{"id":1445360,"date":"2026-05-07T08:15:06","date_gmt":"2026-05-07T06:15:06","guid":{"rendered":"https:\/\/www.payoff.ch\/news\/world-in-turmoil-what-matters-now"},"modified":"2026-05-07T09:25:50","modified_gmt":"2026-05-07T07:25:50","slug":"world-in-turmoil-what-matters-now","status":"publish","type":"post","link":"https:\/\/www.payoff.ch\/en\/news\/world-in-turmoil-what-matters-now","title":{"rendered":"World in turmoil: what matters now"},"content":{"rendered":"\n

July 4, 2026 marks the 250th anniversary of the signing of the US Declaration of Independence. Under the motto “America250”, national highlights are planned in the States alongside numerous regional events: On July 3, the famous “Times Square Ball” in New York is to be held for the first time not on New Year’s Eve and also in a special design. On Independence Day itself, a grand concert will be held at the Memorial Coliseum in Los Angeles. The organizers of the celebrations can count on the support of prominent companies. The long list of sponsors includes Amazon, Boeing, Coca-Cola, J.P. Morgan Chase and Walmart. <\/p>\n\n

Conflict with an open outcome<\/h3>\n\n

It remains to be seen whether the almost 350 million Americans will really feel like partying this summer. Shortly before the big anniversary, the States are more agitated than ever before. While last year’s trade war – especially with China – tore at the collective nerves, the recent war with Iran is causing uncertainty. Donald Trump has unleashed a conflict with an open outcome with the attacks launched together with Isreal. Iran is using the Strait of Hormuz in particular as a strategic weapon. By effectively blocking the sea passage, it has brought around a fifth of global oil and gas transportation to a standstill. <\/p>\n\n

Although the USA is relatively self-sufficient in the energy sector, the oil price shock has also reached the petrol pumps in the States. The price of a gallon of gasoline has settled above USD 4 – a premium of around USD 1 on the level before the war began. General inflation has risen in line with fuel prices. In March 2026, the U.S. Consumer Price Index (CPI) was 3.3% higher than in the same month of the previous year. This meant that inflation had not only reached its highest level in almost two years. It also moved well away from the level of 2% targeted by the US Federal Reserve. <\/p>\n\n

Striking interplay<\/h3>\n\n

Iran war, oil, U.S. CPI – these three topics are currently setting the pace on the capital markets. As soon as the situation in the Middle East comes to a head – keyword “escalation” – the oil price rises, while the US dollar appreciates and equities and bonds take a dive. If, on the other hand, there is hope of a “de-escalation”, the picture is reversed: While the energy source comes under pressure, investors are buying into equities and bonds. The dollar is sold off in this mixed situation. <\/p>\n\n

There are two fundamental projections for the near future behind these behavioral patterns. On the one hand, the negative scenario of stagflation, i.e. a mix of macroeconomic creep and high inflation rates, is causing investors to flee risky asset classes. And for good reason: in the past, a sharp rise in inflation has repeatedly stifled the economy. Chart 1 takes us back to the 1970s, which were characterized by oil crises. Even then, abrupt price rises were followed by economic downturns. Currently, the markets are dominated by hope that things will not be so bad. Investors are betting on successful peace negotiations and that the global economy will pick up speed and be actively supported by the central banks through interest rate cuts. <\/p>\n\n

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Keep a cool head<\/h3>\n\n

Speaking of monetary policy: here, too, expectations shift as soon as the switch flips between “escalation” and “de-escalation”. Until the first bombings on Tehran at the end of February, the markets had firmly expected interest rates in the US to be cut twice in 2026. The consensus now is that monetary policy will remain unchanged until New Year’s Eve. This picture has been reinforced following the latest Fed meeting. Fed Chairman Jerome Powell used the occasion for an incendiary speech. In his view, it is important that US citizens can rely on a central bank that is free from political influence. “It is an absolute foundation of our great economy,” said Powell. The outgoing head of the US Federal Reserve had repeatedly been heavily criticized by Donald Trump, who was pushing for interest rate cuts. In this way, the US President has sown doubts about the independence of the monetary authorities. <\/p>\n\n

Be that as it may, the developments of recent weeks make it clear how difficult it is for investors to get it right in the short term. For Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, it makes no sense to make abrupt changes to the strategic portfolio allocation. The same applies to attempts to “trade” geopolitical events. He therefore advises long-term investors to remain invested. “Oil prices will remain the most important barometer for economic and market risks,” says Haefele. <\/p>\n\n

Shares: “Stay tuned!”<\/h3>\n\n

UBS Global Wealth Management expects the equity markets to rise by the end of the year. One argument cited is the earnings outlook. In the USA, UBS Wealth Management expects earnings growth of 11% for the S&P 500 in 2026. J.P. Morgan shares this assessment. “Maintain a cautiously optimistic stance on risk assets,” is the advice of the major US bank. The strategists also attribute their confidence in equities to the topic of artificial intelligence (AI). Anthropic in particular has recently caused a stir in this area. The US start-up is electrifying investors with its Claude model and rapid sales growth. <\/p>\n\n

Regardless of this, both UBS and J.P. Morgan recommend that clients hedge their portfolios. “The relatively sharp decline in implied volatility makes these insurance policies more favorable,” the US strategists note. Indeed, the markets have become noticeably less hectic since the turmoil at the start of the war (see chart 2). Which speaks in favor of hedging equity positions with the help of put warrants. You will find an example of such a hedging strategy at the end of the article (Investment solutions). <\/p>\n\n

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Raw materials: a must-have<\/h3>\n\n

Commodities offer another opportunity to prepare for renewed adversity. This is all the more true as the fundamental mix in this asset class also favors rising prices. “We see structural attractiveness across the entire commodity complex,” says UBS expert Haefele. In addition to the low inventories in the energy segment, he points to the demand for industrial metals resulting from investments in infrastructure and electrification. Gold is also attractive as a hedge against geopolitical and fiscal risks. <\/p>\n\n

Recently, this characteristic has not applied to the most important precious metal. Instead, the surge in inflation and the associated shift in monetary policy expectations slowed the price down. Rising interest rates are unfavorable per se for gold as a yieldless asset. However, the price dip following the historic rally could offer a new entry opportunity. After all, the fundamental drivers are intact. In addition to geopolitical risks, these include the central banks’ interest in using the precious metal to diversify their currency reserves. The commodities market as a whole is booming despite the correction in gold and silver, with the UBS CMCI Composite Index up 22% on the end of 2025 (see chart 3). <\/p>\n\n

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Bonds: Europe first <\/h3>\n\n

The fixed-income securities segment also offers opportunities to allocate capital in a comparatively safe manner. In the short term, prices here also depend heavily on the respective sentiment – “escalation” or “de-escalation”. Investors who wish to include bonds in their portfolio on a permanent basis should overlook this. For them, this asset class brings stability and generates regular income. The first attribute mentioned applies above all to the debt instruments of Western countries. Here, the U.S. Treasury is the measure of all things. It is true that US government bonds offer significantly higher yields than bonds issued by Switzerland or Germany. However, especially with a view to the coming months – the Iran war, the Fed and the mid-term elections – there are many uncertainties with this debtor. In any case, we would give preference to European government bonds. <\/p>\n\n

Investment solutions<\/h3>\n\n

The Vanguard EUR Eurozone Government Bond ETF VETA<\/a><\/strong> brings together more than 500 bonds. France, Italy and Germany clearly set the tone, with the three countries contributing almost two thirds of the portfolio. Just under a quarter of the approximately EUR 4.5 billion ETF is invested in government bonds with an AAA rating. If the A and AA ratings are added, the share amounts to more than three quarters. In view of a current yield of 3.3% p.a., this index fund fulfills not only the attribute of security but also the desire for decent returns. <\/p>\n\n

The focus of the tracker certificate is less on regular income and more on price potential and the hedging function. CCMCIU<\/a><\/strong> on the UBS CMCI Composite CHF Monthly Hedged TR Index. With this structured product, investors bring the entire commodity spectrum into their portfolio. The underlying is calculated according to the CMCI methodology. It attempts to exclude the uncertainties associated with commodities trading as far as possible. For diversification purposes, the index is positioned across the entire futures curve. By contrast, traditional commodity barometers are positioned at the front end of the maturity curve. <\/p>\n\n

Finally, we show how an equity portfolio can be hedged. Investors with a strong Wall Street exposure can use the put warrant WSPKSV<\/a><\/strong> put warrant. Vontobel has fixed the strike for this warrant, which is based on the S&P 500, at 6,500 points. Assume that hedging is to be established for a USD 50,000 position. With a subscription ratio of 100:1 and an index level of 7,130 points, a rounded number of 702 warrants are required (calculation: (50,000 \/ 7,130) * 100) At an ask price of CHF 2.09, the acquisition costs for the “own-brand” insurance – excluding expenses – amount to CHF 1,467. <\/p>\n\n

As soon as the US benchmark falls below the strike level on the expiry date in December, the hedge begins to take effect. We assume a fall in the S&P 500 to 5,500 points. The put would then expire at CHF 7.91, assuming a stable USD\/CHF exchange rate. The hedge would therefore generate a profit of around CHF 4,086. The loss on the equity position would thus be compensated by just under 36%. This ratio can be controlled via the strike – a higher strike price leads to a stronger hedge. In the event that Wall Street remains in rally mode, the put expires worthless. Investors would have to book this loss as an insurance premium. <\/p>\n\n

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The war in the Middle East and the associated oil price shock have left deep scars on the mood of companies, consumers and investors. Now that the situation has calmed down somewhat, it is worth taking a closer look at the fundamental environment and the outlook for the future. One thing is certain: Investors should keep a cool head and spread their capital as widely as possible. <\/p>\n","protected":false},"author":6,"featured_media":1445309,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ngg_post_thumbnail":0,"footnotes":""},"categories":[225],"tags":[],"class_list":["post-1445360","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-focus-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/posts\/1445360","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/comments?post=1445360"}],"version-history":[{"count":1,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/posts\/1445360\/revisions"}],"predecessor-version":[{"id":1445361,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/posts\/1445360\/revisions\/1445361"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/media\/1445309"}],"wp:attachment":[{"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/media?parent=1445360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/categories?post=1445360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.payoff.ch\/en\/wp-json\/wp\/v2\/tags?post=1445360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}