IBEX 35 Braces for Higher Rates as Inflation Concerns Rise

The recent change in market expectations has shifted the focus to higher interest rates. In the US, Kevin Warsh's warning at Jackson Hole that inflation remains too high has led markets to increase bets on a possible rate hike by the Federal Reserve if upcoming data doesn't show sufficient moderation.

In Europe, the ECB maintains a cautious stance, leaving its three official rates unchanged in July and reiterating that it will decide based on inflation, economic risks, and monetary policy transmission. As a result, a quick return to cheap money is no longer taken for granted.

For banks like Bankinter, higher rates can sustain financial margins but also make mortgages more expensive, weaken credit demand, and raise the risk of default. On the other hand, insurance companies like Mapfre may benefit from higher yields in fixed income, which can progressively improve their investment income.