On the face of it, Q3 2026 looked uneventful — market returns were relatively muted, and the headlines stayed fixed on bond yields, interest rates, and energy prices. But as Walter Scott's latest global update explains, there was plenty of movement beneath the surface.

Higher interest rates have become a frequently cited risk to corporate earnings and the economy. The conventional thinking is straightforward: when borrowing costs rise, companies face higher interest expenses, profits come under pressure, and economic growth slows. While there is truth to that relationship, the current cycle may differ from investors’ expectations.

U.S. midterm elections are rapidly approaching, with the latest polls pointing to a divided government, with Democrats gaining control of at least one house of Congress.

Both the dot-com era and the rise of artificial intelligence suggest that early productivity data can understate the actual economic impact of transformative technologies. In the case of the internet, later revisions to productivity gains surpassed early estimates. The same may prove true for AI, implying stronger support for growth.