Market Update July 2026
The US-Iran ceasefire agreed in June broke down in July, triggering thirteen nights of US air strikes, an oil price spike above $91, and the largest hawkish Fed dissent since 2016.
July was the month the peace broke. The Islamabad MOU signed on 17 June had promised sixty days of ceasefire and the resumption of nuclear talks; it lasted about four weeks. In the second week of July, satellite images pointed to Iran quietly rebuilding parts of its nuclear infrastructure, and by 10 July President Trump had told Tehran the ceasefire was over. Thirteen consecutive nights of US bombing raids followed. Brent crude climbed past $91 for the first time since mid-June, gold pushed back above $4,000, and the S&P 500 broke its eleven-year run of positive Julys. Late in the month, both sides paused their attacks and mediators began stitching diplomacy back together, which pulled oil down almost 9% in a single week. Central banks stayed cautious. The ECB held rates steady on 23 July after June’s hike, and on 29 July Kevin Warsh chaired his second FOMC meeting: the Committee held again, but three regional presidents dissented in favour of a hike, the largest hawkish dissent since 2016. Bonds sold off, the 30-year Treasury yield touched its highest level since 2007, and markets moved to price a September hike as the base case.
Geopolitical Developments
The Islamabad framework signed on 17 June set an ambitious agenda: a sixty-day ceasefire, the reopening of the Strait of Hormuz, and progress on Iran’s nuclear file and sanctions. The framework began to fray in the first days of July. Around 9 to 10 July, satellite images circulating in Western capitals suggested that Iran was working to rebuild nuclear infrastructure in apparent breach of the MOU. President Trump publicly declared the ceasefire over and announced a resumption of strikes.
What followed was thirteen consecutive nights of US bombing raids across Iran, met by Iranian retaliatory action and further disruption in the Strait of Hormuz. Around 20 July, Brent crude spiked to $91.42, its highest level since mid-June. Equity markets held up better than in the February round of the war, but intraday volatility rose sharply.
Late in the month, both sides paused their attacks. Mediators from Pakistan, Egypt, Saudi Arabia and Turkey resumed shuttle diplomacy. On 27 July, Iran indicated it would suspend attacks so long as the US pause held, and oil dropped roughly 6 to 9% in a single session as September Brent futures closed near $88. The direction is once again toward de-escalation, but the framework itself remains open. Rapidan Energy raised its Q4 Brent forecast to near $100, up from $85, on the assumption that Hormuz disruption persists.
Market Developments by Asset Class
Equities
US equities closed July slightly lower, ending an eleven-year streak of positive Julys that had stretched back to 2014. The S&P 500 finished at 7,489.72 on 31 July, essentially flat on the month and up around 9% for the year to date. The Dow held better, posting its fourth straight winning month on the back of value and industrial exposure. Weakness was concentrated in growth and semiconductors, where positioning stayed heavy after the strong first half. The pan-European STOXX 600 was broadly flat, while the SMI traded near 14,400 in early July before drifting lower as the geopolitical picture deteriorated.
Sector performance rotated back toward the war trades. Energy outperformed, with European majors and US independents rising alongside Brent through the middle of the month. Defence stayed strong. Banks and rate-sensitive names were mixed: European banks benefited from the ECB’s June hike still washing through earnings, while US financials were caught between higher yields and softer credit dynamics. Airlines and consumer discretionary gave back some of the gains they had made in June as fuel costs climbed again.
In Switzerland, the trade backdrop remained stable. The 15% US tariff cap continues to hold, including for pharmaceuticals, and Section 232 tariffs on pharma products took effect on 31 July within that cap. EUR/CHF pushed above 0.93 as the franc’s safe-haven premium eased with the June ECB hike and, later in the month, the pause in hostilities. Swiss CPI came in at 0.5% year on year in June and eased to 0.4% in July, back at the lower end of the SNB’s target band.
Bonds
Bond yields moved sharply higher across the curve in July. The 10-year US Treasury yield finished 17 July at 4.55%, rose to about 4.61% into the Fed meeting on 29 July, and jumped to 4.657% after the decision. The 30-year touched its highest level since 2007 as investors demanded more compensation for the risk that inflation stays elevated. The 2-year sat around 4.18% in mid-July.
The 29 July FOMC meeting was the second under Kevin Warsh. The Committee held the federal funds rate at 3.50% to 3.75%. Three regional presidents dissented in favour of a 25 basis point hike: Beth Hammack, Neel Kashkari and Lorie Logan. That was the most hawkish dissent since September 2016. Warsh again used a short statement and stressed that “there is no soft inflation target”. The market took the hint. Fed funds futures now price high odds of a rate hike at the 17 September meeting.
The European Central Bank held rates steady at its 23 July meeting. The deposit facility stayed at 2.25%, following the 25 basis point rise on 11 June. Lagarde warned that the longer energy prices stay elevated, the more likely they are to feed into broader inflation through indirect and second-round effects. Eurozone HICP eased to 2.8%, still above the 2% target. Growth is weak: the euro area contracted 0.2% in the first quarter and Q2 data is expected to be soft. The Swiss National Bank’s next assessment is on 25 September.
Real Estate (Switzerland)
The Swiss real estate backdrop remains intact. The SNB policy rate is at 0% and the next assessment is in September. Swiss inflation moved lower in July to 0.4% year on year, back near the bottom of the target band. Financing conditions stay attractive.
Prime urban residential and listed Swiss real estate continue to behave as stable diversifiers in CHF portfolios. The main risk to that picture would be a durable move higher in Swiss long yields, which so far has not happened. Even as US and euro area rates have risen sharply, Swiss ten-year rates have stayed anchored, keeping mortgage costs and property valuations stable.
Commodities
Oil was again the swing factor. Brent started July around $73 and held there through the first week, then rose sharply as the ceasefire broke down. Around 20 July, Brent spiked to $91.42, its highest since mid-June. The late-month pause in hostilities pulled prices back: September Brent closed the month around $88, off 8.7% in the final week. WTI traced a similar path, trading between the low $70s and high $80s and finishing close to $85. Rapidan Energy raised its Q4 Brent forecast to near $100, up from $85, on the assumption that Hormuz disruption persists.
European TTF gas moved higher on the return of Middle East risk, then eased in the last week as the pause held. Copper and industrial metals tracked equities: firm early in the month, weaker mid-month, and a partial recovery into month-end. Palladium and platinum remained subdued.
Gold recovered from June’s pullback. Prices climbed steadily as the ceasefire broke and the Fed signalled its willingness to hold rates through the inflation impulse. By late July, gold was trading around $4,100 an ounce, up from below $4,000 in June, but still well below the $5,589 all-time high of 28 January. The mechanism is now clearer: higher oil pushes headline inflation up, which pushes rate expectations up, which competes with gold, but sustained geopolitical risk and central bank demand keep a floor under prices.
Everon Strategies and Portfolio Positioning
Income Strategies
Income EU Equities delivered a very strong +18.48% year to date, well ahead of the iShares EURO STOXX UCITS ETF (DE) at +13.19%. The 530 basis points of outperformance materially extends the strategy’s lead against its European dividend benchmark and puts it among the top-performing mandates in our line-up. The higher-rate environment after the ECB’s June hike remained the main tailwind, with dividend-paying banks and insurers as the largest positive contributors. Selected industrial and consumer discretionary names added further support, and the dividend focus kept the portfolio resilient through the mid-month spike in geopolitical volatility.
Multi Factor Strategies
Multifactor EU Equities returned +14.10% year to date, ahead of the Euro STOXX benchmark at +13.19%. Absolute performance sits comfortably in double digits in a year that has swung between a Middle East war, a full central bank pivot, and multiple episodes of sharp risk repricing.
The risk-adjusted numbers are the more compelling read. The strategy has delivered a Sharpe ratio of 1.20 against 1.13 for the benchmark, meaning each unit of risk has been rewarded with more return. The peak-to-trough drawdown over the period was 6.1%, materially lower than the benchmark’s 8.3% during the March correction. Beta versus the benchmark sits at 0.95, so the strategy has taken slightly less systematic market risk while delivering the higher return.
Consistency has been the other feature. The framework has generated positive active return in four of the seven months so far, and the allocation effect, which measures the value added by sector positioning, has contributed around 200 basis points to relative performance year to date. The diversified factor mix has kept the profile balanced through the shifts in market leadership.
Outlook
The near-term direction of markets still hinges on whether the pause in US-Iran hostilities holds and translates into a durable framework. A restored MOU with credible enforcement would pull Brent back toward the low $80s and let inflation ease through the rest of the third quarter. A second collapse of the framework, or a fourth quarter in which oil averages closer to $100 as Rapidan now forecasts, would validate the Fed’s hawkish stance and put a September hike on a near-certain path.
The Fed decision on 17 September is now the single most important event on the calendar. Warsh has told the market that September is live and that inflation is a choice. The Q2 US GDP release, second-quarter corporate earnings, and August inflation prints will each move the odds. In Europe, the ECB has already delivered its hike and now moves data by data. The SNB reassessment is on 25 September.
For Swiss investors, the balance of forces is on the whole more constructive. EUR/CHF above 0.93 removes some pressure on exporters. Inflation is well behaved, financing conditions are attractive, and Swiss equity multiples remain reasonable. Our portfolios continue to favour breadth, quality and selective exposure to European rate-driven trades. We keep the discipline on position sizing and factor mix that has served us well through the war, the ceasefire and its collapse.
Your Everon Investment Team
This article is for general information purposes only and does not constitute investment advice or an offer to buy or sell financial instruments. Everon AG is a wealth manager licensed by FINMA under FinIA. Past performance is not a reliable indicator of future returns.
The Everon strategy performance shown is historical and is stated before costs and fees.