Why higher yields are becoming a defining feature of the investment landscape

UBP’s September House View remains constructive on risk assets but argues that persistent inflation, higher oil prices and rising bond yields are creating a more demanding environment for investors.

The global investment landscape is being reshaped by a combination of resilient corporate earnings, persistent inflation and higher bond yields, according to UBP.

In its September 2026 House View, the Swiss private bank and asset manager maintains a constructive outlook for risk assets but identifies higher yields and oil prices as the principal risks to its central scenario. The firm has also raised its target range for the US 10-year Treasury yield to 4.25%-4.75%. This change reflects a broader reassessment of the macroeconomic environment rather than a simple shift in sentiment towards bonds.

Earnings continue to support equities – UBP’s starting point is relatively supportive for risk assets. The firm argues that the trajectory of equity markets remains reassuring because advances in equity prices have been accompanied by resilient corporate earnings and upward revisions to earnings expectations.

Importantly, we are seeing the strength of the market broadening. What initially appeared to be a predominantly technology led dynamic is, according to the firm’s analysis, gradually extending across a wider range of sectors. That broadening matters because market concentration can increase vulnerability when a small number of companies or industries account for a significant proportion of gains. The September assessment suggests that earnings growth is becoming a more important driver across the market. However, the firm believes the backdrop is complicated by developments in inflation and interest rates.

Inflation remains the key constraint – The central challenge identified by UBP is that inflation remains above the targets of major central banks. This has implications for the timing and scale of monetary policy easing. Rather than assuming that rate cuts will continue according to the expectations established earlier in the cycle, UBP says persistent inflation is pushing expectations for policy-rate reductions towards 2027. The firm’s analysis therefore places greater emphasis on the level of bond yields and the possibility that rates could remain higher for longer.

That changes the environment for investors across both equity and fixed-income markets. Higher yields can affect the relative attractiveness of different assets, while also influencing company valuations and financing costs.

Oil adds another layer of uncertainty – The oil market remains an important source of risk. The firm expects Brent crude to remain within an $80-$100 range through the end of 2026, reflecting the continuing risk premium associated with geopolitical tensions. For investors, the importance of oil extends beyond the energy sector. Higher energy prices can feed into headline inflation and increase costs for companies and consumers. If those effects become persistent, they can complicate the task facing central banks. This creates an interaction between commodities, inflation, monetary policy and bond yields. UBP’s assessment is that this interaction is one of the main factors capable of challenging the otherwise constructive environment for risk assets.

The US 10-year yield becomes increasingly important – Against this backdrop, UBP has raised its target range for the US 10-year Treasury yield to 4.25%-4.75%. The firm attributes the change to a combination of economic resilience, higher energy prices and increased bond supply.

At the same time, UBP sees 5% as a ceiling, arguing that the Federal Reserve and US Treasury would probably intervene if yields were to rise too sharply. The change in yield expectations is significant because the US Treasury market remains an important reference point for global asset pricing. Movements in US government bond yields can influence borrowing costs, currency markets and the valuation of risk assets internationally. UBP’s view therefore places the direction of long-term yields at the centre of the investment landscape.

A constructive stance with greater uncertainty – Despite these risks, UBP is not abandoning its constructive stance on risk assets. Instead, its September House View presents a more nuanced assessment. Corporate earnings remain supportive, while the broadening of earnings growth beyond technology is viewed positively. But the investment manager believes the potential for further increases in yields or another rise in oil prices needs to be considered alongside that positive earnings picture. The result is an environment where macroeconomic conditions and corporate fundamentals need to be considered together.

The changing relationship between growth and rates – One of the implications is that the investment environment of the coming months may be defined less by the prospect of straightforward monetary easing and more by the interaction between growth, inflation and yields.

Resilient economic activity can support corporate earnings and equities. But if that resilience is accompanied by persistent inflation, central banks may have less scope to reduce interest rates. That in turn can keep bond yields elevated. For investors, the balance between these forces becomes increasingly important. UBP’s analysis suggests that the question is not simply whether equities can continue to perform, but whether earnings growth can remain strong enough to offset the valuation and macroeconomic pressures created by higher rates.

A market increasingly driven by breadth Ultimately what we are seeing is a market undergoing a gradual transition. The technology sector remains important, but the firm sees earnings growth broadening across other areas of the equity market. t the same time, persistent inflation, elevated oil prices and higher Treasury yields are creating a more challenging macroeconomic backdrop. UBP therefore maintains a constructive view while highlighting the conditions that could alter that outlook.

For investors, the next stage of the market cycle may depend increasingly on the relationship between corporate earnings and the cost of capital. If earnings continue to broaden while inflation remains contained, risk assets could retain support. If inflation and yields rise materially further, the balance could become more difficult. Those competing forces are now central to understanding the investment landscape as 2026 moves into its final quarter.

Click here to read the full: UBP House View – September 2026, 8 September 2026.