Cross-asset performance in July 2026 favoured selective equity risk over duration, with sovereign-heavy curves again under pressure while idiosyncratic credit and stock stories drove relative returns. FX moves were material in several satellite markets, amplifying both positive and negative local trends versus USD.
We maintain a barbell between high-conviction overweights in reform or carry stories and defensive underweights in FX‑vulnerable, duration‑heavy markets. Positioning remains breadth‑first, with tight risk budgets given uneven liquidity and narrow leadership in several indices.
ML United States Equity Index returned +3.28% in July 2026, while ML United States Bond Index returned +0.22% in July 2026, leaving equities clearly in the lead but without a disorderly bond sell-off. Equity performance was driven by cyclical and idiosyncratic winners such as DUPONT DE NEMOURS INC (+191.04%, Materials), ROBINHOOD MARKETS INC CLASS A (+36.27%, Financials) and AXON ENTERPRISE INC (+33.02%, Industrials), offset by sharp drawdowns in Technology where SUPER MICRO COMPUTER INC (-44.64%), IREN LTD (-39.20%) and ORACLE CORP (-38.52%) weighed on breadth. In credit, ML United States Bond Index gains were modest and skewed to higher-beta names like PREMIER ENTERTAINMENT SUB LLC 144A 2031 (+32.01%, Consumer Cyclical) and LBM ACQUISITION LLC 144A 2029 (+18.43%, Industrials), while distressed prints in ASP UNIFRAX HOLDINGS INC 144A 2029 (-80.43%, Industrials) and weakness in HERTZ CORPORATION (THE) 144A 2029 (-23.82%, Industrials) underlined ongoing dispersion within US high yield.
ML United Kingdom Equity Index returned -0.28% in July 2026, while ML United Kingdom Bond Index returned -1.82% in July 2026, so UK duration underperformed even a flat-to-slightly negative equity tape. GBP weakened by -1.33% versus USD, modestly worsening USD-based returns across both sleeves. Equity performance was mixed: defensives and structural growth names such as SEGRO REIT PLC (+21.30%, Real Estate), 3I GROUP PLC (+21.00%, Financials) and COCA COLA HBC AG (+18.31%, Consumer Staples) outperformed, but Technology and Materials lagged with HALMA PLC (-24.84%), GLENCORE PLC (-17.88%) and RIO TINTO PLC (-16.93%) dragging the index. On the bond side, idiosyncratic rerating in 888 ACQUISITIONS LTD 2031 (+6.17%, Consumer Cyclical), MOBICO GROUP PLC 2031 (+5.29%, Industrials) and ARQIVA BROADCAST FINANCE PLC 2030 (+4.76%, Communications) was overshadowed by sharp declines in THAMES WATER UTILITIES FINANCE PLC 2034 (-14.25%, Utilities) and nearby maturities, reinforcing caution on UK utility credit and overall Gilt‑linked duration.
| Country | Equity Return (July 2026) | Bond Return (July 2026) | FX vs USD | Signal |
|---|---|---|---|---|
| Colombia | +18.36% | +8.77% | COP +6.91% | Equity & bond rally, FX tailwind |
| Egypt | +14.85% | +1.15% | EGP +6.47% | Equity-led, FX tailwind |
| Denmark | +8.39% | -2.14% | DKK -1.53% | Equity vs duration divergence |
| United Arab Emirates | +8.04% | +0.64% | AED +0.00% | Equity carry, neutral FX |
| Greece | +5.96% | -2.81% | EUR -1.15% | Reform equity vs weak credit |
ML Colombia Equity Index returned +18.36% in July 2026, while ML Colombia Bond Index returned +8.77% in July 2026, delivering one of the strongest cross-asset profiles in the universe. COP appreciation of +6.91% versus USD materially amplified both equity and bond gains for foreign investors. Equity leadership is extremely narrow (3 stocks), centred on GRUPO CIBEST SA (+23.19%, Financials), GRUPO CIBEST PREF SA (+19.89%, Financials) and INTERCONEXION ELECTRICA SA (+15.17%, Utilities), underscoring liquidity and concentration risk. On the fixed income side, sovereign paper such as COLOMBIA REPUBLIC OF (GOVERNMENT) 2030 (+65.37%) and 2028 (+65.36%) dominated returns, while energy credits like GRAN TIERRA ENERGY INC 2031 (-6.15%) lagged, suggesting a clean macro/sovereign story but pockets of sectoral weakness.
ML Egypt Equity Index returned +14.85% in July 2026, while ML Egypt Bond Index returned +1.15% in July 2026, making the trade clearly equity-led. EGP gained +6.47% versus USD, significantly enhancing USD returns and validating the local reform premium. Equity performance, though on a very narrow breadth of 3 names, was broad-based across key domestic franchises: COMMERCIAL INTERNATIONAL BANK EGYP (+17.79%, Financials), TALAAT MOUSTAFA GROUP (+14.45%, Real Estate) and EASTERN CO. (+12.31%, Consumer Staples) all outperformed. In contrast, longer-dated sovereign bonds such as EGYPT (ARAB REPUBLIC OF) 2049 (+3.49%) and 2047 (+3.11%) posted modest gains, partially offset by small declines in nearer maturities like EGYPT (ARAB REPUBLIC OF) 2032 (-0.42%), suggesting investors are still cautious on duration despite improved FX and equity sentiment.
ML Denmark Equity Index returned +8.39% in July 2026, while ML Denmark Bond Index returned -2.14% in July 2026, a pronounced divergence that favours an equity overweight against bond underweight. DKK weakened by -1.53% versus USD, slightly diluting local equity gains and accentuating bond losses for USD investors. Equity strength came from a mix of quality growth and consumer exposure, notably PANDORA (+31.39%, Consumer Discretionary), GENMAB (+20.65%, Health Care) and NOVO NORDISK CLASS B (+16.80%, Health Care), while ORSTED A/S (-12.82%, Utilities) and A P MOLLER MAERSK lines (around -5% to -6%, Industrials) dragged on cyclicals and energy transition plays. Danish sovereign bonds such as DENMARK (KINGDOM OF) 2052 (-3.92%) and 2027 (-3.74%) underperformed, with only small positive moves in credits like GENMAB A/S 144A 2033 (+0.84%), reinforcing the preference for Danish equity exposure over duration.
ML United Arab Emirates Equity Index returned +8.04% in July 2026, while ML United Arab Emirates Bond Index returned +0.64% in July 2026, favouring equities but with supportive carry from credit. AED was flat versus USD, so local performance translated directly to hard-currency returns. Equity leadership was reasonably diversified across travel and financials, with AIR ARABIA (+17.83%, Industrials), EMIRATES NBD (+14.83%, Financials) and ABU DHABI COMMERCIAL BANK (+12.95%, Financials) outperforming, while energy-related names such as ADNOC DRILLING COMPANY (-0.64%) lagged the rally. In bonds, sukuk and financial credits like OMNIYAT SUKUK 1 LTD 2031 (+5.01%), BINGHATTI SUKUK 2 SPV LTD 2031 (+4.32%) and SOBHA SUKUK I HOLDING LTD 2030 (+3.95%) did well, contrasting with small pullbacks in longer-dated issues like MAF GLOBAL SECURITIES LTD 2079 (-1.02%), pointing to a constructive but selective credit environment.
ML Greece Equity Index returned +5.96% in July 2026, while ML Greece Bond Index returned -2.81% in July 2026, underscoring an equity‑reform story against more fragile credit and duration. EUR weakened by -1.15% versus USD, softening equity gains and exacerbating bond losses in USD terms. Equity winners such as PUBLIC POWER CORPORATION SA (+10.44%, Utilities), GEK TERNA SA (+9.21%, Industrials) and EUROBANK SA (+7.80%, Financials) highlight improving corporate and financial-sector sentiment, while consumer and some banks, including JUMBO SA (-2.00%, Consumer Discretionary) and PIRAEUS BANK SA (+0.75%, Financials), lagged the move. In contrast, Greek credit underperformed, with utilities like METLEN ENERGY & METALS SMSA 2029 (-5.57%) and 2031 (-4.62%) and financials such as EUROBANK ERGASIAS SERVICES AND HOL 2032 (-2.90%) weighing on ML Greece Bond Index, arguing for a relative-value tilt to equities over bonds.
| Country | Equity Return (July 2026) | Bond Return (July 2026) | FX vs USD | Signal |
|---|---|---|---|---|
| Norway | -14.04% | -9.95% | NOK -5.10% | Broad risk-off, FX drag |
| Israel | -12.43% | -3.23% | ILS -5.59% | Equity stress, duration loss |
| South Korea | -11.18% | -3.99% | KRW -0.79% | Tech weakness, curve pain |
| Finland | -9.58% | -2.72% | EUR -1.15% | Growth & duration headwinds |
| Poland | -7.39% | -1.79% | PLN -2.93% | Broad sell-off, FX drag |
ML Norway Equity Index returned -14.04% in July 2026, while ML Norway Bond Index returned -9.95% in July 2026, with NOK depreciation of -5.10% versus USD compounding losses across both sleeves. Equity weakness was concentrated in cyclical and commodity-linked names, notably NORSK HYDRO (-34.48%, Materials), SALMAR (-25.64%, Consumer Staples) and YARA INTERNATIONAL (-24.54%, Materials), while even relative “winners” such as DNB BANK (-5.04%, Financials) posted negative returns. In bonds, sovereign duration bore the brunt of the sell-off, with NORWAY KINGDOM OF (GOVERNMENT) 2033 (-11.30%), 2034 (-11.28%) and 2028 (-11.26%) sharply lower, and even energy credits such as VAR ENERGI ASA 2086 (-3.22%, Energy) in the “winners” bucket, making Norway a clear cross‑asset underweight.
ML Israel Equity Index returned -12.43% in July 2026, while ML Israel Bond Index returned -3.23% in July 2026, with ILS weakening by -5.59% versus USD and turning local losses into deeper hard-currency drawdowns. Equity declines were led by Technology and cyclicals: TOWER SEMICONDUCTOR LTD (-29.17%, Technology), ICL GROUP LTD (-24.41%, Materials) and OPC ENERGY LTD (-23.05%, Utilities) weighed heavily, while defensives like TEVA PHARMACEUTICAL INDUSTRIES ADR (+5.54%, Health Care) and CHECK POINT SOFTWARE TECHNOLOGIES (+2.26%, Technology) provided only partial offset. On the bond side, long-dated sovereigns ISRAEL (STATE OF) 2052 (-12.68%), 2047 (-12.23%) and 2042 (-11.93%) underperformed, with only modest gains in credits such as TEVA PHARMACEUTICAL FINANCE NETHER 2046 (+1.53%), reinforcing a cautious stance on Israeli duration and FX risk.
ML South Korea Equity Index returned -11.18% in July 2026, while ML South Korea Bond Index returned -3.99% in July 2026, reflecting combined pressure from technology-heavy equities and long sovereign curves. KRW slipped -0.79% versus USD, modestly worsening foreign-investor returns. Equity weakness centred on hardware and components, including LG ELECTRONICS INC (-52.58%, Consumer Discretionary), ECOPRO BM LTD (-40.25%, Industrials) and LG DISPLAY LTD (-35.84%, Technology), although pockets of strength in S-OIL CORP (+15.78%, Energy), AMOREPACIFIC CORP (+13.91%, Consumer Staples) and KOREAN AIR LINES LTD (+13.36%, Industrials) showed selective resilience. In bonds, curve duration sold off sharply, with KOREA (REPUBLIC OF) 2039 and 2049 both at -22.17%, and 2046 at -22.16%, while credits like SHINHAN BANK 2028 (+0.44%) and HANWHA LIFE INSURANCE CO LTD 2032 (+0.44%) eked out small gains, supporting an underweight in sovereign duration relative to selective financial credit.
ML Finland Equity Index returned -9.58% in July 2026, while ML Finland Bond Index returned -2.72% in July 2026, with EUR weakness of -1.15% versus USD adding to negative local returns. Equity drawdowns were driven by growth and industrial names, notably NOKIA (-31.51%, Technology), WARTSILA (-16.28%, Industrials) and ELISA (-13.97%, Communication Services), partially offset by more resilient financials such as NORDEA BANK (+3.34%) and SAMPO CLASS A (+3.26%). On the bond side, the sell-off was again sovereign-led with FINLAND (REPUBLIC OF) 2052 (-4.21%), 2047 (-3.23%) and 2055 (-3.12%) underperforming, whereas credits like CITYCON TREASURY BV 2028 (-2.06%) and MEHILAINEN YHTIOT OY 2032 (-1.83%) declined less, suggesting that Finland offers limited reward for duration risk at this stage.
ML Poland Equity Index returned -7.39% in July 2026, while ML Poland Bond Index returned -1.79% in July 2026, and PLN depreciation of -2.93% versus USD turned modest local losses into more meaningful USD drawdowns. Equity losses were broad, with KGHM POLSKA MIEDZ SA (-18.69%, Materials), LPP SA (-18.35%, Consumer Discretionary) and PGE POLSKA GRUPA ENERGETYCZNA SA (-15.44%, Utilities) lagging, while consumer and financial names like ZABKA GROUP SOCIETE ANONYME SA (+6.61%, Consumer Staples) and ALLEGRO SA (+5.21%, Consumer Discretionary) provided some offset. In bonds, longer-dated sovereigns such as POLAND (REPUBLIC OF) 2053 (+1.92%) and 2054 (+1.76%) managed gains, but near-term issues like POLAND (REPUBLIC OF) 2027 (-5.91% and -5.51%) and 2028 (-5.25%) sold off, pointing to curve steepening and policy uncertainty that justify a structural underweight.
| Bucket | Country | Preferred Sleeve | Key Drivers | Risk Flags |
|---|---|---|---|---|
| Core | United States | Balanced equity & credit | Cyclical and idiosyncratic stock winners; selective HY credit strength | Tech dispersion; single-name HY tail risk |
| Core | United Kingdom | Equity over bonds | Real Estate and Financials resilience vs Gilt and utility credit weakness | GBP softness; regulatory and utility headline risk |
| Overweight | Colombia | Equity & long sovereigns | Strong sovereign rally; financials-led equity strength; COP tailwind | Extreme concentration; energy credit softness; FX volatility |
| Overweight | Egypt | Equity | Banking and real estate leaders; supportive FX | Narrow breadth; long-dated sovereign sensitivity |
| Overweight | Denmark | Equity vs short bonds | Health Care and Consumer Discretionary strength; sovereign curve weakness | DKK drift; concentration in a few large caps |
| Underweight | Norway | Underweight equity & sovereigns | Materials and energy-linked equity drawdowns; sovereign duration sell-off; NOK drag | Oil price sensitivity; liquidity in long end |
| Underweight | Israel | Underweight duration, neutral select credit | Tech and materials equity weakness; long sovereign underperformance; ILS depreciation | Geopolitical and policy risk; FX volatility |
| Underweight | South Korea | Underweight sovereigns, selective equity | Hardware and battery chain sell-off; long-end curve losses | Global tech cycle; sensitivity to US yields |