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Please see the below daily update from Brooks Macdonald detailing their thoughts on investment markets currently, received this morning 02/10/2026:

What has happened?

Markets endured a volatile start to the fourth quarter as concerns over European sovereign debt sustainability triggered a broad risk-off move. French and Italian government bond spreads widened sharply versus German bunds, with the Franco-German 10-year spread recording its largest daily jump since March 2020. The sell-off spread across European assets, with the STOXX Banks index falling almost 4%, European high yield credit spreads widening materially and the euro posting its weakest session against the US dollar since June. At the same time, Brent crude rose above $102/bbl amid renewed Middle East tensions and concerns over disruptions to shipping through the Strait of Hormuz, adding to inflation worries and tightening financial conditions. The US market proved more resilient. Although the 10-year Treasury yield briefly reached 5.34%, its highest intraday level since 2002, yields retraced lower as investors reassessed the likelihood of further Federal Reserve tightening. Dovish comments from several Fed officials helped offset another strong set of economic data, with jobless claims falling to a 10-week low and manufacturing surveys continuing to signal economic expansion. The S&P 500 ended higher on the day, with investors increasingly focused on today’s payrolls report as the next major test of the growth, inflation and policy outlook.

Europe’s Bond Market Stress Returns

Recent market moves highlight that concerns around fiscal sustainability are becoming an increasingly important driver of global asset prices. While higher energy prices initially pushed bond yields higher, investor attention quickly shifted towards France, where concerns over budget deficits and debt dynamics have driven a sharp repricing of sovereign risk. The widening in French spreads has begun to spill into other European bond markets, evoking memories of previous periods of euro area stress and weighing on banks, credit markets and the euro. Rising sovereign borrowing requirements across developed markets, combined with heavy corporate issuance linked to infrastructure, AI investment and energy security, are increasing the supply of long-dated bonds. This is contributing to steeper yield curves and tighter financial conditions. Paradoxically, if higher market rates perform some of the tightening normally delivered by central banks, policymakers may feel less need to raise policy rates further.

What does Brooks Macdonald think?

While market sentiment has deteriorated, we believe the message from bond markets is more nuanced than fears of an imminent crisis. Financial conditions have tightened meaningfully, particularly in Europe, and this may reduce the need for central banks to continue raising rates aggressively. We see scope for policymakers, especially the Federal Reserve, to underdeliver relative to current market expectations as inflation gradually moderates over the coming quarters. At the same time, resilient US labour market and manufacturing data suggest growth remains on a firmer footing than market sentiment currently implies. That said, we remain cautious on longer-dated government bonds given persistent fiscal deficits, rising issuance requirements and structurally higher term premia. Higher long-term yields are increasingly being felt across risk assets, although resilient earnings and economic momentum continue to provide support for US equities. In our view, volatility is likely to remain elevated into year-end, particularly around inflation and labour market data, but periods of stress should also create opportunities for active investors to exploit market dislocations.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Andrew Lloyd

02/10/2026

Please see the below article from WH Ireland discussing the Bank of England’s warning on rising interconnected financial risks, including higher sovereign yields, private credit and AI-related debt. Received today – 01/10/2026

When investors search for the next source of financial instability, attention naturally gravitates towards the obvious catalysts: a sovereign default, a major corporate failure or a sudden credit freeze. Yet systemic stress does not necessarily begin with a single dramatic event. More often, it emerges when vulnerabilities that appear manageable in isolation become increasingly interconnected.

Such is the significance of yesterday’s Bank of England Financial Policy Committee warning. The FPC said the likelihood of interconnected vulnerabilities crystallising has risen, highlighting higher sovereign yields, risky asset valuations, private credit and the renewed energy shock. It also pointed to the rapid expansion of AI related debt, which Morgan Stanley estimates had reached around $450 billion globally by early September, more than twice the amount issued during all of 2025.

The obvious market reaction is to focus on the level of government yields. UK 30-year gilt yields breached 6% this morning, reaching their highest level since 1998, while 10-year yields have risen to 14-year highs this week. But the more interesting question is what happens when higher sovereign yields meet rising corporate capital requirements, leverage and refinancing needs.

AI infrastructure provides a useful example. Data centres, power infrastructure and computing capacity require substantial upfront investment, increasingly funded through debt. Morgan Stanley estimates that $700 billion of data centre capital expenditure between 2026 and 2028 could be financed through private credit. It also highlighted the opacity and, in some cases, circular financing arrangements surrounding parts of the sector.

This creates a less obvious transmission channel. A reassessment of AI investment or earnings expectations could pressure equities and corporate credit, while higher yields simultaneously increase the cost of financing governments and companies. The FPC explicitly notes that weaker expectations for AI driven productivity could ultimately affect sovereign debt markets as well as AI related assets.

This makes balance sheet resilience increasingly important. Not all sovereigns, corporates or credit markets enter a higher yield environment from the same starting point. Countries with strong external balance sheets and substantial net foreign assets have a different capacity to absorb a global liquidity shock from highly indebted borrowers reliant on continued external financing.

The risk, therefore, may not sit in any one market. It lies in the growing overlap between leverage, refinancing needs, liquidity and interest-rate sensitivity, and in the potential for a repricing in one part of the financial system to transmit into another. This reinforces the importance of looking beyond headline yields and assessing what ultimately stands behind the debt: the strength of the balance sheet, the availability of external funding and the capacity to absorb higher financing costs.

As “The Celebrity Traitors” returns to our screens today, perhaps the lesson for markets is not dissimilar: the biggest risk may not be the obvious suspect, but the one quietly working with everyone else… Who would you trust?

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alexander James Roberts

01/10/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 29/09/2026

Markets respond to continued U.S.-Iran tension

Oil prices jumped and inflation fears resurfaced as weekend talks to reopen the Strait of Hormuz stalled.

Key highlights

• Energy prices: Brent crude oil softened below $105 per barrel on hopes of a phased reopening of the Strait of Hormuz.
• The U.S. saw expansion…: The U.S. flash composite purchasing managers’ index reached 58.4, the quickest pace of expansion since 2015.
• …and so did Europe: The eurozone composite hit a 41-month high of 53.1, with France and Germany both in expansion for the first time since November 2025.

Balancing on barrels

Energy remains the fulcrum on which the markets swing.

Source: Bloomberg

Brent crude oil drifted lower, offering markets some welcome relief, before bouncing back with a vengeance – more than 7% in two days – and taking the shine off equities with it.

Last Friday brought better news: the energy complex softened again, with Brent crude briefly dipping below $105 per barrel on reports that U.S. and Iranian intermediaries are exploring a phased reopening of the Strait of Hormuz.

Even with Iranian President Masoud Pezeshkian having been in New York, and talks with Iranian envoys having taken place, there was plenty to be sceptical about. The Iranian negotiating position looked little changed from the memorandum that collapsed within weeks of being signed in June. Sure enough, President Trump rejected the deal, claiming Iran had overplayed its hand.

But with five weeks to go until the U.S. mid-term elections, easing gasoline prices could easily be the factor that allows the Republicans to retain the Senate, and this will form part of the calculus for Iran. After the mid-terms, a crucial source of leverage will have passed.

Diesel’s choke point

Diesel is becoming a major choke point due to the blockage of the Strait of Hormuz and Ukraine’s strikes on Russia’s refineries.

As ever, Europe is collateral damage and Mark Rutte, secretary general of NATO, pointed out that the continent has too little capacity in the event of a disruption to global supplies. It’s an awkward position as funding new refineries in case of conflict makes little sense during peacetime, and when demand is in structural decline due to the increase in EV (electric vehicle) usage.

Natural gas offers a more benign picture. European prices have fallen more than 10% from their recent high, helped both by the de-escalation chatter and by early forecasts pointing to a mild, wet winter. However, as the season starts with low storage, a January cold snap would bite harder than usual.

Oil above $100 per barrel benefits oil producers but increases inflation, which in turn increases interest rates, creating a headwind for most other assets. Government bond yields now sit at levels not seen since around the global financial crisis, with the five-year U.S. Treasury above 5% for the first time since 2007 and the 30-year back to levels last seen in 2004.

Expensive oil transmits into equities along three channels: higher discount rates compress valuations, higher financing costs squeeze leveraged borrowers and property and lower bond prices suck liquidity out of markets, making them susceptible to volatility.

The distinction that decides how this ends is whether yields are rising because growth is strong or because inflation is feared. Shares can climb through rising yields when the cause is a healthy economy; they struggle when the story turns to central banks having to tighten further.

Some like it hot

Source: Bloomberg

The U.S. economy is running hot. The flash composite purchasing managers’ index reached 58.4 this month, up from 56.0 in August. Outside the post-lockdown reopening burst, that’s the quickest pace of expansion recorded since 2015, with manufacturing and services both firing. The catch sits in the cost column.

Firms’ input costs jumped at the steepest rate in four years and the surveyors pinned that squarely on fuel and transport costs rising with oil.

Higher energy prices act like a tax, taking money out of everyone’s pockets. Whether that proves inflationary or demand-sapping depends on the labour market. There, the news was also firm, with services employment building on an earlier bounce in jobs growth.

Consumer sentiment bounced back

Europe is quietly improving too. The eurozone composite hit a 41-month high of 53.1, with France and Germany both in expansion for the first time since November 2025 – a better story than the single U.S. reading suggests. But the same energy-driven price pressure came through in the data, which strengthens the case for another European Central Bank rise before year-end.

The UK drew the short straw. Activity slipped to a three-month low while input costs accelerated, a more stagflationary mix than either the U.S. or the continent. August borrowing of £18.3bn came in above forecast, with debt interest at its heaviest for an August since 1997.

The UK economy looks more exposed than most if energy costs stay elevated approaching the Autumn Budget on 28 October.

Source: LSEG Datastream

Consumer confidence had rebounded, aided by the new prime minister’s more upbeat tone. He has retained that and expressed his reluctance to raise taxes, but a fiscal noose is tightening, driven by factors outside Britain’s control.

The arithmetic of pain

Debt interest is the thread that runs from here into the longer term.

Oaktree’s Howard Marks discussed America’s situation in his latest influential memo. His prescription is conventional: raise government revenues largely through higher taxes on the wealthy and restrain the growth in spending.

However, that doesn’t seem likely as legislation already on the books pushes spending growth higher over time, and no one wins an election promising austerity.

The path of least resistance

History suggests a different route. Japan reduced its debt burden not through spending cuts or tax rises but by holding interest rates below the rate of nominal growth (before inflation). That’s the path we’d expect the U.S., and probably others, to take as debt service costs climb: policy rates set below inflation to avoid choking off growth, banks nudged into holding government bonds and the term premium (extra yield for longer-dated bonds) managed down if long yields creep up.

The risk is that inflation ends up running well above rates rather than a little above, at which point the tools get blunter still. It’s worth remembering that earning a real return (above inflation) on cash isn’t the natural order of things – for most of the past century, savers have been fortunate simply to preserve spending power, and tax has usually settled the argument.

If cash can’t be relied on to protect purchasing power, the answer is to own real assets. Carefully selected equities can form a meaningful part of that, alongside contractual claims on inflation, such as index-linked bonds. This makes the question of whose earnings are genuinely durable the important one – and the market answered it rather hastily.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

30/09/2026

Please see the below article from WH Ireland detailing their discussions on ongoing predominant geopolitical factors that are continually shaping markets. Received yesterday 28/09/2026.

World equity and bond markets have been very volatile this year based on changing perceptions of the war in the Middle East. The US intervention against Iran was meant to be a short sharp bombing campaign to change the government. The aims were to stop Iran backing the Houthi, Hamas and Hezbollah terrorist groups in Yemen, Gaza and Lebanon and to end the Iran nuclear programme. Whilst US bombing technology was good enough to remove many of the government including the Supreme leader, Iran replaced them with even more determined anti US representatives with a new motive for revenge.

President Trump expected an outcome similar to Venezuela, where he removed the President with no loss of life, and was able to coerce the remaining government to move Venezuelan oil under US influence. He now wants to find a way out of the war which has become entrenched and is a significant problem, not a triumph, for him politically. Higher gas (petrol) prices, annoyance amongst supporters that he has gone back on his promise to avoid foreign wars, and the threat of higher interest rates holding back the economy means he faces a stiff test in the mid-term elections. Republicans are likely to lose the House of Representatives, with the Senate also at risk.

The US claim they did great damage to Iran’s nuclear installations, but there are differing views about how much enriched uranium Iran still has and how long it might take to develop a full nuclear bomb capability from here. Meanwhile Iran retaliated by seeking control over shipping using the Straits of Hormuz as an effective strangle hold. The US countered with a naval blockade of Iranian trading vessels. This has created a standoff between the US and Iran over control of the passage of ships in this important waterway.

Iran, through her three proxies, can also prosecute war against the US and her ally Israel in Gaza, Lebanon and Yemen. In the last few weeks, the Houthis have taken more of the coastal lands next to the Red Sea, and strategic islands offshore. This increases their ability to disrupt shipping going into and out of the Red Sea en route to the Suez Canal. It means both main routes for Saudi to export her crude oil by the Straits of Hormuz to the east and the Red Sea to the West are now vulnerable to attacks on her shipping. Iran has also succeeded in damaging the crucial oil pipeline Saudi has been using to carry oil from the blocked Straits of Hormuz area across to the Red Sea coast. As a result, Saudi oil output is said to be down by as much as 4 m barrels a day, driving up the price of crude oil.

Global bonds sell off when news of the war intensifying becomes widespread. Any general view that the war will drag on forces up oil prices and puts pressure on growth forecasts. This in turn depresses bond prices as investors fear the rise in inflation from dearer energy and petrochemicals, like fertiliser. There is an assumption that higher interest rates will be needed to control prices. Equities can also sell off on stories of a longer and more damaging war as higher interest rates, blocked trade routes, dearer shipping, and more inflation are detrimental to business in general.

In contrast, when it appears diplomacy may bring a truce or broader peace, bonds and equities are likely to rally. The oil price can drop away quickly. The current ‘war time’ range for oil has been between $70 and $120 a barrel based on rumours and forecasts of how much oil will be taken out of circulation by blockades of crucial sea lanes and by direct attacks on tankers, and on varying timetables for the end of the conflict.

There are crucial shipping routes that are restricted and subject to the vagaries of war and politics. The Suez Canal is seeing reduced passage. Iran claims the Straits of Hormuz are shut to tankers not approved by themselves, whilst the Bab al Mendeb narrow entrance to the Red Sea and Suez corridor is subject to Yemeni threats and has reduced flows. The recent break through by the Houthis in Yemen offers a greater threat to Bab al Mendep and shipping entering the Red Sea. Their immediate target is Saudi shipping, as Saudi seeks to send its oil out by this route to replace the dangerous Straits of Hormuz exit. The US keeps out of the fighting in the hope its ships will not be damaged.

The US/Iran war is now mainly a war for control of the Straits of Hormuz. This was always an international waterway allowing passage of 20 m barrels of oil a day by tankers representing one fifth of world traded oil supplies. The US claims they have removed the mines from a specific route and accompany ships at night, sometimes with their responders turned off. The Treasury Secretary has said they can get half the usual amount through the Straits. President Trump has been more optimistic. Recorded vessel numbers are much down implying only a handful of ships a day have been making it, compared with around 100 when the Straits did accommodate 20 m barrels of oil in transit. Iran claims only oil shipping she approves has made the passage. The US claims they have impeded most of the Iranian oil exports. Attempts at independent counting of ships may be affected by vessels travelling to avoid detection.

It is difficult to see how either side can deliver a knockout blow to the other to resolve this conflict any time soon. Whilst the US is optimistic in its published statements, in practice it is relying on attrition as its blockade of Iranian shipping starves Iran of her usual oil revenues crucial to the economy and state budget. So far Iran has managed to export enough oil to her counter parties despite the blockade and has an ability to get her citizens to accept hardship and sacrifice by running a state under strict military discipline from the Revolutionary Guards.

Iran was hoping President Trump would accept a poor settlement to get the war over in good time before the mid-term elections. Instead, he seems to have accepted that the war is not about to be resolved: hence the offer of $5000 a person by way of bonus or dividend if they return a Republican Congress.

Trump’s allies in the Gulf are doing their best to see if a diplomatic compromise can be achieved. The most likely outcome is continuing flare ups without either side doing bigger scale damage to each other, with the war dragging on. Both sides will get some oil out, but oil prices will remain higher for longer given the overall reductions in supply. Saudi’s recent losses against the Houthi in Yemen are another reversal for the US as well, but the US will be reluctant to put its own forces into that additional conflict.

In the longer term the Gulf states will complete the construction of pipelines and new transit routes to avoid Hormuz altogether for many cargoes, and to give themselves more flexibility over which of several routes they can use to sell their own oil and gas. These are wealthy states, able to spend what it takes to create routes for oil export. They still need to make sure that at least one is without mines and missiles attacking commercial shipping.

Today markets are on a sceptical tack; the Saudi’s have not come back with a solution to the attacks from Yemen, and the US has so far decided to stay out of this additional conflict. While it is clearly in both the US and Iran’s interests to cease attacks on each other’s oil trade, neither wish to compromise to provide an early and lasting truce. President Trump is reluctant to escalate the war, but it is difficult to see a catalyst for weaker oil prices in the short term. The ongoing tussle between high inflation fears, and higher borrowing costs is setting the tone for both equities and bonds, and likely to do so for some time.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

29/09/2026

Please see the below article from Tatton Investment Management discussing rising bond yields, fragile AI-led markets, Türkiye’s fund liquidity crisis and SoftBank’s leveraged OpenAI investment, received this morning – 28/09/2026.

Waiting for Goldilocks
Bond yields keep rising. The US 10-year yield is at 5.2%, its highest level in nearly two decades. It got there last week, taking other nations’ bonds with it.

Although energy prices continue to be a negative, it is growth expectations, rather than oil prices, that are moving yields the most. US business sentiment surveys were remarkably strong. That’s awkward for the Federal Reserve: the US economy is near capacity, so extra demand will push up prices. Markets now expect another rate rise next month.

The Fed’s hawkish turn pushed short-term rate expectations up faster than long-term yields, flattening the yield curve and tightening financial conditions. Stocks suffered, with the now-typical exception of AI-driven tech firms. The Fed’s problem is that the economy’s AI motor seems undisturbed by higher rates, despite the rest of the economy struggling. Bond investors yearn for the slow-but-steady ‘goldilocks’ growth that characterised the 2010s.

A friendly Trump-Xi summit produced little of substance but preparatory talks extended a tariff truce until January – conveniently after the US midterms. US-China détente removes potential disruption for US consumers, though it does little to address Trump’s main electoral headache: fuel prices.

With big tech’s capital demand crowding out other investment, the AI trade is single-handedly carrying markets. AI firms have amassed vast cash piles to build datacentres but, curiously, datacentres seemingly aren’t being built and computing capacity is stalling. Even stranger, constrained computing capacity isn’t resulting in higher compute prices.

That suggests current computing capacity is ample. And since AI firms have already raised unspent billions, you’d expect them to borrow less going forward. That’s one path back to a goldilocks environment – AI spending cooling along with the rest of the economy, allowing central bankers to back off. The other route is energy price reprieve, but we won’t bank on that. Without either of those, market breadth will probably keep narrowing. That doesn’t preclude investment returns, but it makes them more fragile.

‘Pump and dump’ turned Ponzi
Türkiye’s stock market had a storming start to the year but has since hit serious turbulence. High-profile funds like Tera Portföy and Pusula Portföy have blocked investor redemptions after running into liquidity trouble tied to a handful of thinly-traded stocks. That caused a broader sell-off and whispers of financial collapse.

The funds in question had mystifyingly good returns in recent years, seemingly thanks to market manipulation. Türkiye’s free float is unusually small – just 33.5% on average – and fund managers exploited that by trading illiquid shares between themselves to push up prices.

Tera Portföy is the poster child. It invested heavily into a handful of closely related stocks and used leverage to amplify its bets. One of those was its own parent company, creating a feedback loop where the fund’s gains lifted the parent’s share price, in turn boosting returns. At one point, Tera stock made up 99% of the fund’s holdings.

It worked for a while; Tera’s flagship fund was 660 times its 2022 listing price at one point. But the same illiquidity that inflated the fund also sank it once outflows overtook inflows. The government has since ordered an $18bn liquidation and arrested Tera’s chairman.

Many long suspected the fund’s returns were too good to be true – but as long as they kept coming, investors kept investing.

The trigger for the collapse was a tightening of rules on illiquid holdings, and the catalyst for that seems to have been MSCI threatening to demote Türkiye from ‘emerging’ to ‘frontier’ market status over transparency concerns.

We see little sign of contagion beyond Türkiye, and no obvious banking crisis brewing. But the affair is a reminder of why mature, well-regulated markets like the G7’s matter: strong oversight doesn’t eliminate the temptation to chase self-reinforcing gains, but it does make Ponzi-like structures much harder to sustain.

SoftBank’s big bond bet
SoftBank has launched $11bn of junk-rated bonds, reportedly to fund its OpenAI investment ahead of the ChatGPT maker’s stock market listing. The Japanese investment group will pay a 9.75% yield on the debt’s longest tranche, underlining its confidence in the company. SoftBank has already committed $65bn for a 13% stake in OpenAI.

SoftBank and its outspoken founder Masayoshi Son have a history on big tech bets – the most famous being its $20mn Alibaba investment, which turned into $60bn when the tech firm went public. Masayoshi Son has been likened to Warren Buffet, though Cathy Wood’s ARK Innovation ETF is a better comparison, given Son’s growth-over-value approach. SoftBank is similar to Berkshire Hathaway in the way it leverages investment, however, shown by its willingness to pay a near-10% bond coupon.

SoftBank’s leverage mirrors the rising leverage in the tech sector itself. Once-rich AI firms have become incredibly capital-intensive. Oracle, whose credit default swaps hit record highs earlier this year, exemplify this. That debt has helped fuel earnings growth and share prices. SoftBank’s bond shows the leverage increase is happening at both the company and investor levels – and demand for the bond shows the process isn’t slowing down.

Tech firms still have low leverage ratios relative to everyone else. Indeed, that’s why they’re able to borrow while other firms and households aren’t. The effect on overall borrowing costs means AI companies are crowding out other investment in the way governments are sometimes accused of.

Things aren’t all fine for AI companies themselves: higher leverage makes them more interest rate-sensitive just as rates are climbing, and it makes earnings distortions (like Amazon’s earnings gain from its SpaceX holdings) more likely. Big tech’s credit spreads have been more volatility lately too.

SoftBank’s big bond isn’t an alarm bell, but investors should keep an eye on AI leverage.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

28^th September 2026

Please see below, an article from WH Ireland which discusses the potential options for managing the US government’s borrowing costs. Received today – 25/09/2026

Last week’s “Unpleasant Arithmetic” examined a difficult relationship. Higher interest rates help control inflation but increase government borrowing costs. Unless fiscal policy adjusts, a larger interest bill means more borrowing, making the problem worse.

But the government can influence that arithmetic. It cannot set the Federal Reserve’s policy rate. It can choose which maturities to borrow at and which outstanding bonds to buy back.

Earlier this month, the US Treasury announced an operation to purchase up to $6bn of bonds with ten to twenty years remaining. Combined with greater reliance on short-term Treasury bills, Scott Bessent’s modest programme resembles a miniature Operation Twist.

Under the Fed’s 2011 programme, the central bank sold shorter-dated securities and bought longer-dated government bonds. The aim was to reduce the long-term interest-rate risk investors had to hold, pushing longer-term yields down without expanding the Fed’s balance sheet.

Long-bond buybacks alongside shorter borrowing could have a similar effect. The distinction is that the Fed controls overnight rates, while investors set long-term yields.

Investors lending for thirty years demand compensation for uncertainty about inflation, government finances and future interest rates. The supply of bonds also affects the price they require.

Overnight rates work differently. The Fed chooses a target and supplies the reserves needed to keep market rates consistent with it.

When government borrowing draws money into its account at the Fed, payments can drain banking-system reserves. If that threatens to push overnight rates above target, the Fed must provide liquidity or adjust its operating tools. It can lend against securities or buy them outright.

Not every dollar issued requires Fed buying. Banks may hold enough reserves to absorb the drain without rates rising above target. Government spending also returns reserves to the system.

Nevertheless, shorter borrowing places more government financing near the rate the Fed maintains. Bill yields still reflect expected policy changes and market conditions, but the government avoids committing to the premium investors may demand for lending over decades.

Larger purchases of long-dated bonds could push their yields down. With fewer such bonds available, investors have less long-term interest-rate risk to absorb. Borrowing through bills avoids replacing all that risk.

Much depends on inflation.

Rising long-term yields suggest investors remain unconvinced that inflation will be brought durably under control. Stronger growth, heavier issuance, and fiscal uncertainty can also explain the rise. Higher yields alone cannot tell us which concern dominates.

If the Fed restores confidence in price stability while keeping short-term rates elevated, long-term yields could fall and the curve flatten. Larger buybacks could reinforce that move: investors become more confident about inflation just as fewer long bonds are available to buy.

Higher policy rates could therefore help lower long-term borrowing costs. That is the twist in last week’s arithmetic.

The amounts matter. Small buybacks may mainly improve trading in older securities. Buying back substantially more long-dated debt could have a wider effect on yields.

For investors, the opportunity is that the Fed succeeds in bringing inflation down while larger buybacks help lower long-term yields. Bondholders would gain, and the government could borrow for longer at a lower cost.

If inflation persists, however, greater reliance on short-term debt makes higher rates feed into the government’s interest bill faster.

Last week’s unpleasant arithmetic has not gone away. Bessent may be able to soften it, but he still needs the Fed to bring inflation under control.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

25^th September 2026

Please see below the daily update article from WH Ireland, received yesterday afternoon – 23/09/2026

Space infrastructure is becoming an increasingly important, but largely overlooked, component of the global economy. As satellite constellations expand and orbital space becomes more congested, the resilience and cost of this infrastructure are becoming increasingly relevant to investors.

Modern financial markets depend on space-enabled services in ways that are not always visible. Positioning, navigation and timing (PNT) systems help synchronise financial and communications networks, while satellites support telecommunications, transport, logistics, weather forecasting and supply-chain monitoring. The UK Government identifies PNT as vital to critical infrastructure, including finance.

The scale of orbital deployment has accelerated sharply. The European Space Agency’s (ESA) latest Space Environment Report, published in September 2026, estimates that around 47,000 objects are regularly tracked. More than 4,000 payloads were placed into orbit during 2025, equivalent to roughly ten new objects launched each day. At the same time, ESA estimates that the debris population continues to grow, despite improvements in disposal and mitigation practices.

The concern is not that one collision automatically triggers a catastrophic chain reaction. Rather, greater orbital density increases the complexity of space traffic management and the potential consequences of fragmentation events. The ESA warns that, without sufficient end-of-life disposal and active debris removal, collisions can create further debris and potentially establish a self-sustaining cycle known as the Kessler Syndrome.

The more immediate economic issue may therefore be resilience and rising operating costs rather than a single catastrophic event. Operators face increasing requirements for tracking, manoeuvring, redundancy and responsible disposal. These could raise capital requirements, insurance costs and the cost of maintaining satellite fleets.

There is also a wider concentration risk. Financial markets have become accustomed to treating space-enabled infrastructure as an almost invisible utility. Yet the UK Government estimates that a seven-day disruption to the Global Navigation Satellite System (GNSS) could cost the UK economy around £7.64 billion, although most of the estimated losses would fall on emergency services, road and maritime transport rather than financial markets themselves.

The investment blind spot may therefore be less about predicting a dramatic space-related shock and more about recognising the gradual repricing of an infrastructure layer previously treated as abundant and reliable. As orbital congestion increases, the cost of resilience could increasingly feed into corporate capex, insurance, financing requirements and ultimately asset valuations.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Cherise Lancaster

24th September 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 22/09/2026

Will UK interest rates rise?

The Bank of England left interest rates on hold last week, but economists and markets disagree on what’s next for UK rates.

Key highlights

• AI restraint: Frontier labs call for a slowdown, citing safety concerns and the rising cost of the AI arms race.
• Fed hikes: Rates were hiked to 3.75%-4% from 3.5%-3.75% by the Federal Reserve in a unanimous decision.
• Bank of England: Rates held at 3.75% on a 6-3 vote, with three members open to hikes if energy prices persist.

Show of restraint

As in previous weeks, the juxtaposition of the AI boom and fallout from the conflict between the U.S. and Iran remains centre stage.

A major development on the AI front came from Anthropic’s CEO, Dario Amodei, who released an essay entitled “We must pace the Frontier”. In it, he argued that AI development has reached a critical inflection point requiring deliberate slowing – not halting – of advancement to let safety measures catch up. His stated motivation rested on two concerns: the rapid acceleration of “recursive self-improvement” (AI building better AI), and the incident in which AI agents at OpenAI displayed swarm-like unauthorised cyberattacks and attempts to hack their own evaluation systems, resulting in the hacking of Hugging Face (a hub for open-source AI models, datasets, and machine learning tools). Amodei proposes:

• Unilaterally embedding third-party evaluators at Anthropic to verify safety practices
• Coordinating with other democratic AI companies on shared safety standards
• Pursuing global cooperation – even with authoritarian rivals like China – through a tiered framework ranging from banning clearly dangerous uses to eventually agreeing on “speed limits” for AI self-improvement

Sam Altman (of OpenAI) and Elon Musk (of SpaceX, xAI) voiced their agreement. Agreement between rivals always provokes scepticism – in this case, suspicions of an attempt at regulatory capture.

The idea is that frontier models have been engaged in an arms race of development in the hope of gaining an unassailable lead in AI capability – with mixed success so far. Frontier model capabilities have advanced meaningfully but, as we’ve discussed in recent weeks, the open-weight models (models with freely available weights) remain close behind. These offer lower costs, smaller models and more transparency and security, while also consuming less capital themselves.

We’ve characterised this market as a prisoner’s dilemma before. If any single firm outpaces its peers’ spending, it could monopolise the frontier. But if a number of firms compete, the frontier will become commoditised and competitive. Better for all would be to slow development, save costs and turn attention to fighting off the chasing pack.

Source: LSEG Datastream

That would mean creating a barrier to entry in the form of regulatory requirements that would be difficult for challengers to either meet or fund. Have the firms manufactured this excuse to coordinate a slow-down in their development? Two things can be true at once.

It seems likely that frontier labs are genuinely concerned about their ability to develop their models without causing repeats of the Hugging Face incident – or worse. But at the same time, they need to find a more durable means of reducing their own spending and repelling competitors, and this may provide them with the opportunity to do so.

If this were to happen there would be many implications. Lots of headlines have been written about how dependent the U.S. economy is on AI capex (capital expenditure). Growth has been below trend for the past three quarters and in the first quarter of 2026, investment formed a disproportionately large share of growth.

That was the result of a slowdown in consumer spending coinciding with an acceleration in investment. Q2 saw consumption rebound and in Q3, it looks set to accelerate further, as things stand.

Business-fixed asset investment has been accelerating all year – the only comparable period was 2021, when a pandemic-related investment collapse gave way to severe supply constraints. Information technology now makes up a record 5% of U.S. GDP, but capital available for investment in any period is finite: if frontier AI labs pull back, that capital doesn’t vanish, it migrates – either to other sectors, or within AI itself, from training towards inference (running models to generate outputs). Given how compute-constrained the system remains, the more likely outcome is a shift in the mix rather than an outright fall in demand.

Nvidia, whose chips flex between both tasks, may prove less exposed to this shift than first feared. In any case, the bulk of real-world AI adoption doesn’t depend on frontier models – it depends on businesses getting their data ready for a mass of fairly routine tasks.

We remain deliberately measured in our AI exposure, favouring quality over the more speculative bottleneck trades.

Amodei’s essay was not welcomed at the White House, which remains wary of the U.S. losing ground in the AI race to China despite evidence that any gains made by U.S. frontier models are soon assimilated into Chinese models at lower cost.

The chief concern about the AI boom has always been how the investment is allocated and how it’s financed – both of which may now improve, particularly if the slowdown reduces pressure on the most financially stretched corners of the market.

OpenAI choosing to delay its IPO (initial public offering) removes one of the major prospective draws on the equity market – while doing little to dent the productivity gains already within reach from AI capability that exists today.

Credible threats

These decisions could affect the outlook for inflation going forward. For now, central banks have been focused on the here and now, with U.S. inflation having exceeded target for more than sixty months.

Last Wednesday, the Federal Reserve (the Fed), under Kevin Warsh’s chairmanship, at last raised rates to 4%. Notably, the decision was unanimous.

We’d been led to expect a more fractious committee, closer to the Bank of England’s habitual splits, so the united front carried weight. Warsh, no fan of forward guidance (signals about future policy), chose his words to be read only one way: the Fed is getting “serious about inflation”, the move “removes a dose of accommodation” and the economy is strengthening.

He added, pointedly, that there’s “no hiding from hot spots around the world” – a nod to the geopolitics driving energy costs, and arguably a gentle rebuke to a president who has mused publicly that rates belong below 1%.

As we had speculated, by re-establishing the Fed’s credibility, Warsh reduced the uncertainty premium built into longer-term borrowing costs. Short rates rose but longer yields eased across much of the curve (the yield curve). In other words, the move to tighten at the short end has probably done more for Main Street than Wall Street, nudging down the long-term financing costs that matter for households and businesses (albeit only marginally).

Bank of Japan

The Bank of Japan also raised rates, to 1.25%, in a 7-2 vote. Both dissenters were appointees of Prime Minister Sanae Takaichi, raising questions over their independence. For the yen carry trade (borrowing in yen to invest in higher-yielding currencies), there’s now around 2.5% pickup available for anyone borrowing yen and saving in dollars.

U.S. Treasury Secretary Scott Bessent had argued that the market should follow his actions due to his superior information on the direction of interest rates.

So far, the market is calling his bluff, with his comments marking a peak for the yen. All else equal, investors can borrow in yen and invest abroad, and with U.S. monetary credibility being reinforced, the expected narrowing of the U.S.-Japan rate gap is not happening. Bessent’s interest in this stems from Japanese holdings of U.S. treasuries. If the yen needs to be supported, these could be sold, putting upward pressure on long-term U.S. interest rates.

A hawkish hold

All the interest rate decisions have been broadly as expected, with focus ending up on the nuances around comments and voting patterns.

The Bank of England (BoE) held rates at 3.75% on a 6-3 vote, much as economists expected. A further three members now appear open to supporting hikes if energy prices persist, “as appears likely”, in the words of BoE Governor Andrew Bailey.

The gap between what markets price and what economists forecast remains striking. The interest rate curve implies as many as four or five UK rate rises over the coming year, taking rates towards 4.7%. Yet the consensus among economists has been for rates to stay broadly flat.

Source: Bloomberg

This isn’t necessarily a contradiction. Economists provide their single most likely outcome; markets price a probability-weighted range of outcomes. The high implied rates suggest investors think the balance of risks skews upward.

High interest rates, driven by high inflation, increase pressure on the government, eroding headroom against its fiscal rules ahead of October’s budget. The only partial mitigant was the BoE’s decision to slow the pace of bond sales – so-called quantitative tightening (selling bonds back to the market), which was putting upward pressure on long-term interest rates.

The net result remains a steep gilt curve (the yield curve for UK government bonds) in the early years – and, for us, an opportunity to earn a useful pickup by putting money to work just a few years out.

UK resilience

The UK economy, for its part, is proving more resilient than feared.

Retail sales rose 0.5% on the month in August, and the increase was broad rather than a one-off – households are still spending despite higher fuel and borrowing costs. The picture in the labour market is more mixed: payrolled employment fell by 26,000 in August, the sharpest drop in nine months, while wage growth held at 3.9%. Sticky pay alongside a softening jobs market is precisely the awkward combination the BoE must navigate.

But the U.S.-Iran conflict remains a common theme across all these central bank decisions. Last week, the news was marginally positive due to the reopening of Saudi Arabia’s East-West pipeline, which restores some supply. Hope of an end to the conflict has diminished, and investors now see the mid-term elections as the next plausible window for de-escalation – after which the political costs for the Trump administration would ease.

However, it’s very hard to know how well the Iranian regime is coping with the loss of oil revenue, or whether further pressure can be brought to bear.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

23/09/2026

Please see the below article from Brooks Macdonald detailing their discussions on the Geopolitical environment currently stimulating markets. Received this morning 22/09/2026.

What has happened?

Global equity markets rallied yesterday as hopes of a diplomatic solution in the Middle East helped ease concerns over energy prices. Brent crude oil (-3.40%) briefly fell below $100/bbl, while in the US, the S&P 500 (+1.43%) rose for a third consecutive session and recorded its best day in seven weeks, leaving it just -0.44% below last month’s record high. Tech stocks led the gains, with the Nasdaq (+2.26%) reaching new high. Meta (+11.43%) rallied amid optimism surrounding its Muse AI agent, while AMD (+9.95%) became the latest company to reach a $1trn valuation. European markets also advanced, with the STOXX 600 (+1.02%) and DAX (+1.07%) finishing higher.

Diplomatic hope ease the pressure on energy markets

The improvement in sentiment followed more encouraging headlines from the Middle East, including President Trump signalling that he would be open to meeting Iran’s President at the UN this week. Hopes of diplomatic progress drove energy prices lower, with European natural gas futures (-7.88%) recording their largest daily decline since July. Lower energy prices also eased some inflation concerns, prompting investors to scale back expectations for further rate hikes. Markets continued to fully price another European Central Bank rate hike by year-end, but the probability of a second hike fell from 52% to 40%. The reaction in the US was more muted, with 33 bps of Federal Reserve hikes still priced by year-end following hawkish comments from several regional Fed officials.

German politics enters unfamiliar territory

In Germany, Chancellor Merz’s CDU failed to meet the 5% threshold in Sunday’s state election in Mecklenburg-Western Pomerania, leaving it outside the regional parliament for the first time in Germany’s post-war history. Despite speculation over Merz’s position, he retains the backing of CDU leaders. Importantly for markets, any leadership change would not necessarily signal a shift in economic policy, given the limited opposition within the CDU/CSU to the government’s current fiscal stance.

What does Brooks Macdonald think?

Attention is increasingly turning to US-China trade relations ahead of the meeting between Presidents Trump and Xi later this week. The key issue for markets is what happens when the current one-year trade truce expires in November. Although the tone of negotiations remains constructive, the two sides have yet to agree on an extension. Reports suggest the US has proposed a six-month extension, while China favours a longer period. For markets, therefore, the significance of this week’s meeting may lie less in whether every outstanding issue is resolved and more in whether both sides can provide a credible path towards a more durable period of stability.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

22/09/2026

Please see the below article from Tatton Investment Management discussing central bank hawkishness, French debt concerns, and the changing relationship between equities and bonds -received this morning – 21/09/2026.

Hawks to the rescue
We start this week in a positive frame, after last week’s surprisingly good performance. The preparatory trade and AI-cooperation talks dominate the headlines, ahead of the Washington Trump-Xi meeting. Meanwhile crude oil is on a downswing, which may hopefully start to bring down petrol, diesel and other refined outputs.

Last week, despite geopolitics and AI warnings, was more about bonds and central banks. It may be counter-intuitive but central banks raising rates can help long bond yields go down.

The Fed raised US rates by 0.25 percentage points, as Chairman Warsh flexed his inflation-fighting credentials. The BoE held but signalled a November hike. And the BoJ closed the week with its own widely expected 0.25 percentage point rise. Some tough talk ultimately calmed nerves rather than unsettling them.

Warsh’s speech briefly rattled bond yields and stocks, but markets recovered as inflation expectations fell. We read this as a credibility boost: the Fed squeezes now, but containing inflation will allow markets to breathe later. It was a particular win for Fed independence, with Trump backing Warsh despite lambasting the hike.

The BoE’s hawkish signal helped gilt yields, although its plan to sell its stock of long-term gilts back to the treasury was perhaps even more impactful. The BoE’s sale of bonds accumulated on its balance sheet has contributed to gilts’ underperformance, as has the gilt market’s structural imbalance (too many inflation linked and long-dated bonds). The treasury will now buy back its long-term debt, effectively swapping it for shorter-term borrowing. That will help further ease the maturity imbalance.

The BoJ ultimately backed the theme of monetary credibility, calming bonds despite the dovishness of two politically-appointed members. Its hike might have created some near-term bond market volatility, by unsettling the yen carry trade – borrowing cheaply in yen to buy higher yielding US bond. However, the mixed signal created by the split vote actually caused the yen to weaken.

Central banks could get another disinflation boost if AI companies slow their spending. That’s what tech leaders’ warnings about the need to slow AI development suggest – and the nervous reaction in chip stocks suggests it might be genuine. Conveniently, the existential threat is coming just as AI investment costs are ballooning for tech firms. Central bankers would appreciate a spending slowdown at least.

French debt looms large
British commentators talk up a potential UK debt crisis – but we think the bigger risk lies across the Channel. Gilt yields are higher than French OATs, but that’s more down to structural gilt market imbalances than reckless UK spending. The nominal yield comparison (4.53% 10-year OAT versus 5.27% 10-year gilt) belies worrying signs for France.

OAT yields have overtaken Greece, Italy, Spain and Portugal, and the 10-year is now 1% above German Bunds. OAT yields have risen faster than every other major market in recent weeks, and our preferred fiscal risk measure – the spread between bond yields and swaps – has deteriorated more any other G7 nation.

France’s perilous fiscal position explains why. France’s debt-to-GDP ratio hit 115.6% in 2025, with a budget deficit of 5.1%, both worse than Britain’s 94.3% and 4.3%. Finance Minister Lescure now expects this year’s deficit to come in at 5.4%, with only a vague promise to bring it down next year. Interest payments, while still lower than Britain’s, will rise 25% this year.

The UK’s main problem is debt costs, but France’s core spending is uncomfortably high. It outspends Britain in most categories, leaving a primary deficit worth 3% of GDP. Pensions are the biggest bill, and both Le Pen nor Mélenchon – the frontrunners for next year’s election – oppose reform.

That’s why the dreaded ‘doom loop’ – borrowing to pay off borrowing – is a live threat to France and wider Europe. Europe’s second-largest economy is too big to fail, but too big to bail.

The one silver lining is that an OAT crisis is unlikely to cause another euro crisis, for the simple reason that a genuine OAT sell-off would likely spill over to the equally fiscally lax US. That would weaken the dollar and hence strengthen the euro. That’s some comfort, even as France’s fiscal position keeps deteriorating.

Stocks and bonds split up
For 17 years, stocks have outperformed bonds, breaking the traditional inverse relationship at the heart of diversified multi-asset portfolios. Normally, strong growth lifts stocks but pushes up bond yields (and so pulls down bond prices), while weak growth does the opposite – meaning the two assets move along with the economic cycle. Diversified portfolios therefore invest in both to weather boom and bust.

Since the global financial crisis (GFC), equity outperformance has gone from cyclical to secular. First it was ultra-low rates and profit margin expansion, then it was the AI earnings boom. When stocks have sold off in that time, bonds have often been positively correlated, not the inverse.

The 1970s saw a similar breakdown amid inflation shocks and a change in monetary regime. Today, following the oil shock from the US-Iran war, real yields have risen sharply, but they still aren’t tempting equity investors into bond markets. Equity holders have enjoyed too long and too strong a run to give it up, and on a risk-adjusted basis, stocks still look more attractive than volatile bonds, even at high yields.

The fact equity holders are so entrenched is remarkable, considering that the cheap-borrowing feedback loop that fuelled equities in the quantitative easing years can no longer be sustained under higher rates.

It’s hard to bet against continue equity outperformance, given that AI earnings growth looks impervious to higher rates. AI spending also makes it hard to bet on yields coming down – as tech companies’ grab for capital drains demand from government bonds.

But it’s naïve to think earnings growth will expand forever, especially when the intangibles underpinning it – global trade and stability – look shakier than ever. A rotation might not be imminent, but global instability and historically cheap bonds mean the risks for equities are higher than they have been in years.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

21^st September 2026