Report published September 28, 2026
How Will Fed Rate Hikes Impact Markets: UBS Macro and Fixed Income Outlook
UBS · September 28, 2026
UBS expects the Federal Reserve to deliver only one more 25 bps interest rate hike in December, arguing that market pricing for a prolonged tightening cycle is excessive. Resilient US economic growth and double-digit S&P 500 earnings expansion should support equities, while elevated Treasury yields offer attractive opportunities in high-quality bonds.
Read the remaining 3 pages
Finvaulta summarizes UBS's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Markets are pricing an overly aggressive Fed tightening cycle; UBS expects only one further 25 bps rate hike in December.
- 2.Resilient economic growth and robust earnings (forecasted S&P 500 earnings growth of 25% in 2026 and 14% in 2027) will allow US equities to absorb moderately higher yields.
- 3.Multi-decade highs in Treasury yields create attractive opportunities to lock in portfolio income via medium- to long-duration high-quality bonds and investment-grade corporate credit.
Table of Contents
- Key message
- 01 Strong growth and renewed inflation concerns have led investors to price a faster pace of Fed tightening.
- 02 But markets may be pricing a longer tightening cycle than the Fed ultimately delivers.
- 03 So, resilient earnings and higher starting yields continue to offer investment opportunities.
- New this week
- One liner
- Did you know?
- Investment view
Report data
Key figures extracted from this report
| Metric | Estimate | Context |
|---|---|---|
| 10-year US Treasury yield | 5.16% | Rose nearly 17 basis points last week to reach its highest level since 2007 |
| Market probability of October Fed rate hike | 64% | Increased from 53% to 64% over the week |
| US flash composite PMI | 58.4 index | Highest level since July 2021 |
| S&P 500 earnings growth forecast (2026) | 25% | UBS forecast for full-year 2026 earnings growth |
| S&P 500 earnings growth forecast (2027) | 14% | UBS forecast for full-year 2027 earnings growth |
Reports in this series
UBS House View Briefcase is shown in chronological order through this edition, published on September 28, 2026.
Part of the UBS House View Briefcase series — view all 68 editions
Looking for the latest edition? Should investors pay more attention to cash English 1667740 (Oct 12, 2026)
Access the full report
And others from the leading tier 1 banks.
Free account: read previews and a daily allowance of full reports. Pro removes the daily limit.