Economic review
Third quarter 2026: Persistently high prices, a US interest rate hike and rising bond yields
US foreign policy continued to cause uncertainty in the financial markets in Q3. The United States (US) increased import duties on products from Canada, making these products more expensive. This could lead to higher prices for goods and services in the US.
Meanwhile, the ongoing conflict in the Persian Gulf region also caused unrest. The price of oil fluctuated strongly. In early July, the US launched new attacks. Tensions around the Strait of Hormuz resurfaced later in the quarter. In between, there were short periods of relative calm.
Due to high oil prices, energy companies saw a sharp rise in profits. As a result, energy companies outperformed companies in other sectors this year. However, high oil prices also lead to higher prices for products and services, or what we know as inflation. The impact is felt by consumers in the supermarket and elsewhere.
Artificial intelligence (AI) also continued to influence financial markets. For example, a young Chinese technology company presented a new AI model with highly promising results. This caused doubt among investors as to whether large AI companies could keep their lead. At the same time, large technology companies showed good results and continue to invest significant amounts in AI and data centres. This gave investors renewed confidence in these companies, causing the share prices of chip manufacturers to go up once more.
Interest rates were the main focus at the end of the quarter. The US central bank (Fed) raised interest rates from 3.75% to 4.00% in September. This was the first interest rate hike since 2023.
The European Central Bank (ECB) also raised interest rates in September. Both central banks increased rates by 0.25%. By raising interest rates, central banks aim to slow price increases.
According to the new Fed chair, Kevin Warsh, prices are still rising too quickly. Another interest rate hike is therefore possible this year. In the meantime, yields on long-term bonds rose sharply. Investors were concerned about high inflation and government debt. Governments also issued large amounts of new bonds. As yields rose, the prices of existing bonds fell.
Shares reached new record highs this summer, but fell again after the interest rate hike in September.