The publication of Swiss economic activity for the second quarter of 2026 requires a closer look, beyond the first public comments such as “The Swiss economy is buzzing” (see Neue Zürcher Zeitung, 13. August 2026, p. 25).
It is well known that the explanation of economic crises takes place in quite different contexts. Today’s specific difficulties for investors relate to the timing of relevant policy actions and/or reactions.
It is a known fact that the solution of economic crises takes place in rather differential and hard to compare phases. Today’s specific difficulty for investors refers to the timing of any pertinent, policy actions/reactions.
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.
The recent focus of economic policy has been on managing inflation primordially by means of interest rate management by the Central Banks. However, we disagree with this widespread assumption that increased interest rates would solve the current economic impasse.
Our analysis of the long-term relationship between inflation and short- and long-term interest rates, as well as the DJIA stock index, has repeatedly piqued our curiosity.
Examining the following chart of long-term US real GDP both on a level basis and on a percent change basis we can infer that, over the longer term, volatili-ty, on average, dropped significantly.
Hardly a day goes by without a commentary – or even a request of a responsible politicians to further cut interest rates, in order to guide the whereabouts of inflation and equity indexes. As of recently, a further determinant is due to the repetitive requests of politicians, and in recent times, specifically, by the current U.S. president.
Assessing the current context is a complex exercise, as there are differences between determining factors.
By examining the graph of the monthly averages of the SPI, DJIA, and NDX indices over the last three years, we find important indications for the immediate future.
