Global Insights

GLOBAL Larry Adam, Chief Investment Officer

INSIGHTS Tracey Manzi, Senior Investment Strategist Pavel Molchanov, Senior Investment Strategist Follow Larry on Linkedin or on Our Views • We favor US equities over international developed equities. • Our favorite sectors in the US are Info Tech, Health Care, Industrials, and Consumer Discretionary. • Among international markets, we favor Japan and EM Asia over the euro zone, the UK, and Latin America.

DEVELOPED MARKETS EMERGING MARKETS

US Euro Zone EM Asia Overweight Underweight Overweight

• The S&P 500 is up 13.5% YTD, while down • MSCI Europe is up 12.5% YTD in USD terms • MSCI China is down 7.5% YTD in USD terms, slightly from its record high set on Aug. 13. and is underperforming the S&P 500 by with manufacturing overcapacity offsetting The Russell 2000’s record came on Aug. 14. ~1%, reflecting currency headwinds. strong exports.

• Energy and Tech are the top-gaining • GDP growth in 2Q26 was 1.0% on a YoY • China’s manufacturing PMI ticked down in sectors YTD, while Consumer Discretionary basis—faster than 1Q26’s 0.5% but slower July to 49.2, marking the first month of and Utilities are at the bottom. than in the previous six quarters. contraction since February.

• After setting a three-year high in May, the • The ECB held its policy rate steady in July, • MSCI India is down 8.4% YTD in USD terms, CPI cooled in July for a second straight but markets point to a ~98% probability of as low inflation and robust GDP have been month to 3.4% (headline) / 2.5% (core). a 25 bp hike in September. offset by currency weakness.

• Boosted by the Fed’s hawkish rhetoric, the • The euro is down 1.1% YTD, weighed down • After nearing an all-time low in July, India’s US Dollar Index is up 1.4% YTD and near by Germany’s industrial sluggishness and rupee was boosted by government the midpoint of its ten-year range. France’s political instability. intervention, though still down 6.3% YTD.

Japan UK LatAm Overweight Underweight Neutral

• MSCI Japan is up 20.7% YTD in USD terms, • UK equities are outperforming the euro • MSCI LatAm is among the better fueled by solid earnings growth and zone but underperforming the US on a YTD performers YTD, up 14.7% in USD terms, expectations for more fiscal stimulus. basis. MSCI UK is up 12.8% in USD terms. boosted by energy and currency tailwinds.

• The CPI rose in July to a seven-month high • The top-performing industries YTD are • With fewer than 50 days until Brazil’s of 1.9%—just under the BOJ’s 2% target— Electronic Technology, Energy Minerals, presidential election on October 4, polls with the core rate rising to 1.8%. and Producer Manufacturing. point to a lead for incumbent Lula da Silva.

• Amid expectations for further Bank of • July marked the sixth straight month—and • Mexico’s industrial output in June was up Japan rate hikes, the 10-year JGB yield is ninth out of the past 12—with payrolls in 1.7% YoY, marking only the third month of 2.93%, near its highest levels since 1996. negative territory. growth over the past 12 months.

• Despite several boosts from government • Having followed a more bullish trajectory • Moody’s upgraded Argentina’s sovereign intervention, the yen is down 2.0% YTD and during the Iran conflict than the euro, the debt rating, following upgrades by Fitch near its lowest levels since 1986. pound is up 0.9% YTD. and S&P earlier in the year.

Source: FactSet. Data as of 8/28/2026. 1

In the Spotlight Japanese Stocks Are Rallying—But Why Did The Yen Need Three Interventions YTD? With gains of ~23% in local terms and ~21% in USD terms, Japan, as measured by the MSCI Japan Index, has been the top-performing G7 equity market year-to-date. Yet at the same time, the KEY TAKEAWAYS Japanese yen briefly fell to a 40-year low against the US dollar, prompting three government interventions to support the currency. Today, we explore this unusual divergence. Like the MSCI Japan’s Tech Weighting Of ~18% outsized gains in South Korea and Taiwan, Japan's equity rally has been driven largely by the Helps Explain Its YTD Outperformance Technology sector. As a result, we continue to favor Japan over other developed markets outside the US as a way to participate…