Interest rates are back. Will that change your plans?
Bonds are once again offering higher returns. But does that mean their role has changed? And does the traditional combination of equities and bonds still work the way it used to? Mailee Hovsepian and Heng-Ta Quach, Customer Relationship Managers at KBC Asset Management, discuss the impact of rising interest rates on financial markets and on a diversified investment portfolio.
22-09-2026
How are investors reacting?
Technology stocks under pressure
Tech shares came under pressure due to the huge investments made by these companies. As these investments are often financed with borrowed capital, higher interest rates weigh on borrowing costs. In addition, Chinese firms have made progress in developing memory chips, which is further intensifying competition. Investors therefore fear that the profitability of tech companies could come under pressure.
What happened in the world?
US inflation higher than expected
Persistently high energy prices caused US inflation to increase more sharply than expected in September. As a result, investors are factoring in the US central bank moving more quickly to raise its key rate further.
Long-term interest rates in the US and the euro area initially rose on the back of these expectation of higher interest rates, before falling again. Concerns about technology shares prompted investors to seek refuge in safe government bonds.
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