Investors flee tech for bonds and defensive stocks after US inflation data

In depth

US inflation data for October came in above economists' forecasts, and this led to a sharp drop in technology stocks. The technology index lost more than 13%, while the global basic consumer goods index recorded its sharpest monthly jump since 1998 in October.

Voices within the US Federal Reserve have called for a rate hike, and interest rate futures are pricing in an increase as early as next month. Government bond yields have moved back toward the 5% level, as investors flock to bonds and defensive stocks.

The investment bank UBS is sketching a scenario in which the Federal Reserve returns to raising rates as early as December, with further hikes in early 2027. The bank's chief investment officer warns of sharp volatility and recommends that investors reduce concentration in technology stocks.