Monthly Report, October 2026
Editorial
The market is losing patience with French debt
The French debt plummets in an already turbulent market.
The sharp rise in yields is making the bill even higher.
What can we expect next?
What consequences can we expect for the markets?
France is known for only taking action when a (very) serious crisis breaks out. The financial markets, so despised by the Left, will soon 'blow the whistle' to signal that 'playtime is over'. The question is whether this will be in 2026, or in the run-up to the 2027 elections. Until then, we will still need to stay out of the OAT market.
- by Kim Muller, CIO (Switzerland)
Assessment of the economic situation
Inflation expectations are rising across the board and are pushing bond yields sharply higher. Energy and fuel prices in particular are reaching record highs, both in Europe and the United States, fuelling fears of social unrest. Consumer purchasing power is under pressure, particularly in Europe.
Despite inflation, energy & interest rates, US growth is fine.
Diesel prices are soaring not only in Europe, but also in the US.
The market now expects 3-4 interest rate rises from the Fed.
What about the SNB's monetary policy?
At its latest meeting on 24 September, the SNB, as expected, kept its key policy rate at 0 per cent. Medium-term inflationary pressure has increased only slightly since June. The SNB's monetary policy is appropriate for keeping inflation within the price stability range and supports economic activity. Furthermore, should the need arise, the SNB is prepared to intervene in the foreign exchange market to ensure appropriate monetary conditions, as defined by the SNB. The very recent bout of weakness in the single currency merely confirms that a rate rise is not on the cards.
Financial markets during the month
Equity markets, with the notable exception of the Nasdaq, ended the month in negative territory. The sharp rise in bond yields weighed heavily on valuations, whilst the dollar strengthened.
September, true to its bad reputation.
Long-term interest rates at 20+ years highs (except in Switzerland).
Europeans have been net buyers of gold ETFs since the end of June.
Our convictions
Comments on investment decisions
Whilst the indices' downward movements have been moderate, sector rotations have been more pronounced. Long-term yields are reaching 20-year highs or higher, but the positive correlation with equities is dampening our enthusiasm. The dollar is strengthening, but not excessively, whilst gold is struggling a bit. Oil prices remain high.
Equities.
Bonds.
Precious metals and listed real estate (REITs).
Currencies.
Performance Summary
Equity.
Bonds, currencies and commodities.
Disclaimer
This document has been prepared using sources believed to be reliable but should not be assumed to be accurate or complete. The statements and opinions it incorporates were formed after careful consideration and may be subject to change without notice. The author and distributors of this document expressly disclaim any and all liability for inaccuracies it may contain and shall not be held liable for any damage that may result from any use of the information presented herein. Past performance is not indicative of future results. Values of an investment may fall as well as rise. This document is intended for information purposes only and should not be construed as a recommendation, an offer, or the solicitation of an offer to buy or sell any investment products or services. The use of any information contained in this document shall be at the sole discretion and risk of the user. Prior to making any investment or financial decisions, an investor should seek individualized advice from his/her financial, legal, and tax advisors that consider all of the particular facts and circumstances of an investor's own situation.
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