What We Are Watching Before 2027

Borrowing is becoming more expensive for weaker companies, corporate earnings forecasts increasingly depend on a broader recovery in profits, and Europe’s energy shock is putting renewed pressure on inflation. For Swiss investors, the question is how these developments will affect financing costs, portfolio returns and the cash available to meet future commitments.

The final quarter of 2026 will test whether the pressures building across credit, corporate earnings and inflation are beginning to affect the cash flows, financing decisions and liquidity needs of investors entering 2027. Four indicators deserve particular attention: whether expensive credit is becoming scarce credit, whether earnings growth is spreading beyond the largest technology companies, whether Europe’s energy shock is reaching wages and services, and what Swiss investors are being paid to keep money liquid.

Is Expensive Credit Becoming Scarce Credit?

The gap inside high yield has widened. CCC spreads reached 11.12 percentage points on 24 September, while BB spreads remained at 1.64. The broad US high-yield spread was 2.80 percentage points that day and rose to 2.93 on 25 September.

European companies are feeling the squeeze through their banks. In the ECB’s second-quarter survey, a net 42 percent of firms reported higher bank-loan rates, up from 26 percent in the previous quarter. A net 31 percent paid higher fees and commissions, while 10 percent faced higher collateral requirements. Bank-loan availability remained broadly unchanged.

For borrowers approaching refinancing, higher margins and collateral demands already change the economics even before banks cut availability. Family businesses, PE-backed companies and property vehicles will feel the higher cost of debt before they face an outright shortage of credit. A heavily indebted borrower reaches the point sooner at which interest costs absorb cash needed elsewhere.

The next ECB lending data will show whether banks have moved from charging more to lending less. For investors with leveraged businesses or property, that distinction will determine whether refinancing simply becomes more expensive or starts to limit the cash available for other commitments.

Is Earnings Growth Moving Beyond The Market Leaders?

Analysts normally cut S&P 500 earnings forecasts as a quarter progresses. During July and August they raised them. FactSet’s bottom-up Q3 EPS estimate increased 1.2 percent, from $88.64 at the end of June to $89.69 at the end of August. Over the previous five years, estimates fell by an average 1.7 percent during the same part of the quarter.

FactSet expects the Magnificent Seven to produce earnings growth of 31.8 percent in Q3, against 25.5 percent for the other 493 companies. By Q4, the forecast reverses: 22.8 percent for the seven and 25.3 percent for the rest.

That forecast has not yet been earned as Q3 reporting will show whether industrials, financials, healthcare, energy and consumer companies are producing the profits now built into estimates. If more sectors deliver, fewer companies will account for the index’s earnings gains. If the rest of the market misses while the largest technology groups continue to deliver, earnings growth will still rest heavily on a small group of companies.

The next evidence comes from actual earnings and Q4 guidance, not another revision to the year-end index target. For investors, broader profit growth would reduce reliance on a handful of market leaders, while disappointing results elsewhere would leave portfolios more exposed to their performance.

Has The Energy Shock Reached Wages And Services?

Euro-area inflation rose to 3.8 percent in September from 3.2 percent in August, according to Eurostat’s flash estimate. Energy inflation accelerated from 14.3 percent to 18.8 percent, while services inflation increased from 3.0 percent to 3.2 percent. Inflation excluding energy, food, alcohol and tobacco edged up from 2.4 percent to 2.5 percent, suggesting that the rise remains concentrated in energy rather than spreading broadly across other prices.

Wage agreements have moved more slowly. The ECB’s September tracker puts negotiated wage growth at 2.2 percent for 2026, rising to 2.7 percent in the first quarter of 2027 and 2.8 percent in the second. Coverage falls to 32.5 percent and 25.1 percent respectively as fewer agreements extend that far ahead.

Services prices and wage settlements now tell us more than another move in oil. If wage growth stays close to current levels while headline inflation falls with energy, the ECB will have less reason to treat the shock as persistent.

A renewed rise in services prices alongside stronger wage settlements would make further easing harder to justify. Eurostat’s next inflation release is due on 16 October. The outcome matters for companies facing higher operating costs and for investors whose borrowing costs and property valuations depend partly on the direction of interest rates.

What Is Swiss Liquidity Earning Now?

The Swiss National Bank left its policy rate at 0 percent on 24 September. Swiss inflation had risen from 0.6 percent in May to 0.8 percent in August, driven mainly by higher oil-product prices. The SNB said medium-term inflation pressure had increased only slightly.

Swiss short-term money still pays almost nothing when SARON stood at -0.04 percent on 25 September, while the ten-year Confederation yield was 0.701 percent on 28 September.

With SARON below zero and inflation at 0.8 percent, large CHF cash balances are losing purchasing power before fees or tax.

A fall in inflation would make near-zero cash less costly in real terms. With inflation near current levels, the drag remains. The SNB is holding the policy rate at zero while expecting inflation to remain inside its price-stability range.

For your wealthy family, the decision should not be simply whether cash earns enough interest. They also need to determine how much liquidity to retain for business expenses, property refinancing and private-market commitments. Holding more than necessary reduces purchasing power, but insufficient reserves can force asset sales or additional borrowing when financing conditions become less favourable.

What To Ask Before 2027

Credit
Are our companies or properties refinancing soon? Higher margins or tighter collateral can cut cash flow and force asset sales.

Earnings
How much of our equity return still depends on a few companies? Weak breadth leaves the portfolio more exposed to disappointment in the market leaders.

Inflation
Are higher energy costs spreading into wages and services? Persistent inflation can keep financing costs higher and pressure bonds, property and company margins.

Swiss Liquidity
How much CHF cash do we genuinely need? Near-zero rates with positive inflation erode purchasing power while the money sits idle.

Banking
What happens if one lender pulls back? A lost credit line can turn a manageable refinancing into a liquidity problem.

The Takeaway

The final quarter of 2026 will show whether companies can still refinance on workable terms, whether profit growth is spreading beyond the market leaders and whether Europe’s energy shock is becoming embedded in wages and services. For Swiss investors, these developments will influence both portfolio returns and the cash available to meet future commitments.

The practical task before 2027 is to examine where financing costs, concentrated investments and liquidity requirements could put pressure on the same family balance sheet. Your business facing higher interest charges may generate less cash, weaker equity markets may make selling investments less attractive, and delayed private-market distributions may leave less money available than expected.

Investors who understand when their debts mature, where their returns are concentrated and how much cash they will need can make financing and portfolio decisions before market conditions narrow their options.

References (APA)

1. ICE Data Indices, LLC. (2026). ICE BofA CCC & Lower US High Yield Index Option-Adjusted Spread. Federal Reserve Bank of St. Louis, FRED.
https://fred.stlouisfed.org/series/BAMLH0A3HYC

2. ICE Data Indices, LLC. (2026). ICE BofA BB US High Yield Index Option-Adjusted Spread. Federal Reserve Bank of St. Louis, FRED.
https://fred.stlouisfed.org/series/BAMLH0A1HYBB

3. ICE Data Indices, LLC. (2026). ICE BofA US High Yield Index Option-Adjusted Spread. Federal Reserve Bank of St. Louis, FRED.
https://fred.stlouisfed.org/series/BAMLH0A0HYM2

4. European Central Bank. (2026, July 20). Survey on the Access to Finance of Enterprises in the euro area – Second quarter of 2026. European Central Bank.
https://www.ecb.europa.eu/stats/ecb_surveys/safe/html/ecb.safe202607.en.html

5. FactSet. (2026, September 4). Analysts Increasing EPS Estimates for S&P 500 Companies for 2nd Straight Quarter. FactSet Insight.
https://insight.factset.com/analysts-increasing-eps-estimates-for-sp-500-companies-for-2nd-straight-quarter

6. FactSet. (2026, July 20). Are “Magnificent 7” Companies Still Top Contributors to S&P 500 Earnings Growth for Q2? FactSet Insight.
https://insight.factset.com/are-magnificent-7-companies-still-top-contributors-to-sp-500-earnings-growth-for-q2

7. Eurostat. (2026, September 17). Annual inflation up to 3.2% in the euro area. European Commission.
https://ec.europa.eu/eurostat/en/web/products-euro-indicators/w/2-17092026-ap

8. European Central Bank. (2026, September 16). ECB wage tracker at 2.7% in H1 2027, pointing to a modest uptick in negotiated wage growth. European Central Bank.
https://www.ecb.europa.eu/press/pr/date/2026/html/ecb.pr260916~7bc58ebef4.en.html

9. Swiss National Bank. (2026, September 24). Monetary policy assessment of 24 September 2026. Swiss National Bank.
https://www.snb.ch/en/publications/communication/press-releases-restricted/pre_20260924

10. Swiss National Bank. (2026, September 30). Quarterly Bulletin 3/2026. Swiss National Bank.
https://www.snb.ch/en/publications/quarterly-bulletin/2026/quartbul_2026_3_komplett

11. Swiss National Bank. (2026). Current interest rates and exchange rates. Swiss National Bank.
https://www.snb.ch/en/the-snb/mandates-goals/statistics/statistics-pub/current_interest_exchange_rates

12. Swiss National Bank. (2026). SNB data portal: Interest rates, yields and foreign exchange market. Swiss National Bank.
https://data.snb.ch/en