Please see the below article from Tatton Investment Management discussing market volatility, tariff risks and food security concerns, received this morning – 15/06/2026.
Stall, correction and rebound
Equities started poorly but finished strong last week. The Trump 80th birthday present of the reopening of the Strait of Hormuz has ensured that equity markets are starting this week 1-2% above last week’s close. Bonds are also rejoicing in the relief of some inflation pressure with Spot Brent moving below $83.
SpaceX’s $75bn IPO (at a $1.77tn valuation) attracted $350bn in demand and saw secondary trading well above the $135 per share offer price. Investors are frontrunning some of the forced buying from Nasdaq-tracking funds, but SpaceX won’t join the S&P 500 for a year and for the foreseeable future will make up no more than 0.5% of the Nasdaq or MSCI USA. The exposure in most UK multi-asset portfolios (such as Tatton’s range) will be negligible.
Trading liquidity was tight, leading into the biggest IPO in history, and we wondered if it might be badly timed – though that was partly a consequence of the US equity issuance glut itself (including Alphabet’s $85bn offering earlier in the week). Bitcoin’s failure to recover from recent falls is a sign that retail investors aren’t wholly confident. But the AI theme carries on, despite bubble fears. The key difference from the dotcom era is that many of today’s big spenders are already hugely profitable. Current AI spending increases the chances they will keep being profitable.
The Middle East is on the path to a new normality. Trump announced the deal and it is clear that all the main leaderships have incentive to settle, but are still at risk of being destabilised by factional interests. China’s lower oil demand has quietly kept a lid on prices, with reduced import volumes preventing the $150 per barrel predictions from coming true. However, reserves are not limitless. That’s best seen in Europe, where natural gas storage is in its seasonal build phase but is close to the 2021 under-filling which added to the 2022-23 price shocks.
Speaking of factional politics, Defence Secretary Healey’s resignation over funding is a headache for the UK government. It’s also a risk for gilts, although Burnham calmed fears of higher interest rate costs by talking of higher defence spending funded by welfare reform. Global investors, meanwhile, are waiting for Kevin Warsh’s first meeting as Fed chair. Next week should at least give us something else to talk about.
Tariff trouble again
Markets barely reacted to the latest round of US tariffs: an extra 10% on allies including the UK and EU, and 12.5% on everyone else. They’re nominally to punish countries for insufficient forced labour protections, but the clear motivation is to replace revenues that Washington will lose once current tariffs expire. Most US trading partners will face roughly the same tariff levels they did last year.
Washington needs the money. Trump’s tax cuts have widened an already stretched budget deficit and bond markets are watching US debt nervously.
The new Section 301 tariffs take longer to implement and can’t be enacted by a Truth Social post. The payoff is that they’re more likely to survive legal challenges – having been used by multiple administrations. That provides clarity for businesses. American importers can live with a flat 10% far more easily than constantly changing rates. The current tariff levels have not disturbed global trade too much since Trump re-entered the White House (barring the “Liberation Day” market sell-off in April 2025), and bond markets appreciate the extra tax take.
That said, don’t mistake a calmer phase for a resolved one. The US Trade Representative’s anti-dumping investigation is ongoing and will almost certainly produce further Section 301 tariffs, particularly targeting China. Section 232 national security tariffs add another layer – and all the tariffs stack on top of each other.
What keeps markets relaxed for now is the feeling that Trump doesn’t want another Liberation Day. His recent summit with President Xi looked friendly, and with approval ratings on the economy in the doldrums, cost of living relief looks more politically attractive than protectionism ahead of November’s midterms. But with this administration, “for now” is always the operative phrase. US tariffs have moved into a less chaotic phase — but the potential for a nasty surprise hasn’t entirely gone away.
Super El Niño threatens food security
Japan’s Meteorological Agency confirmed that El Niño – persistently warmer-than-average Pacific Ocean temperatures, causing extreme weather across the world – has begun. Meteorologists are predicting a “Super El Niño”, an informal term for temperatures more than 2°C above the long-term average. That’s expected to push global temperatures to record highs in 2027.
The economic consequences of the El Niño-Southern Oscillation cycle (ENSO) are complex. Growth suffers in most regions, but the US and Europe can see short-term boosts. The clearest market impact is on commodity prices: ENSO shocks drive sharp volatility in soft commodities, hurting crop production across swathes of the world. La Niña variations can actually be worse for energy and agriculture, with effects lagged by six months to a year. Price volatility is worse for crops only grown in certain areas, or where only a small proportion of goods are sold internationally.
What makes this particularly concerning is that El Niño doesn’t operate in isolation. The Strait of Hormuz is already a major supply chain worry, and farmers struggled to secure adequate fertiliser supplies this spring. Extreme weather could compound those disruptions and make food shortages more likely into the end of 2026.
With climate change making ENSO shocks more likely, long-term food security requires diversification in global agricultural production. Individual crop sources are more likely to fail, but not all at once. Trade and variety increase resilience. Unfortunately, the prevailing trend in global trade runs the other way, towards localised production.
People often think about supply chain security in energy terms – where individual sources are generally reliable and the important factor is who controls them. But food security is different. All individual sources are vulnerable, regardless of who controls them. Climate change is making that an ever more pressing problem for the world economy.
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Marcus Blenkinsop
15th June 2026