EMR June 2026
Dear Reader
Recently, the policy focus has primarily been set on interest rate regulations. We, on our part, have repeatedly tended to disagree with the widespread consensus. Consequently, the focus of the present EMR is set on interest rate developments, and specifically on selected 10-year Government bond yields as plausible indicators.
FACTS AND INTERPRETATIONS
In order to show, why our assessment differs from the mainstream opinion, we present graphs of 10-year government bond yields of selected equity markets. The graphs of the pertinent interest rates, show significant developments, concerning the two most recent periods under examination. The following two charts point to the following significant disparities:
- A differential path between the first half of the chart as compared to the second half.
- The differential performance is significantly more pronounced in the second half, i.e. the most recent period.
- The real question we ask ourselves is: what are the reasons for the disparate divergencies?
Examining the charts, we find that the performances are significantly more pronounced on the righthand of the chart; indexed to 1 on June 1, 2016. Why so, is the real question, is it not?
Recently, as we all know, economic policy has primarily been focused on managing inflation through interest rate adjustments by the respective Central Banks. As can be inferred from the shown charts, inflation has not received the attention it deserves from a large majority of analysts. To some extent, we fear that the current political environment is not sufficiently geared toward resolving the current economic stalemate with a significantly more coordinated approach.
We are aware of the fact that an evaluation of the current context, only on the basis of the above restricted representations, is a really complex task, as there are differences between the determining factors of the respective time series, such as:
- Will Russia’s war against Ukraine and the wars in the Persian Gulf soon be over?
- Will the outlook act as a driver of economic growth, or will politics continue to play the main destructive role?
- Will the focus be mainly set on monetary policy and the corresponding actions of the respective central banks?
- Or is, and ought to be, the traditional economic thinking be the “new leader”?
We are constantly told that the evolution of interest rates is fundamental to curbing the feared rise of inflation. Based on the available data, we wonder, which of the above hypotheses should and will actually be the valid and deterministic argument for the year 2026.
The recent focus of economic policy has been on managing inflation primordially by means of interest rate management by the Central Banks. Nevertheless, we disagree with this widespread assumption, implying that increased interest rates would solve the current economic impasse.
The graphs somehow puzzle us; thus, let us pinpoint the intriguing whereabouts.
As portrayed, the charts show two specific developments. One covering the period prior end 2019 early 2020 and the second the period thereafter. We find the specific developments as highly revealing.
CONCLUSIONS
Despite all the difficulties in forecasting, we prefer the Swiss franc and our domestic market – primarily for reasons of efficiency. We expect the CHF to remain in high demand. As can be deduced from the general conditions mentioned above, the war in Ukraine and the situation in the Middle East, particularly from a security perspective, are highly deterministic factors given their devastating impact on the availability of commodities such as gas and crude oil.
International diversification speaks for itself. In line with technological developments, investments in the US remain attractive despite the anticipated weakness of the USD against our own currency. Regarding EUR exposure, we are concerned due to the political uncertainties in France and Germany.
Will the focus continue to be primarily on monetary policy and the corresponding responses of central banks, and will this remain the case in the future?
