of the underlying stock – returns quickly head upward over a holding period of several days, but head downward even faster if the price of the underlying stock falls. Hundreds of thousands of South Koreans have learned this the hard way in recent weeks and received margin calls from their respective banks or even had to liquidate their portfolios. To keep
the Seoul Stock Exchange from permanently degenerating into a casino, South Korea’s financial market supervisory authority took action in July (a bit belatedly): leveraged ETFs may no longer be launched for the time being, margin requirements for leveraged ETF trading have been tripled, and anyone who wants to continue trading products of that kind must first pass an online risk management course.
Darned mathematics | Leveraged ETFs have their pitfalls SK Hynix shares vs. SK Hynix 2x Leveraged ETF 100 100
100 100
90 90
90 90
80 80
80 80
70 70
70 70
60 60
60 60
50 50
50 50
40 40
40 40
30 30
30 30
20 20
20 20
10 10
10 10
0 0
11/2025 11/2025
12/2025 12/2025
01/2026 01/2026
02/2026 02/2026
SK Hynix Hynix SK
03/2026 03/2026
04/2026 04/2026
SK Hynix Hynix 2x 2x Leveraged Leveraged ETF ETF SK
05/2026 05/2026
06/2026 06/2026
0 0
07/2026 07/2026
Sources: Bloomberg, Kaiser Partner Privatbank
Leveraged ETFs may no longer be launched for the time being, margin requirements for leveraged ETF trading have been tripled, and anyone who wants to continue trading products of that kind must first pass an online risk management course. 2
Kaiser Partner Privatbank AG
Macro Radar
Taking the pulse of economic activity A press conference devoid of substance
The US Federal Reserve left its policy rate unchanged in July and thus disappointed the one-third of the market that had been anticipating a rate hike. At the press conference, Fed Chairman Kevin Warsh walked a fine line, spoke a lot, but ultimately said little: he stayed tight-lipped about the prospect of an interest-rate hiking cycle and at the same time reiterated the Fed’s commitment to its 2 % inflation target. He also pointed to the significant increase in nominal and real market interest rates since the previous Federal Open Market Committee (FOMC) meeting. However, he left unanswered whether that raises the probability of interest-rate hikes (as markets are expecting) or makes them less likely since financing conditions have already tightened. Despite the anodyne press conference, a rate hike in September is now becoming more probable on the bottom line because the FOMC was clearly divided nine votes to three. In the history of the Fed, when there were more than two dissenters at an FOMC meeting, three out of seven times an interestrate move was made at the next meeting.
particularly for inflation. At the same time, the heatwaves in recent weeks and the record-low water levels in European rivers are likely to hinder the transportation of goods also on local trade routes in Europe. After the European Central Bank left its benchmark lending rate unchanged at 2.25 % in July, its next policy meeting could again become a deadlock between monetary hawks and doves. Since the negotiation of a (renewed) ceasefire in the Middle East is more likely to be a matter of weeks than days, there is a growing probability of another ECB interestrate hike in September.
Japan intervenes, China stimulating too little After the Japanese yen fell to its lowest level in 40 years against the US dollar in July, the Bank of Japan saw itself compelled to intervene on the currency market, and not for the first time in recent years. Its intervention coordinated with South Korean and US central-bank
officials was successful at least in the short term – the yen was up 2.5 % at the end of the day’s trading. How sustainable that upturn is remains to be seen. In the past, yen surges have always been brief episodes that were followed by renewed dips. It would take further rate-hiking to lastingly bring about a more expensive yen, but in July the BoJ left its policy interest rate unchanged at 1 % for the time being. China’s economic growth rate slowed in the second quarter to +4.3 %, the lowest level recorded in the last three years. Moreover, the country’s manufacturing purchasing managers’ index fell (massively) short of expectations and came in at a July reading of 49.3 points, below the threshold that signifies expansion. While the export sector is thriving, weak domestic consumer spending remains China’s big problem. Although the government in Beijing has recently issued repeated reassurances that it would turn things around in the economy, tangible steps to do that have yet to be taken.
Sustained blockage | Hardly any movement through the chokepoint Number of daily ship transits through the Strait of Hormuz 100
Eurozone growth surprises on the upside
90
The Eurozone economy grew surprisingly strongly in the second quarter at a +0.4 % rate, whereas the consensus estimate among economists stood at just +0.2 %. The Iran conflict and the associated oil-price volatility appear to be harming the Eurozone economy less than originally assumed. However, ebullient optimism would be inappropriate. The vital trade route in the Persian Gulf is closed again after having briefly reopened, which is bound to have consequences
70
80
60 50 40 30 20 10 0 07/2024
10/2024
01/2025
04/2025
07/2025
10/2025
01/2026
04/2026
07/2026
Sources: Bloomberg, Kaiser Partner Privatbank
After the European Central Bank left its benchmark lending rate unchanged at 2.25 % in July, its next policy meeting could again become a deadlock between monetary hawks and doves. Monthly Market Monitor – August 2026
3
Asset Allocation
Notes from the Investment Committee July brought a number of reversals and trend breaks on the equity markets. However, the overall upward trend remains intact – it simply took a breather in areas where prices had previously risen too quickly. But even this correction, which is healthy in itself, did not proceed smoothly everywhere (see South Korea). There was also turbulence
in the currency market, where the Bank of Japan once again intervened against a yen that was too weak and this time received support from the U.S. It remains to be seen how long-lasting this success will be. In the past, such actions have fizzled out – a few exceptions prove the rule.
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: “What goes up, must come down” “What goes up, must come down” – this phrase applies not just to space rockets (and to the IPO by SpaceX), but also very reliably to equity markets whenever investor euphoria has pushed stock prices up too high, too fast, as is the case this time with semiconductor chip stocks. Anyone who didn’t get in on the action until the second quarter and thus jumped on the bandwagon too late took a bruising in July because stock prices have plunged in recent weeks even faster than they had previously risen. Volatility was extremely high particularly on the South Korean equity market, where the Kospi index plummeted by 40 % in a span of just six weeks and gave back most of its year-to-date gains. By the end of July, the Far East was already in an intense panic state, which prompted South Korea’s Ministry of Finance and Economy to convene an emergency meeting. Chip stocks and everything else tossed into the “AI speculation” pot are now very oversold for the near term. A technical retracement is therefore likely to occur in August. What happens afterwards is bound to depend in no small part on how the fundamentals develop and on the earnings and guidance in the ongoing reporting season. The disappointing numbers reported by SK Hynix in late July caused some gray clouds to gather on that front, but other companies would have to confirm that to shelve the AI bet. Outside the technology sector, the world equity market has held very steady in recent weeks. The MSCI World index was trading just a few percentage points below its alltime high at last look while the defensive Swiss benchmark index (the SMI) already hit new highs in July. The outlook for the second half of this year is constructive, particularly for Europe. After three consecutive weak years, corporate earnings on the old continent are picking up sharply now. Net earnings estimate revisions were recently positive for 16 straight weeks, and the numbers reported for the second quarter have mostly surprised on the upside thus far, which has been rewarded this time with
corresponding upward share-price reactions. Positive momentum has been reflected lately in no small part by macro indicators like purchasing managers’ and economic surprise indices. And finally, inflation, too, is unlikely to become a killjoy. The current inflation wave probably has already crested, so market expectations for further interestrate hikes by the European Central Bank are arguably overblown. The longer-term picture for European stocks is brightening even aside from those classic share-price drivers. The fact that many companies are trading below their book value is increasingly prompting activists to demand the implementation of value-enhancing initiatives. Corresponding campaigns regularly generate excess returns on those stocks affected. At the same time, the trend arrow for share-price-driving stock buyback programs in Europe continues to point upward. And last but not least, M&A deal momentum has also picked up and looks set to fuel more share-price speculation and upside potential for undervalued stocks.
Fixed income: Yields climb to new highs Yields on long-term US Treasury bonds climbed to new highs in July. The 10-year US Treasury yield hit a new year-to-date high above the 4.7 % mark, and the yield on 30year Treasurys rose to its highest level since 2007 (5.2 %). The price performance of US Treasury securities reflects a certain degree of impatience with the US Federal Reserve – although inflation has been hovering above 2 % for years, a period that will be further prolonged by this year’s war with Iran, the US central bank kept the current interest-rate level unchanged at its July monetary policy meeting. However, disagreement between Fed officials has evidently formed in the meantime. Several FOMC members want to restore the central bank’s lost credibility with regard to inflation targeting. The financial market believes that they will prevail and has recently been pricing in two quarter-point policy rate hikes over the next 12 months. Even if those rate hikes were to get implemented,
US yields where they currently stand are already at an accordingly fair level. Further yield increases would present investors with an opportunity to build out their positions in long-term bonds a bit.
Alternative assets: Peak oil-price volatility The crude-oil market has become (yet another) playground for speculators lately as well as a plaything for presidential tweets. Constant posting and a hyperactive news ticker at times have been causing very elevated volatility ever since the start of the Iran conflict. After the ceasefire between Iran and the USA was declared over, the price of petroleum resurged in July by 50 % at its peak until the latest change of course calmed oil markets again. Meanwhile, strategic oil reserves around the world are rapidly being drawn down. In a scenario of an enduring disruption of ship traffic through the Strait of Hormuz, a physical shortage could lastingly propel the price of oil back to above the USD 100-per-barrel mark in the months ahead. The US president will probably want to prevent that from happening in his customary manner in view of the prices at gas stations and the upcoming midterm elections, but realities can’t simply be tweeted out of existence. The commotion over private credit has abated a bit lately. The investor exodus from this asset class appears to have passed its zenith. Private markets giant Blackstone’s presentation of its latest numbers included the comment that redemption requests by investors in its flagship private credit vehicle decreased in the second quarter. Observers on the sidelines can take away the following insight from this episode over the past year: the contractually permissible gating in the event that too many investors wish to exit an evergreen fund all at the same time really works and will accordingly be used by managers. Gating is actually good for investors in the end because it averts fire sales by managers and unnecessarily bad redemption prices for fund shares. Therefore, anyone who invests in private credit – or even
The crude-oil market has become (yet another) playground for speculators lately as well as a plaything for presidential tweets.
Monthly Market Monitor – August 2026
5
in private equity or infrastructure – should have a lengthy time horizon and should only invest money that isn’t needed somewhere else in the near or medium term.
Currencies: Carry trades Carry trades are back in vogue at the moment on forex markets. As a result, low-interest currencies are depreciating and high-interest currencies are gaining value. The Japanese yen is still very popular as a classic carry-trade currency even though the policy interest rate level in Japan has since risen mildly to 1 % at present. The yen fell to a new 40-year low
Shares of SpaceX commenced trading on the stock market on June 11 with a pyrotechnic explosion that skyrocketed them from an issue price of USD 135 to USD 226 two trading sessions later. The thrust gave out at that altitude, and SpaceX’s stock price has intermittently fallen by half since then. If this poor performance continues, that wouldn’t make SpaceX an anomaly. New stock-market entrants have been a bad investment for years. Exceptions confirm the rule, but the majority of IPOs have significantly underperformed the broad market over the first three years after going public. That has happened for a number of reasons. In the post-pandemic climate in 2020 / 21, which was shaped by frenzied speculative activity and low interest rates, companies came onto the market with very ambitious valuations that left little room for share-price advances. The subsequent interest-rate hiking cycle then hit unprofitable growth companies the hardest. And finally, many IPOs in recent years were of questionable quality, but they had to compete with market-dominating, high-quality Big Tech companies. Although one can ascribe a certain degree of quality and uniqueness to SpaceX, the stock price that allowed the company to briefly join the ranks of the world’s five largest enterprises was arguably nonetheless a bit too high after all (for now).
against the US dollar in July. Neither verbal nor tangible monetary market interventions by the Bank of Japan have been able to alter the direction of the trend in recent months. It remains to be seen whether the recent action, carried out in coordination with the U.S., will change anything. It may take several more interest-rate hikes by the central bank to make the yen unattractive for carry traders. However, the real funding currency for carry trades right now is the Swiss franc because it is even less expensive to borrow. Its interestrate differential versus the US dollar and the
euro has widened in recent weeks, and the franc has accordingly depreciated. The Swiss National Bank can watch this development calmly from the sideline at the moment. The dip in the franc’s strength comes not inopportunely because it renders the repeatedly threatened interventions by the SNB unnecessary. The SNB looks set to stay in wait-and-see mode in the months ahead. Interest-rate hikes in Switzerland are not even visible on the distant horizon, so the Swiss franc remains attractive for carry trading.
Chart in the Spotlight Misguided euphoria | IPOs in recent years have underperformed IPO performance relative to the broad market (over three years) 60% 40% 20% 0 -20% -40% -60% -80% -100% 1980
1985
1990
1995
2000
2005
2010
2015
2020
2024
Sources: Bloomberg, Kaiser Partner Privatbank
And finally, many IPOs in recent years were of questionable quality, but they had to compete with market-dominating, high-quality Big Tech companies.
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Kaiser Partner Privatbank AG
The Back Page
Asset Classes Performance as of 31 July 2026 Asset class
YTD 1 Month
1 year
3 years*
Index
Cash US-Dollar
2.28%
0.35%
4.05%
4.84%
USD Interest Rate Return
Euro
1.33%
0.22%
2.21%
3.00%
EUR Interest Rate Return
Swiss Franc
-0.02%
0.00%
-0.03%
0.66%
CHF Interest Rate Return
Fixed Income Government Bonds USA
-1.54%
-1.38%
1.91%
2.82%
Bloomberg US Govt 7-10 Yr Bond Index (USD)
USA inflation-protected
0.46%
-0.68%
2.59%
3.70%
Bloomberg US Treasury Inflation-Linked Bond Index (USD)
Germany
-0.67%
-1.98%
-0.86%
1.16%
Bloomberg Germany Govt 7-10 Yr Bond Index (EUR)
United Kingdom
-0.92%
-1.52%
1.55%
3.21%
Bloomberg UK Govt 7-10 Yr Bond Index (GBP)
Switzerland
0.41%
-0.26%
2.74%
4.53%
Bloomberg Switzerland Govt 7-10 Yr Bond Index (CHF)
US Investment Grade
0.27%
-0.41%
3.34%
5.63%
Bloomberg US Corporate 3-5 Yr Index (USD)
EU Investment Grade
0.28%
-0.71%
1.22%
4.59%
Bloomberg European Corporate 3-5 Yr Index (EUR)
US High Yield
1.71%
-0.25%
5.17%
8.27%
Bloomberg US Corporate High Yield Index (USD)
EU High Yield
1.64%
-0.23%
3.01%
7.32%
Bloomberg Pan-European High Yield Index (EUR)
Emerging-market bonds
0.91%
-1.66%
7.53%
8.54%
JPMorgan EMBI Global Core Index (USD)
Insurance-linked bonds
5.22%
1.06%
12.39%
13.76%
Swiss Re Global Cat Bond Total Return Index (USD)
Convertible bonds
12.99%
-4.56%
21.95%
15.21%
Bloomberg Global Convertibles Index (USD)
Corporate Bonds
Others
Equities Global
10.52%
0.53%
20.88%
18.64%
MSCI World Gross Total Return Index (USD)
USA
10.14%
-0.06%
19.56%
19.32%
S&P 500 Total Return Index (USD)
Europe
12.26%
1.27%
22.56%
14.89%
STOXX Europe 600 (Gross Return) (EUR)
United Kingdom
11.50%
3.62%
22.82%
16.26%
FTSE 100 Total Return Index (GBP)
Switzerland
10.66%
0.73%
22.00%
10.54%
Swiss Performance Index (CHF)
Japan
18.82%
0.22%
39.16%
22.75%
Topix Total Return Index (JPY)
China
-7.22%
9.04%
-0.98%
7.37%
MSCI China Gross Total Return Index (USD)
Emerging-markets ex. China
30.86%
-5.86%
53.11%
24.73%
MSCI Emerging Markets ex China Gross Return Index (USD)
Alternatives Commodities
20.39%
7.21%
30.51%
7.15%
Bloomberg Commodity Index (USD)
Gold
-6.33%
0.95%
22.99%
27.22%
Gold Spot (US Dollar / Ounce)
Bitcoin
-28.24%
7.26%
-46.01%
29.14%
XBTUSD Spot Exchange Rate
Real estate USA
15.33%
2.32%
15.06%
5.94%
S&P US All Equity REIT Index (USD)
Real estate Switzerland
-0.36%
-1.19%
6.55%
10.90%
SXI Real Estate Funds Total Return Index (CHF)
Hedge Funds
4.84%
-0.46%
11.77%
10.35%
Bloomberg All Hedge Fund Index (USD)
Private Equity
-11.14%
6.87%
-12.38%
5.95%
Global Listed Private Equity Index (USD)
Currencies EUR/USD
-1.86%
0.92%
0.98%
1.58%
EURUSD Spot Exchange Rate
EUR/CHF
-0.04%
0.77%
0.32%
-1.00%
EURCHF Spot Exchange Rate
GBP/USD
0.06%
1.67%
2.09%
1.66%
GBPUSD Spot Exchange Rate
*annualised
Monthly Market Monitor – August 2026
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