Swiss bank warns: The three trends that will shake the markets

In a review published by the Swiss bank Julius Baer, three key trends are identified that may affect the markets in the near future. Among other things, the bank rejects the claim that the massive investments of technology companies in artificial intelligence are the main factor behind the rise in bond yields in the US, identifies potential for significant expansion of Chinese companies into international markets, and estimates that corporate reforms in Japan are gaining momentum.

Regarding the US bond market, Julius Baer argues that the increase in capital expenditures of hyperscalers, the large companies operating computing and cloud infrastructure, reflects mainly a change in the composition of investments in the US and not a broad wave of debt raising. The expenditures of these companies rose from 0.5% of US GDP at the end of 2023 to 1.5% in the first quarter of 2026. Conversely, corporate debt in the US fell from 44.4% of GDP in 2020 to 36.9% in the first quarter of this year.

The bank notes that long-term US government debt is growing at a significantly faster rate than investment-grade corporate debt. Therefore, in their assessment, the main structural factor exerting pressure on the long-term bond market is the supply of government debt and not competition from technology companies.

At the same time, Julius Baer identifies an interesting change in China as well. After years of investment and building production capabilities, many Chinese companies are now able to offer products at competitive prices in markets around the world. The bank estimates that companies that manage to expand beyond the local market will be able to open up a significant growth engine for themselves, especially in a period when competition within China is increasing and eroding profit margins.

According to the bank, artificial intelligence may improve the productivity and efficiency of companies, but international expansion can become an additional growth engine. As part of a recently published study, Julius Baer identified 18 Chinese companies that derive more than 30% of their revenues from international markets and already hold significant competitive positions outside of China.

Japan is also at the center of the review. The bank estimates that pressure from shareholders and reforms to improve corporate governance continue to strengthen. Among other things, a 53% increase in the number of activist shareholder campaigns in Japan was recorded in the first half of 2026, to 52 campaigns.

At the same time, Japanese companies continue to increase the distribution of funds to investors through dividends and share buybacks. Share buybacks from the beginning of the year reached 20.3 trillion yen by mid-August, and Julius Baer estimates that they may reach new record levels.

The bank remains optimistic about the Japanese stock market and continues to hold an "overweight" recommendation on Japan. The assessment is based on a combination of profit growth, an increase in shareholder returns, improvement in capital efficiency, and structural reforms in the country. Julius Baer sets a target of 75,000 points for the Nikkei 225 index and identifies corporate reforms and the improvement in investor returns as a key factor supporting the continuation of the trend.