JEF Macro Weekly Intervention & Fiscal Tremors; The AI Momentum Rout

Equity Research Global | Equity Strategy August 9, 2026

JEF Macro Weekly—Intervention & Fiscal STRATEGY NOTE

Tremors; The AI Momentum Rout GREED & fear raises issue of why long-end of the Treasury bond market is Tom shifted his GDP forecasts: 2.3% in '26 and 2.5% in '27 demanding a high real interest rate to hold Treasuries. His answer is risk GDP Forecasts (In %)

premium is driven by growing fiscal concerns. Mohit's base case remains Quarter\Annual New Old 1Q26 2.2 2.2 oil settles between $75-$80, would need to be factored into growth\inflation 2Q26 1.5 2.9 expectations. Desh thinks AI momentum rout has happened; favors GARP 3Q26 3.3 2.6 with no-momentum, but are increasingly focusing on high-quality stocks with 4Q26 2.3 2.6 accelerating revisions. 1Q27 2.6 2.2 2Q27 2.4 2.5 GREED & fear—Long-term inflation expectations in the US remain well behaved. This raises the 2026 2.3 2.5 issue of why the long end of the Treasury bond market is demanding a high real interest rate to .2027 2.5 2.4 Source: Jefferies hold Treasuries. The risk premium is driven by growing fiscal concerns, that the US has entered an era of “fiscal dominance”. The higher than previously expected net borrowings reflects weaker anticipated cash flows due to tariff refunds and expenses related to the operations in Iran.

Mohit Kumar—is more focused on sector rotation. We are not adding risk back to duration or duration sensitive sectors. Our base case remains that oil would likely settle in the $75-$80 range, which is still a good 25%-30% higher than pre-war levels and would need to be factored into growth and inflation expectations.

Thomas Simons—Baby Boomers are quickly approaching the point where all of them will be at least 65 years old, the performance of the markets has put them in a strong position to retire, and businesses are struggling to replace their skills and experience. The experience recession is intensifying and is unlikely to improve any time soon.

M Sherif Hamid—The economic data was bad enough to potentially give the Fed some pause but probably not so bad to have folks that worried about the cycle. This will also bring that much more focus on inflation data. We are still pricing two hikes over the next twelve months, we are still pricing longer term neutral rates near 4.5%, and real yields remain near highest levels in decades. We remain constructive rate duration. JefMacro Strategy * | Global Macro Team Desh Peramunetilleke—The AI momentum rout has happened. While the broader ROI and funding | questions linger amid high real yields, vol is easing. The strong S&P 2Q26 results (85% beats) Christopher Wood ^ | Global Head of Equity and 40% YoY EPS growth have been supportive. We still favor GARP with no-momentum, but Strategy increasingly focused on high-quality with accelerating revisions. |

It was a short but nasty pullback in Momentum, but so far the bounce back has been better Thomas Simons * | US Economist | Previous Drawdowns June 22 to July 29 Momentum Corrections And Subsequent Rebounds 23.4 Mohit Kumar ‡ | European Economist 28.0 | Steven G. DeSanctis, CFA * | Equity Strategist 8.0 | -2.0 Aniket Shah, PhD * | Head of Sust. & -12.0 Transition Strategy -22.0 -15.7 | -32.0 -27.0 Decline Next 5-Days Next 22-Days Next 65-Days Desh Peramunetilleke ^ | Head of Quantitative Strategy Note: Next 22-days for current momentum correction is through August | Source: FactSet; Jefferies

Please see analyst certifications, important disclosure information, and information regarding the status of non-US analysts on pages 10 - 16 of this report. * Jefferies LLC / Jefferies Research Services, LLC ^ Jefferies Hong Kong Limited ‡ Jefferies International Limited

Equity Strategy Equity Research August 9, 2026

Jefferies Macro Forecasts: Tom Simons made some adjustments to growth and inflation: Equity Targets and Forecasts GDP Forecasts Index Levels '26 Target GDP 1Q26 2Q26 3Q26 4Q26 1Q27 2Q S&P 500 7,500 United States 2.2% 1.5% 3.3% 2.3% 2.6% 2.4% 2.3% 2.5% Russell 2000 3,190 Economic Forecasts JEF's Earnings Earnings (In '26) Growth (In %) Economy 1Q26 2Q26 3Q26 4Q26 1Q27 2Q S&P 500 $307.07 13.1 Average NFP Growth ( Russell 2000 $122.56 15.7 Unemployment Rate (qtr…