Strong returns in August despite interest rate headwind

Equities have risen on the back of strong results from major technology companies, while bond investors have faced declining prices. In my view, this reflects a global economy that remains far more resilient than expected despite geopolitical tensions and elevated energy costs. The result of this unexpected robustness has been higher interest rates. 

In the euro area and Denmark, rising inflationary pressure has already prompted rate hikes, most recently earlier this month. At the same time, the European Central Bank (ECB) has signalled that further hikes may follow during the winter. High gas prices, in particular, increase the risk of renewed inflation, and the ECB has therefore adopted a more aggressive stance to tackle the early signs of inflation. Central banks in the United States and Japan are likely to follow, contributing to a broader global rise in rates. 

Equities and interest rates can rise simultaneously — if the underlying driver is positive   

Over time, higher interest rates can create headwinds for equities by increasing financing costs and making bonds more attractive relative to shares. So far, however, equity markets have held firm. Historically, equity prices have often continued to rise during periods of increasing interest rates, provided the rises are driven by stronger economic growth and improved earnings prospects. In the coming months, investors will therefore closely monitor whether rates continue to rise for “good” reasons. My expectation remains that equities still have more to offer for the remainder of the year, although the extraordinary gains seen earlier are likely behind us. 

Strong Returns Continue in August

In terms of returns, Velliv maintains its strong foundation. An average customer with a medium risk profile and 15 years left before retirement will have received a return of between 1.3% and 1.7% in August. The total return for 2026 stands at between 8.8 % and 10.7 % depending on product choice.  

Purchasing‑power protection passes its first test 

The risk of significantly higher inflation is increasing as winter approaches, and many will recall the extreme price rises in 2022 following Russia’s invasion of Ukraine. The situation is not as severe this time, but inflation is still likely to be somewhat higher than usual.

I am therefore pleased that the value of our new scaling‑down model, launched earlier this year, is now clearly visible in practice. The model provides enhanced inflation protection for VækstPension customers who are receiving or soon will receive their pension benefits. For this customer group, Velliv’s returns this year stand out as exceptionally strong. In our view, this demonstrates that our focus on safeguarding purchasing power in the later stage of the pension process is genuinely worthwhile. 

The equity market’s focus is on AI… 

Beyond inflation, equity markets will increasingly focus on developments within artificial intelligence. Investment continues to grow at an impressive pace, and the impact is spreading across broader segments of the market. However, high expectations also make the market more vulnerable. If the AI growth trajectory falters, or even shows minor signs of doing so, it could quickly affect the technology stocks that have driven much of the market’s gains in 2026. 

…and soon the American midterm election — join the webinar 

Another key theme is the American midterm election, which is now entering a more intensive phase. Support for the Democrats is rising, increasing the likelihood of a shift in congressional power. This may influence fiscal policy, regulation, and the broader political framework for businesses in the coming years — and thereby also financial markets.

For this precise reason, we will be hosting a webinar in early October with Anders Agner, Editor‑in‑Chief at Kongressen.com, who will provide insights into the potential outcomes and implications of the election. The webinar will be held in Danish.