Market Update 07/2026 | Are We in an AI Bubble? Markets Look Past US-Iran Conflict as Earnings Broaden
Are We in an AI Bubble? Equities Reach New All-Time Highs as Markets Look Past the US-Iran Conflict
In July 2026, T&T International maintains an Attractive stance on US, Swiss, German and Asian equities as markets reach new all-time highs and refocus on strong underlying fundamentals. The macro backdrop remains constructive — resilient consumption, robust access to capital, supportive fiscal policies and a recovering manufacturing sector — with 20% EPS growth expected for the MSCI AC World Index this year, though a more selective approach within the AI sector is warranted.
In fixed income, High Grade, Investment Grade and Emerging Market bonds remain Attractive while High Yield stays Neutral; global yields have fallen as the US-Iran conflict winds down and energy prices retreat sharply. In commodities, broad exposure and Copper are Attractive. In FX, the focus stays on pro-growth and carry currencies — the SEK and GBP are our top picks for 3Q, with the GBP upgraded to Attractive alongside SEK, NZD, AUD and CNY, while EUR/USD remains Neutral.
The Topic of the Month — Are We in an AI Bubble? — argues the answer depends on whether AI can turn today's scarcity into tomorrow's abundance. What matters is whether today's extraordinary earnings can endure, not where valuations sit relative to history — and still-elevated margins suggest they can. We remain overweight US equities, favoring the scarce inputs every AI system requires.
