Q3 2026: A major market readjustment is in the works

After reviewing the main macro trends and information currently dominating the markets, my strategic interpretation is that the market is shifting from a regime of abundant liquidity and AI-driven optimism to a much more complex regime where long-term rates, sovereign debt, and government financing are once again becoming the dominant variables.

1. The real risk is no longer oil but bonds

Most investors are still focused on oil, Iran, or geopolitical tensions. However, the most important message from recent weeks comes from the bond market:

• Sovereign yields are rising.
• The market is now anticipating the possibility of further rate hikes.
• The Fed is adopting a much more restrictive tone under Kevin Warsh.
• Long-term US bonds are approaching levels that are starting to weigh on equity valuations.

Historically, when a stock market continues to rise while long-term yields are sharply increasing, it creates a divergence that often ends up being corrected.

2. AI continues to fuel the rise but hides a structural weakness

Enthusiasm around AI remains extremely powerful:

• massive investments;
• semiconductor growth;
• strong demand for digital infrastructure;
• solid earnings from many tech companies.

But behind this strength:

• US consumption is slowing;
• households are under pressure;
• inflation remains above targets;
• markets are becoming increasingly dependent on a reduced number of large-cap stocks.

This looks more like a concentration of risk than a healthy, broad-based market. In a previous article, I highlighted an analysis, or rather a warning, because AI is entering an area that very few people truly analyze, especially since this sector is currently burning hundreds of billions to support its growth.

3. The stagflation scenario discreetly returns

The market had anticipated several rate cuts.

Today the debate is different:

• still high inflation;
• slowing growth;
• still unstable energy costs;
• rising budget deficits.

This is exactly the ground where stagflation can reappear.

The risk is therefore not an immediate crash but a long period where:

• stocks don't rise much;
• bonds suffer;
• the economy slows down;
• central banks remain stuck.

4. What I would monitor in Q3

For me, the next 90 days will be more influenced by:

1. US10Y and US30Y.
2. US Treasury auctions.
3. PCE and inflation.
4. Global manufacturing PMI.
5. Oil after the Iran-US détente.
6. Global liquidity indicators.

If yields continue to rise while indices remain near their peaks, the probability of a market clearing will increase sharply.

What to remember!

In retrospect, I don't see a market in a healthy expansion phase.

I see a market driven by three fragile pillars:

• the hope of an AI revolution;
• the constant expectation of central bank support;
• global debt reaching historic levels.

The most concerning signal today is not falling oil prices or even geopolitics. It's the simultaneous rise in bond yields across several major economies while global growth is slowing. Historically, this type of configuration often precedes a phase of re-evaluation of financial assets.

As I anticipated in January in the 2026 timeline, Q3 looks more like a period of market cleansing and valuation readjustment than the beginning of a new sustainable bull market.