Q3 2026 market review
In Q3 2026, euro interest rate markets remained focused on the balance between resilient economic activity and persistent inflation pressures. Growth showed signs of improvement, with business surveys moving further into expansionary territory and labour market conditions remaining relatively stable. However, inflation remained well above the ECB's target, supported by elevated energy prices and stronger-than-expected inflation readings across several major eurozone economies. Against this backdrop, the European Central Bank raised its deposit rate in September and maintained a hawkish tone, signalling that further policy tightening could not be ruled out. While economic sentiment improved over much of the quarter, consumer confidence remained subdued owing to elevated energy costs and ongoing geopolitical uncertainty.
Daily horizon: ILF EUR Liquidity Fund
LATEST LIQUIDITY FACTSHEET
3 months+ horizon: ILF EUR Liquidity Plus Fund
Day-to-day spending needs
Highly liquid
Target weighted average maturity 30-45 days
Fund rating: S&P-AAAm, Fitch-AAAmmf
Fund type: LVNAV/STMMF
+0.10%
ILF EUR Liquidity Fund gross yield versus ECB deposit facility rate
LATEST LIQUIDITY PLUS FACTSHEET
Q3 2026 market review
In Q3 2026, euro interest rate markets remained focused on the balance between resilient economic activity and persistent inflation pressures. Growth showed signs of improvement, with business surveys moving further into expansionary territory and labour market conditions remaining relatively stable. However, inflation remained well above the ECB's target, supported by elevated energy prices and stronger-than-expected inflation readings across several major eurozone economies. Against this backdrop, the European Central Bank raised its deposit rate in September and maintained a hawkish tone, signalling that further policy tightening could not be ruled out. While economic sentiment improved over much of the quarter, consumer confidence remained subdued owing to elevated energy costs and ongoing geopolitical uncertainty.
Intermediate reserve
Liquid
Target weighted average maturity: 30-120 days
Fund rating: Fitch-AAAf/S1
Fund type: VNAV STBF
WKN: A2PKR6
+0.17%
ILF EUR Liquidity Plus Fund gross yield versus ECB deposit facility rate
Fund activity
Fund activity over the quarter remained focused on maintaining high levels of liquidity and a conservative maturity profile. As markets increasingly priced in an ECB rate hike in September, activity was concentrated in shorter-dated maturities of up to three months. Selective investments were made further out the curve where value was identified, including positions in Barclays Bank, ASN, KBC, Erste Bank, RATP and Skandinaviska Enskilda Banken. Overall, the Fund continued to prioritise liquidity, while retaining flexibility to take advantage of changes in market pricing and opportunities across approved issuers.
Source: European Central Bank, Insight Investment, as at 30 September 2026.
Source: European Central Bank, Insight Investment, as at 30 September 2026.
Fund activity
Fund activity focused on maintaining high liquidity while selectively adding value where opportunities arose. Activity was concentrated in shorter-dated maturities of up to three months, reflecting ongoing geopolitical uncertainty and expectations of an ECB rate hike in September. Selective fixed-rate additions were made further out the curve, including Barclays Bank and Skandinaviska Enskilda Banken. In the securitised space, incremental investments were made in Fortuna, Thetis and Santander Consumer Loans at attractive levels. Overall, the Fund maintained a defensive maturity profile while retaining flexibility to take advantage of changes in market pricing.