News

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

Please see below the daily update article from WH Ireland, received this morning – 18/09/2026

The Federal Reserve has started raising interest rates again. Inflation remains too high and domestic spending resilient. But there is something unusual about this tightening cycle. Fiscal and monetary policy are pulling in opposite directions.

Washington is running a budget deficit approaching 6 per cent of GDP, despite an economy close to full employment. The Trump administration’s tax and spending changes are expected by the IMF to add about 0.75 per cent to GDP in 2026-27 while increasing the deficit.

Fiscal policy is supporting demand just as the Fed is trying to restrain it. The government is pressing the accelerator while the central bank presses the brake.

That makes a 45-year-old piece of economics suddenly relevant. In 1981, Thomas Sargent and Neil Wallace published Some Unpleasant Monetarist Arithmetic. Their conclusion was uncomfortable: under the wrong fiscal conditions, tighter monetary policy today can create problems for monetary policy tomorrow.

The arithmetic is straightforward. When a government spends more than it collects in taxes, it borrows the difference by selling bonds.

But bonds carry interest. Governments feel higher rates more slowly than households because existing debt does not reprice overnight. Instead, cheap bonds mature and are replaced by more expensive ones. Unless taxes increase or spending falls, the government must borrow more to meet the rising interest bill.

This creates a peculiar circle. Fiscal policy supports demand, contributing to the conditions requiring tighter monetary policy. Higher rates then increase government borrowing costs, adding to future deficits and debt.

The numbers are uncomfortable. The Congressional Budget Office projects federal debt held by the public rising from about 101 per cent of GDP this year to 175 per cent by 2056, against just 35 per cent before the financial crisis. Net interest costs rise from 3.3 per cent to 6.9 per cent of GDP. The debt is not only larger; it is becoming more expensive to carry.

The Fed can raise rates to fight inflation, but it cannot fix the budget deficit. If fiscal policy continues to support demand, the Fed may instead have to raise rates further to offset it — exactly the opposite of the lower rates the Trump administration is calling for.

That makes the circle still more unpleasant. Larger deficits can require higher interest rates; higher rates increase the government’s interest bill; and a larger interest bill adds to the deficit.

Sargent and Wallace argued that this cannot continue indefinitely. There is ultimately a limit to the government debt private investors will absorb. Once that limit is reached, something has to give.

In their model, the government refuses to cut spending, raise taxes or default. Eventually the central bank has to create money to finance obligations that can no longer be funded with more debt.

That does not mean higher rates are ineffective. They can reduce demand and inflation today. Sargent and Wallace’s warning comes later. If fiscal policy still does not adjust, eventually the combination of loose fiscal policy and tight monetary policy cannot be sustained.

America has other choices. Taxes can rise, spending can fall, or regulation can encourage domestic institutions to hold more government debt. Inflation itself can reduce the real value of nominal liabilities.

But the central insight survives. The Fed can determine interest rates. It cannot determine how much Washington borrows. If fiscal policy does not adjust, it can eventually dictate what monetary policy is able to do.

For decades, developed-market government bonds have been treated as the “risk-free” assets against which everything else is priced. Sargent and Wallace turn that relationship around.

For investors, the question is no longer simply where interest rates are going.

It is whose balance sheet they want to lend to.

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

Cherise Lancaster

18^th September 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 15/09/2026.

What’s driving the surge in bond yields?

Oil has accelerated the sell-off, but it’s not the only force pushing yields higher.

Key highlights

• Global bond yields surged, as higher oil prices and hawkish central banks added to inflation concerns, but structural factors are at play too.
• The European Central Bank raised rates to 2.5% and revised up its inflation forecasts. Markets expect more rate hikes to come.
• U.S. inflation in August was broadly as expected but the monthly core Consumer Price Index (CPI) came in above estimates. This CPI does not yet capture the latest surge in oil prices as much of that happens in September.

Why are bond yields surging?

Bond markets were at the centre of market moves last week, with global government bond yields rising sharply across developed markets. The U.S. 10-year treasury yield moved close to 5%, while UK gilt yields reached nearly 5.4%, a level not seen since 2007.

Source: Bloomberg

The immediate catalyst was another rise in energy prices, a result of the conflict in the Middle East intensifying. Escalation in Iran-U.S. tensions has pushed Brent crude oil prices back above $100 a barrel while U.S. diesel prices have moved to over $6 a gallon.

Source: Bloomberg

Higher oil prices have renewed concerns about inflation and pushed investors to expect more interest rate hikes. But we think oil is only part of the story.

Governments are borrowing heavily to fund large fiscal deficits. At the same time, the enormous investment required to build AI infrastructure is creating another source of demand for capital.

Put simply, there are a lot of borrowers competing for the same pool of money. Investors are therefore demanding higher yields to lend for 10 or 30 years.

This is also why the U.S. Treasury’s latest bond buyback failed to provide much relief. Buybacks can improve liquidity and help supply and demand at the margin, but they can’t address the fundamental issue of large fiscal deficits, heavy government borrowing and persistent inflation.

This is broadly consistent with our view that the latest geopolitical shock is only one part of a bigger, longer-term shift in bond markets.

For equity investors, higher yields are a near-term headwind. When investors can earn close to 5% from U.S. government bonds, equities face more competition for capital. Higher yields also reduce the present value of future corporate earnings, which can be particularly challenging for more highly-valued growth stocks.

This doesn’t change our longer-term constructive view on equities. But while bond yields remain elevated, we think equity markets could remain more volatile.

U.S. inflation adds interest rate pressure

The U.S. inflation reading adds pressure on the Federal Reserve (the Fed) to raise interest rates this week. Headline Consumer Price Index (CPI) inflation was broadly in line with expectations, coming in at 3.4% year-on-year, while annual core inflation eased slightly to 2.4%, the lowest since March 2021. But the more closely watched core CPI rose +0.3% month-on-month, above the 0.2% expected and the biggest increase since April.

This CPI data doesn’t yet capture the latest surge in oil prices, much of which occurred in the first half of September. Higher energy costs can also take time to feed through into other parts of the economy. Meanwhile, producer prices released last week pointed to continued pipeline inflation pressure and the latest U.S. jobs report was strong – both reinforcing the case for elevated inflation.

All this data adds pressure on the Fed to do its job to constrain price pressures.

Markets have responded quickly. Earlier this month, markets priced in a 70% probability of an interest rate hike, which rose to 90% immediately after the CPI release.

Interestingly, bond yields came in a bit lower and stocks reacted positively. The read is that if the Fed follows through with a rate hike, it would help restore its inflation-fighting credibility – anchoring long-term inflation expectations, which markets would welcome as a positive development.

Source: Bloomberg

The ECB turns more hawkish

The European Central Bank (ECB) added to the more hawkish backdrop last week, raising its deposit rate by 25 basis points to 2.5%, which was widely expected.

More important was its outlook. The ECB revised up its inflation forecasts, with inflation now expected to average 2.5% in 2027 and 2.1% in 2028. At the same time, it upgraded its growth forecasts for this year and next, reflecting a more resilient Eurozone economy.

That resilience is important. Higher energy prices are hurting consumers and businesses, but so far, the economy has held up better than feared. This reduces the immediate risk of stagflation and gives the ECB more room to focus on inflation.

Markets have responded by pricing in more rate hikes. However, we think there’s a risk that markets are overestimating how much tightening will ultimately be needed.

The key is wages. So far, there’s little evidence that higher energy prices are creating a second-round wage-price spiral. Eurozone compensation growth has slowed, while the ECB’s wage tracker points to only a modest 2.7% increase in negotiated wage growth in the first half of next year. Longer-term inflation expectations also remain anchored at around 2%.

And this is not just a European story. U.S. wage growth eased to 3.1% in August, while UK private sector wage growth has slowed to 2.8%. Resilient economic growth means central banks can’t ignore the inflation shock, particularly if oil prices remain high. But slowing wage growth suggests the second-round effects aren’t there yet.

That means central banks may need to remain hawkish in the near term, without necessarily delivering as many rate hikes as markets currently expect.

Given the ECB’s rate hike, the recent data and market pricing, it will be a surprise if the Fed remains on hold this week. If it doesn’t, it will face serious credibility challenges and Fed Chair Kevin Warsh will need to explain its rationale clearly to the market.

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

16/09/2026

Please see the below article from WH Ireland discussing how BRICS is attempting to strengthen supply-chain resilience, local currency trade and alternative channels for cross-border finance. received today – 15/09/2026.

The 18th BRICS Summit in New Delhi reinforced a gradual shift towards a more fragmented global economic and financial architecture. Rather than announcing a common currency or attempting to displace the dollar, the bloc focused on practical measures to strengthen supply-chain resilience, local currency trade and alternative channels for cross-border finance.

Trade fragmentation is perhaps the most immediate economic implication. BRICS criticised unilateral tariffs and non-tariff measures and called for greater participation by emerging markets in higher-value segments of global manufacturing. The declaration also emphasised resilient supply chains and technology transfer, particularly for critical minerals. For emerging economies, the objective is increasingly to capture more value domestically rather than remain exporters of raw materials.

Financial infrastructure is another part of this longer-term shift. BRICS is exploring interoperability between payment and messaging systems and encouraging greater use of local currencies for trade and investment. India’s UPI and Brazil’s Pix demonstrate the potential of low-cost domestic digital payments, although cross-border adoption remains relatively limited and practical obstacles remain. The significance is therefore less an imminent threat to the dollar and more the gradual creation of additional settlement channels alongside existing infrastructure.

The New Development Bank is also being positioned to play a larger role, with BRICS encouraging it to expand local currency financing, diversify funding sources and support infrastructure and economic integration. If these initiatives develop at scale, they could reduce some dependence on dollar funding and Western capital markets at the margin, particularly for intra-BRICS trade and investment.

The critical-minerals agenda adds another layer. BRICS is calling for reliable and diversified supply chains while explicitly supporting value addition and economic diversification in resource-rich countries. Combined with the push into higher-value manufacturing, this could support industrial investment and domestic growth over time.

The bigger takeaway is therefore evolution rather than revolution. BRICS is not replacing the existing financial system, but it is building more options around it. For markets, the longer-term consequence could be a more multipolar system of trade, payments, financing and capital flows, with implications for FX, sovereign credit and the allocation of global capital.

 

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

Alexander James Roberts

15^th September 2026

Please see the below article from Tatton Investment Management discussing the impact of the Middle East energy shock, tighter monetary policy, UK gilt resilience and the fragile US–China trade truce, received this morning – 14/09/2026.

Tightening up
Bond pain spread to stocks last week. Middle East re-escalation pushed Brent crude oil well above $100 a barrel with natural gas also sharply higher, even as US core inflation held steady at 2.4%. That was enough to push the European Central Bank into its second rate rise of the year, ahead of the US and UK decisions this week. The larger cap tech stocks stayed relatively calm, helped by strong Oracle earnings, but rate-sensitive sectors outside tech struggled and, generally, broad stock performance is weaker.

Separately, markets are unsure of what to make of Anthropic CEO Amodei’s request that major AI model developers jointly slow progress. Other AI firm leaders have agreed with his call, citing worries about uncontrolled model “breakouts”. However, Trump has said work must continue so that the US can stay ahead of China. Others suspect that the AI modellers are struggling to find resources and may be seeking to behave as an oligopoly.

The US and Iran traded strikes last week as Tehran tries to extend its Strait of Hormuz leverage across the Gulf. Flow through the Red Sea is sharply down after damage to the Saudi Arabia East-West pipeline and Houthi gains in Yemen. As we start the week, Brent is above $105pb and European gas is at its highest since late 2022. Gulf State-Iran talks and a rumoured deal to open a route through the Strait of Hormuz were planned for today (Monday 14th) and offered a sliver of hope but have been “postponed” from today.

With Eurozone energy inflation at 14.3%, the ECB felt it couldn’t wait out the crisis. We expect the Federal Reserve and Bank of England to follow this week with, at least, hawkish signals of their own. While the Bank of England may wait to hike at the start of November, the US Federal Reserve is more likely to raise rates this week.

Short-term yields rose to match rate expectations, but long yields rose just as much – a little counterintuitive, as you would expect hawkish policy to compress long-term inflation. Long-term bonds suffered partly from the liquidity effect (less money around to buy them) but also because ‘risk-free’ government debt is looking riskier, as energy costs strain public finances.

That tension showed up in UK political rhetoric over defence versus welfare spending, but much more flagrantly in Donald Trump’s pledge of $5,000 per adult, should Republicans win both houses of Congress in November’s midterms. No one expects that to happen, but it shows the White House’s disregard for fiscal restraint.

We’d still point to reasons for optimism: corporate earnings remain resilient, equities are only marginally off July’s highs, and a Trump-Xi summit later this month could deliver good news on trade. But tighter policy means tighter market liquidity – a real risk heading into autumn.

No Goodbye For Great Britain
With gilt yields at multi-decade highs, talk of a ‘doom loop’ in UK government finances is rife, with comparisons drawn to the 1976 sterling crisis and IMF bailout.

Gilts are what traders call a “high beta” bond market: they react more violently than others to bond volatility, due to structural imbalances (long average maturity and heavy inflation-linkage). Global bonds are suffering from tech-driven capital demand and the oil shock, but gilts are suffering more.

That sensitivity feeds back into borrowing costs – higher yields mean higher debt-servicing bills, which is more painful given debt sits at 93.8% of GDP. Sensitivity also amplifies the usual media talk of profligate government spending. This is the mechanism by which a doom loop can happen (higher yields force more borrowing, forcing higher yields) but that doesn’t mean the UK is in one or will be soon.

The 1976 comparison, though evocative, doesn’t hold up well. That crisis was fundamentally a currency crisis: an overvalued sterling, propped up under a fixed trading band after the gold standard’s collapse, became untenable once the current account and budget both swung into deficit following the 1973 oil shock. The Bank of England’s attempt to guide sterling lower coincided with traders already selling it, triggering a collapse that only an IMF loan could stem.

Nothing similar threatens sterling today. The chief risk to gilts now is contagion from higher US Treasury yields, which would actually tend to strengthen sterling against the dollar, cushioning the blow. And unlike Denis Healey’s 1970s Treasury, today’s fiscal policy is comparatively restrained – the UK’s primary budget (excluding interest costs) is close to balanced and forecast to move into surplus. Gilts are fragile, but not fractured. The conditions that led to the Wall Street Journal’s famously scathing headline “Goodbye Great Britain”, preceding the 1976 crisis, are largely absent this time.

Don’t be fooled by US-China détente
Xi Jinping and Trump will meet in Washington on 24 September, against a backdrop of relative calm between the two powers. That calm will likely continue through the summit, but the trade truce probably won’t continue indefinitely.

Tariffs have been less central to Trump’s 2026 agenda than in 2025. He imposed new levies in July – but these mostly just replaced tariffs struck down by the Supreme Court’s IEEPA ruling. The administration’s lighter touch on tariffs is partly due to their unpopularity – ahead of November’s midterm elections and amid the president’s unpopular Iran war. It’s also because the current regime works relatively well for Washington: steady revenue but limited economic pain.

So, we expect little of substance from the summit itself, with effective tariffs on China likely to stay near their current 22.8% average. Still, extending the trade détente that has informally been in place since May’s summit is significant.

It’s slightly odd that Beijing has escaped Trump’s recent ire, considering China has under-delivered on its purchase pledges. Many US partners have done the same, but China still buys 90% of Iran’s oil – exactly the behaviour Washington claims to be targeting with sanctions. The fact China hasn’t been more seriously sanctioned shows how important Chinese imports remain to US consumers and businesses.

We’re also sceptical that China’s negotiating position is as strong as it looks. Its trade surplus and reluctance to buy more US goods stem largely from a weak domestic economy that Beijing is still firefighting, including by shifting bad bank debts onto the state’s balance sheet. That leaves Xi needing exports, and hence trade détente, at least as much as Trump needs a deal. We suspect the White House may simply be waiting out the midterms – after which, in our view, tariffs could return to the top of the market’s worry list.

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

Marcus Blenkinsop

14^th September 2026

Please see the below article from WH Ireland discussing the growing risks of sovereign debt and opportunities in financially stronger sovereign bond markets, received late yesterday – 10/09/2026.

Major developed economies are increasingly devoting substantial resources to servicing sovereign debt, challenging the assumption that developed market government bonds are inherently lower risk. In the US, net interest payments on federal debt have risen to close to $1 trillion annually and now exceed defence spending. In the UK, debt interest costs are significantly higher than defence spending and consume around one pound in every ten of government revenue. France faces a similar challenge, with debt servicing costs rising as higher interest rates feed through into a large and growing public debt burden.

These examples do not mean that developed market sovereigns are equivalent to emerging markets. Reserve currency status, deep domestic capital markets and institutional strength remain important sources of resilience. Rather, they demonstrate why traditional economic classifications can obscure meaningful differences in fiscal and external strength. For bond investors, the more relevant question is whether an issuer has the balance sheet capacity to withstand higher funding costs, weaker growth and fiscal shocks.

This creates opportunities from a relative value perspective. Selected emerging market sovereign and quasi-sovereign bonds can trade at meaningful premiums to developed market debt even where their underlying external positions are stronger. The opportunity is therefore not simply to seek higher yields, but to identify where the market appears to offer insufficient compensation for the risks of one issuer relative to another. We focus on the relationship between spread and financial strength, rather than yield in isolation.

This is particularly relevant to passive fixed income investing. Market capitalisation weighted bond indices allocate capital broadly in proportion to debt outstanding, meaning that countries issuing more debt tend to command larger index weights. Investors tracking such indices can therefore become structurally exposed to the largest borrowers, irrespective of whether their underlying balance sheets are strengthening or deteriorating.

We therefore look beyond conventional market classifications and focus on Net Foreign Assets (NFA) as an important measure of national financial strength. NFA captures the difference between a country’s external financial assets and liabilities, providing insight into whether an economy is a net creditor or debtor to the rest of the world. In our view, this creditor–debtor distinction can be more informative for sovereign bond selection than a simple developed or emerging market label.

By combining NFA analysis with an index agnostic, relative value approach, we seek to identify sovereign and quasi-sovereign issuers where valuations do not fully reflect underlying financial strength. This includes opportunities across Abu Dhabi, Qatar, Norway, Mexico and Chile, where strong external positions and sovereign resilience can, in our view, create attractive relative value compared with more highly indebted developed market issuers.

The objective is not simply to find the highest yield, but to determine where investors are being best compensated for the risks they take.

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

Marcus Blenkinsop

11^th September 2026

Please see below the daily update article from Brooks Macdonald, received this morning – 10/09/2026:

What has happened?

Stagflation concerns lingered yesterday as Brent crude rose above $100/bbl for the first time since July. The move led investors to price in a more hawkish path for interest rates, pushing sovereign bond yields to multi-year highs. US Treasuries also came under pressure after the Treasury Department’s announcement of up to $6bn of long-dated bond buybacks fell short of market expectations. By the close, the 10-year Treasury yield (+5.2bps) had reached a post-2023 high of 4.84%, while Germany’s 10-year Bund yield (+7.6bps) rose to its highest level since 2011 at 3.44%. Higher yields weighed on risk assets, with the S&P 500 (-0.48%) falling for a third consecutive session and the STOXX 600 (-1.41%) posting its worst day in two months. Market breadth was particularly weak in the US, where 404 stocks in S&P 500 declined. Energy (+1.09%) was the S&P 500’s only advancing sector, reaching a record high.

 

Energy fears

The latest rise in oil prices was fuelled by a further escalation in hostilities between the US and Iran. Reports indicated that the US had destroyed five Iranian tankers, while Iran later claimed it had targeted US vessels and oil tankers in the Persian Gulf in retaliation. Investors increasingly fear a prolonged conflict that could disrupt energy supplies and delay the reopening of the Strait of Hormuz. The impact extended beyond oil. Brent crude rose +3.36% to $101.21/bbl, while European natural gas futures gained +4.49% to their highest level since 2022. Gas prices were also influenced by reports of a fire at an industrial site in Russia’s Yamalo-Nenets region, a key gas-producing hub.

 

What does Brooks Macdonald think?

The renewed rise in energy prices has prompted investors to reassess the outlook for inflation and monetary policy. In the US, markets modestly increased the probability of a September rate hike, reflecting concerns that higher energy costs could feed through to broader inflationary impulse. European markets also priced in a more hawkish path for the European Central Bank. Attention now turns to today’s ECB policy decision, where a 25bp hike is widely expected. As a result, investors will focus less on the decision itself and more on the ECB’s guidance and updated economic forecasts for clues on how policymakers are balancing renewed inflation risks against a potentially slowing growth backdrop.

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

Cherise Lancaster

10/09/2026