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Please see below, an article from EPIC Investment Partners which discusses the external factors impacting the US bond market. Received today – 24/07/2026

For most of the past two years, investors have treated the US bond market as an extension of Federal Reserve policy. Inflation would fall, growth would slow, the Fed would cut rates, and long-term borrowing costs would follow.

That assumption is now being tested.

Treasury yields are increasingly being driven by forces the Fed cannot easily control: war, energy prices, government borrowing and the refinancing of debts accumulated during the era of near-zero rates. The Fed controls the overnight rate. It does not control oil prices, the federal deficit or the yield investors demand to finance the US government for 10 or 30 years.

Before the war with Iran, the 10-year Treasury yield was below 4 per cent. It has since risen towards 4.7 per cent, while the 30-year yield has moved above 5 per cent.

Part of that reflects reduced expectations of rate cuts. But investors are also demanding greater compensation for inflation, heavy Treasury issuance and fiscal uncertainty. This term premium may remain elevated even if the Fed eventually lowers short-term rates.

The pressure is magnified by the volume of debt due to be refinanced. Governments, companies, households and property owners benefited from the low-rate era. Debt issued at 1, 2 or 3 per cent does not immediately become more expensive when yields rise. The cost appears gradually as maturities arrive.

That delay can be mistaken for resilience.

This is the uncomfortable echo of 2007. Then, the hidden problem was deteriorating credit quality. Today, it is the delayed repricing of debt across the public and private sectors. In both cases, slow transmission risks being mistaken for evidence that the system has absorbed the shock.

Commercial property provides the clearest example. A building producing $10mn of annual net operating income is worth $250mn at a 4 per cent capitalisation rate. At 6 per cent, the same income supports a value of only $167mn.

A third of the value disappears without any fall in rents. Refinancing also becomes more expensive, while weaker growth may reduce occupancy. The borrower may avoid default by injecting equity or extending the loan, but the economic loss remains.

This matters because investors often respond to rising Treasury yields by moving towards equities, private credit, infrastructure or real estate. Yet those assets do not exist independently of the Treasury market. Their financing costs and valuations are built on top of the same sovereign curve.

Higher government yields raise corporate borrowing costs, reduce the present value of future cash flows and push property capitalisation rates higher. The alternatives to Treasuries therefore become less attractive partly because Treasury yields have risen.

For a while, the damage remains hidden. Existing loans are fixed, private assets are valued infrequently, and lenders extend maturities rather than recognise losses. But as debt rolls over, more income is diverted towards interest payments. Transactions slow, investment is postponed and hiring weakens.

Eventually, growth slows not despite high bond yields, but partly because of them.

That creates a perverse investment cycle. The rise in yields that makes Treasuries appear unattractive may create the weakness that ultimately makes them valuable again. As demand slows and inflation eases, investors may return to government bonds for income and capital protection.

The debt wall will arrive borrower by borrower and maturity by maturity. By the time its effects are visible, the rise in Treasury yields may already have created the conditions for their reversal.

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

Alex Kitteringham

24^th July 2026

Please see below the daily update article from Brooks Macdonald, received this morning – 23/07/2026:

What has happened?

Renewed tensions in the Middle East continued to dominate markets, pushing Brent crude to a seven-week high and fuelling concerns that central banks may need to keep interest rates higher for longer. Government bonds came under pressure on both sides of the Atlantic, with the US 2-year Treasury yield rising 3.5bps to 4.30%, its highest level since February 2025. Equity markets were more mixed. The S&P 500 fell -0.14%, while European shares outperformed, with the STOXX 600 gaining +0.58%.

Escalation keeps energy markets on edge

There was little sign of easing in the US-Iran conflict, with both sides issuing fresh warnings and US Central Command confirming another round of strikes overnight. Meanwhile, reports of Houthi attacks on oil tankers in the Red Sea added to concerns about global energy supplies, particularly as Saudi Arabia has rerouted exports through the region. Brent crude rose +3.36% to $94.07/bbl, while European natural gas futures climbed +4.82% to €62.54/MWh, their highest closing level since early 2023.

Big Tech earnings fail to reassure investors

US equity futures edged lower overnight following earnings releases from Alphabet and Tesla. Although Alphabet exceeded expectations, helped by strong cloud revenue growth, investors focused on the company’s higher-than-expected capital expenditure plans, sending the shares more than -3% lower in after-hours trading. Tesla also fell over -4% after reporting its first quarter of negative free cash flow in more than two years, as rising operating costs offset healthy vehicle sales.

What does Brooks Macdonald think?

Today’s main event will be the ECB’s policy decision. While rates are widely expected to remain unchanged following June’s increase, the accompanying guidance may prove more important than the decision itself. The recent surge in oil and natural gas prices complicates the outlook for policymakers. Higher energy costs can push inflation higher. Markets are currently pricing close to two additional ECB rate hikes by year-end, so investors will be paying close attention to whether policymakers share those concerns or continue to signal confidence that inflation could stay steady. More broadly, the ECB’s assessment will offer an early indication of how other central banks may respond if geopolitical tensions continue to filter through into energy markets and inflation expectations.

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

23/07/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 21/07/2026.

Why have semiconductor stocks fallen?

After achieving exceptional gains, semiconductor stocks have retreated – but what’s driving the sharp sell-off?

Key highlights

• Tensions in the Middle East intensify, lifting oil prices and reminding investors that inflation risks remain uncertain, reinforcing a cautious approach from central banks.
• Semiconductor stocks sell off sharply despite strong results from TSMC and ASML, suggesting the weakness reflected profit-taking, leveraged positioning and valuation concerns rather than deteriorating AI fundamentals.
• The U.S. economy remains resilient, with healthy consumer spending, a stable labour market and solid bank earnings continuing to support the broader outlook.

Oil prices rebound as Middle East tensions intensify

The standoff in the Gulf set the tone from last Monday’s open and never fully released its grip. The Strait of Hormuz remains a live question, with the Joint Maritime Information Centre reporting the southern route technically open but the threat level severe, and vessels warned of mines.

Source: Bloomberg

Meanwhile, Iran’s Revolutionary Guard, said it would let no ship pass until foreign interference ended. Traffic appeared to halt almost entirely, though some clients close to the market suggested ships were still moving with their transponders switched off.

Last Tuesday, President Donald Trump floated a plan to charge a 20% toll on cargo transiting the Strait and to reinstate a U.S. naval blockade. The plan lacked any credible route to implementation, and by Wednesday it had quietly been dropped.

Overall, Brent crude oil prices jumped by more than 13% in a week to over $86 per barrel.

The near-term worry runs deeper than crude itself. More than 10% of global refining capacity remains offline following Russia’s export ban and repeated Ukrainian strikes on its refineries. With inventories of refined products low, that bottleneck has pushed petrol, diesel and jet fuel higher – gasoline rose around 6% at one point. These all feed directly into inflation expectations. Longer-dated oil futures still point to a supply glut later this year, so the market’s discomfort is about timing, not a permanent shift.

On a positive note, the latest U.S. inflation report offered some reprieve. Headline consumer price index (CPI) inflation contracted 0.4% in June, driven by energy prices. Core CPI was flat on the month, the biggest downside surprise since mid-2022.

Source: Bloomberg

Core services excluding shelter inflation fell sharply, shelter inflation decelerated and even the tech-related categories showed deepening deflation. The odds of a July hike evaporated. But this is a pause, not an all-clear; with a tight labour market, booming AI investment, loose financial conditions and rising oil again, we still think a rate rise is likely at one of the year’s final three meetings.

The Federal Reserve (the Fed) Chair, Kevin Warsh, told Congress the Fed has “no tolerance” for persistently elevated inflation, while adding it’s in no rush.

Semiconductor stocks stumble despite strong AI fundamentals

Ironically, the sell-off came despite another week of encouraging news for the AI investment cycle.

Both TSMC and ASML delivered strong results and maintained constructive outlooks. TSMC continued to benefit from robust demand for advanced AI chips, while ASML – whose lithography machines underpin the world’s most advanced semiconductors – highlighted strong order momentum and confidence in sustained demand.

As two of the industry’s most important bellwethers, their results reinforce the view that AI infrastructure investment remains on a solid footing and that hyperscale spending continues to support the sector.

So, why did semiconductor shares fall? The answer appears to lie more in market positioning than fundamentals.

Source: Bloomberg

Following an exceptional rally over the past year, investors took the opportunity to lock in profits as valuations across parts of the sector became increasingly demanding. Technical factors also amplified selling pressure, including leveraged exchange-traded funds (ETFs) in South Korea that accelerated declines in memory chip stocks and increased short-term volatility.

The recent correction therefore appears to reflect sentiment rather than a meaningful change in the outlook for AI. As earnings season gathers pace, guidance from the major technology companies on AI demand, capital expenditure and monetisation will be closely watched.

Economic fundamentals remain supportive

Against the market volatility, the underlying economic picture changed very little.

Recent U.S. economic data continue to suggest that growth is resilient. Initial jobless claims have fallen more than expected in recent weeks, while retail sales indicate that consumer spending continues to hold up.

Corporate earnings have also provided reassurance. Large U.S. banks generally reported solid results, supported by resilient consumer spending, healthy credit quality and improving capital markets activity. While management teams remain mindful of geopolitical uncertainty and the interest rate outlook, there was little evidence of meaningful stress among either households or businesses.

Taken together, these indicators suggest the U.S. economy continues to enjoy relatively solid foundations. That should continue to provide support for corporate earnings, even if markets experience periods of heightened volatility.

Attention now turns to earnings season, with updates from the major technology companies likely to shape sentiment around the AI investment cycle. Geopolitical developments in the Middle East will also remain in focus, given their potential implications for oil prices and inflation.

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

22/07/2026

 

Please see the below article from Brooks Macdonald discussing how markets struggled to gain traction amid Middle East tensions, UK fiscal questions, and US trade policy concerns. Received this morning – 21/07/2026.

What has happened?

Markets struggled to gain traction yesterday. The S&P 500 fell -0.19%, while the NASDAQ (-0.05%) and Magnificent 7 (-0.07%) also edged lower as investors remained cautious despite some stabilisation in semiconductor stocks following last week’s sharp sell-off. European equities were also weaker, with the STOXX 600 down -0.30%. The FTSE 100 underperformed, falling -0.71%, as UK assets came under broader pressure.

Oil swings as Middle East tensions evolve

Investor sentiment towards the Middle East improved briefly after Reuters reported that Iran had received a proposal for a 10-day ceasefire aimed at reviving last month’s interim agreement. However, optimism quickly faded after the Houthis threatened a maritime blockade on Saudi Arabia, while President Trump struck a more hawkish tone and the US carried out a tenth consecutive night of strikes. Against this backdrop, Brent crude rose +1.27% to $89.22/bbl.

UK fiscal questions drive gilt sell-off

UK markets underperformed after newly appointed Prime Minister Andy Burnham said he would use “any flexibility” available within the government’s fiscal framework. Investors interpreted the remarks as potentially opening the door to higher borrowing, prompting a gilt sell-off. 10-year yields rose +8.1bps to 5.03%, while 30-year yields climbed +8.9bps to 5.74%. Attention also turned to the new government’s line-up. In a surprise move, Burnham appointed former Defence Secretary John Healey as Chancellor. Healey is generally viewed as one of the more market-friendly figures within the party, though his fiscal views remain unclear. Sterling ended the day down -0.16% against the US dollar. With further policy announcements expected this week, investors will be looking for greater clarity on the government’s economic agenda.

What does Brooks Macdonald think?

Alongside developments in the Middle East and the UK, trade policy is re-emerging as a potential market focus. Overnight, the US announced plans to impose a 50% tariff on selected Canadian goods under Section 338 of the 1930 Tariff Act, a provision that has never previously been used. While the measures will affect only around $20bn of imports and are unlikely to have a significant immediate economic impact, they may signal a more aggressive phase of US trade policy. With the administration’s temporary 10% global tariff set to expire on Friday and several Section 301 investigations still ongoing, additional tariff announcements could follow. While any single measure may have a limited effect, the cumulative impact could add to uncertainty around global trade and supply chains.

Bloomberg as at 21/07/2026.

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

21/07/2026

Please see the below article from Tatton Investment Management discussing cooling AI enthusiasm, softer US inflation, limited UK fiscal room, and rising government involvement in AI, received this morning – 20/07/2026

AI froth coming off

Chip stocks have swung from euphoria to despondency without any real bad news. Other than that, markets are in a lull, trading up and down over the same themes they have for months: war, interest rates, and the durability of the AI boom. Investors still don’t know what to make of them.

Oil prices went higher last week but not dramatically, despite the Strait of Hormuz closing again. Investors may be thinking that one or both sides will TACO (Trump or Tehran Always Chickens Out). The incentives would suggest that’s right: Trump has the midterms and Tehran needs the cash. But the war so far has been more like a game of chicken than a rational calculation. Things could still get worse, but at least games of chicken are usually short.

Softer US inflation data helped calm nerves too. Energy reprieve was expected to help lower June’s figures, but even core inflation eased, all but ruling out a Fed rate rise this month. Bond yields fell and equities rallied in response. The good mood faded somewhat once investors remembered the data predates the latest oil price bump, however.

The real story is in chips. TSMC and SK Hynix both sold off hard despite strong earnings, as doubts crept back in over how sustainable AI-driven growth really is. We’d call that a healthy sign rather than a warning sign: bubbles are built on exuberance, and it’s hard to argue investors are exuberant while valuations are falling.

Banks, meanwhile, are having a moment, with strong second-quarter profits on the back of a busy quarter for trading and dealmaking – prompting some to call them AI stocks by proxy. If that’s true, we suspect their turn in the spotlight won’t last: the AI theme has a habit of moving on just as quickly as it arrives.

Markets’ guardrails for Burnham

Reports this week suggested Shabana Mahmood could become Chancellor under Andy Burnham, and gilt yields duly fell. Some took this as gilt trader relief that the supposedly borrow-happy Ed Miliband won’t get the job, but as usual we would caution against political interpretations.

Yields fell mainly because US treasury yields fell first, after a succession of softer-than-expected US inflation data ruled out a July rate hike from the Federal Reserve. Gilts tend to follow US bonds especially closely, thanks to the UK’s heavier weighting towards long-dated and inflation-linked issuance.

But if gilt markets were worried about Miliband, why didn’t they react more to Mahmood reportedly getting the Treasury instead? We suspect that gilt traders were never as worried about internal Labour politics as the media narrative suggests.

Every recent UK government, Burnham’s included, has precious little room to loosen fiscal policy: any attempt at bigger gilt issuance would likely just push yields up enough to cancel out the extra borrowing. That reality was laid bare by Liz Truss’s 2022 “mini budget” crisis, which exposed gilts’ structural imbalance and put the UK at the mercy of foreign investors. It is why Rachel Reeves has focused on lowering interest costs rather than opening the spending taps – advice she all but repeated to her successor in her final Mansion House speech.

Some call the UK’s persistently higher yields a “moron premium”. We’d rather call it structural: a large stock of inflation-linked gilts means UK yields amplify global inflation swings, rising faster than most when sentiment turns – a “high beta”, in bond-trader speak. That’s why this week’s Strait of Hormuz tensions were awkwardly timed for the incoming government, even if the softer US inflation report balanced things out. Either way, we don’t expect Burnham’s government to shift the balance of UK borrowing by much.

National Artificial Intelligence

Governments want more control over AI development, but interventions – particularly Washington’s – have been erratic so far. The Trump administration ordered Anthropic to block non-US citizens from accessing its powerful Fable 5 model last month on national security ground. Anthropic pulled its newly released model entirely, before the White House finally cleared it. OpenAI was told to stagger ChatGPT 5.6’s release, giving a government-approved list early access first.

Some read Anthropic’s treatment as punishment for refusing to let Claude be used in weapons and surveillance, while OpenAI’s offer of a 5% stake to Washington ahead of its IPO looks like a bid for favourable treatment.

Security concerns are shared by policymakers and AI firms alike: Google DeepMind’s chief this week called for the same kind of US standards body Washington is reportedly building, and the ECB has told significant European institutions to plan for AI security risks.

The trickier question is over potential public ownership. If AI displaces workers while enriching shareholders, the public has some claim to the proceeds – but a US company returning profits earned in Europe to American citizens would not go down well with Europeans, and could invite more international restrictions.

Is government intervention a threat to AI stocks? Recent selling pressures might suggest so, but there’s still little sign that investors are overly worried. Over the long-term, though, government action could hurt the key things holding up AI companies’ high valuations: rapid technological development and profits.

A consistent regulatory framework wouldn’t be seen as a problem (AI leaders themselves are calling for it) but the chaotic approval or disapproval of models by Washington creates uncertainty. Even (part) public ownership need not be a problem for the AI companies; the government will take a slice whether through tax or earnings. The bigger problem is firms buying patronage with thinly-veiled share offers.

We will have to watch the government-AI overlap closely.

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

Marcus Blenkinsop

20^th July 2026

Please see below the daily update article from Brooks Macdonald, received this morning – 17/07/2026:

What has happened?

Global markets moved onto a more defensive footing, led by a sharp reversal in the AI and semiconductor trade. US markets fell yesterday, with Nasdaq weakness more pronounced and Asian markets sold off heavily overnight, with chip-related names under pressure. The move came despite generally resilient US economic data, including lower jobless claims, steady retail sales and a strong Philly Fed manufacturing print. However, higher oil prices, renewed US-Iran escalation and more hawkish Fed commentary have revived concerns that inflation may prove stickier than hoped.

AI in focus

The standout theme is the market’s reassessment of AI-related expectations. TSMC’s results were strong, with upgraded revenue and capex guidance, but investors focused instead on elevated expectations, rising investment requirements and whether AI infrastructure spending can continue to justify valuations. Alphabet’s reported delay to Gemini 3.5 Pro and Netflix’s after-hours weakness added to the pressure on large-cap technology. At the same time, China’s Moonshot Kimi K3 model has sharpened the debate around lower-cost, open-source AI competition, reinforcing the idea that the AI story remains powerful but increasingly contested.

What does Brooks Macdonald think?

The latest moves look less like a broad macro shock and more like a valuation and positioning reset in the most crowded parts of the market. Encouragingly, US market breadth was positive, with many cyclicals, defensives and healthcare names outperforming even as mega-cap technology weighed on headline indices. That suggests risk appetite has not disappeared, but leadership is becoming more selective. For investors, the key question is whether strong growth data and AI-related capex can continue to offset higher oil prices, geopolitical uncertainty and a less dovish central bank backdrop. Near-term sentiment may remain fragile, but a broader rotation would be healthier than a market reliant on a narrow group of AI winners.

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

17/07/2026

Please see below the Brooks Macdonald Daily Investment Update, received this morning – 16/07/2026

What has happened?

Markets rallied yesterday after a softer-than-expected US producer price inflation (PPI) report reinforced expectations that the Federal Reserve is unlikely to raise interest rates at its upcoming meeting. The S&P 500 rose +0.38%, closing less than 0.5% below its record high, while strong corporate earnings provided additional support, with BlackRock gaining +6.6% after beating expectations. Oil prices also stabilised following their recent surge, with Brent crude rising just +0.26%. By contrast, European markets were more mixed. The STOXX 600 edged up +0.10%, but Germany’s DAX (-0.59%) and Italy’s FTSE-MIB (-0.85%) declined as bond yields moved higher amid lingering inflation concerns. Despite the pullback in oil prices, European natural gas futures climbed to a fresh three-month high of €54.35/MWh.

US PPI reinforces a disinflationary picture

June US PPI fell -0.3% m-o-m, compared with expectations for no change, while May’s reading was revised down sharply. As a result, annual producer price inflation slowed to 5.5%, below the 6.2% consensus forecast. Importantly for investors, there were also no obvious signs of inflation pressure from the components that feed into the Fed’s preferred PCE inflation measure. The data helped reinforce a dovish repricing across markets, with the probability of a Fed rate hike at the next meeting falling to around 10%, its lowest level since speculation about an imminent hike first emerged.

Political clarity boosts UK assets

The UK was a notable outperformer following reports that Shabana Mahmood is expected to become Chancellor under incoming Prime Minister Andy Burnham. The announcement was closely watched by investors and helped lift sterling 1.1% against the US dollar. Gilts also outperformed, with the 10-year yield falling 3.8bps to 4.94%, moving in the opposite direction to most continental European bond markets.

What does Brooks Macdonald think?

The latest US inflation data provides some reassurance that underlying price pressures remain more contained than headline energy moves alone would suggest. That said, investors should be careful not to draw too many conclusions from a single data point. Energy markets remain vulnerable to disruption. For now, however, markets appear increasingly comfortable with the view that policy rates will remain stable.

Bloomberg as at 16/07/2026.

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

16/07/2026

 

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 14/07/2026.

Markets react to end of U.S.-Iran ceasefire

Tensions are again building in the Middle East as the U.S. has declared an end to its ceasefire with Iran.

Key highlights

• Oil prices rise amidst Middle East tensions: Iran and the U.S. ended their ceasefire as the U.S. struck 80 Iranian targets in retaliation for Iranian attacks on vessels in the Strait of Hormuz. As a result, the oil price rose but lacked serious momentum.
• The heat is on: Cooling appliances saw a huge sales boost in Europe as temperatures soared – while an estimated $17 billion in productivity was lost due to the World Cup and heat-induced capacity drops.
• Prime minister-in-waiting: Andy Burnham looks set to become prime minister around 20 July. Though some worry about what this will mean for gilts, Burnham has already walked back his more combative remarks and committed to the existing fiscal rules.

Semiconductor sector restabilises

Last week began with the market focusing its attention on the semiconductor industry, where a bout of volatility had erupted. Semiconductor and related stocks have been the market leaders over recent weeks, rising extremely sharply. They’ve become associated with speculative investment activity and it was inevitable that, at some stage, the increases would need to consolidate at the very least.

Despite some very supportive earnings news from Samsung, the sector fell as investors took profits, but towards the end of the week, stability seemed to have returned.

Oil prices rise as Iran-U.S. negotiations remain tenuous

It was the reverse story for the Strait of Hormuz, where the earlier sense of calm had disappeared by the end of the week.

Iran has continued to insist it would impose fees on vessels using the Strait of Hormuz once the 60-day negotiation window with the U.S. closes. In an early act of antagonism, Iran said China and friendly nations would receive special treatment.

On Saturday 4 July, eight ships turned back on the southern Omani route before flows resumed. By Tuesday last week, the mood had darkened sharply: an LNG carrier, the Al Rekayyat, was struck by Iranian projectiles near the Omani coast, with reports of at least one further vessel fired upon. Traffic through the Strait, which was already at a fraction of its pre-March level, looked precarious.

The U.S. responded in force. Last Wednesday, it struck some 80 sites in Iran and revoked a waiver permitting new sales of Iranian oil. Iran called both moves violations of the interim deal and vowed a decisive response. The dispute appears to turn on Tehran’s insistence that ships transit only through Iranian waters – a condition that was never obviously part of the agreement reached with Washington. Yet, strikingly, technical talks between the two sides were still reported to be continuing by last week’s end.

Source: Bloomberg

Markets took it all with remarkable composure. The oil price rose by around 8% from its lows but lacked any serious momentum. RBC’s Chief Commodity Analyst Helena Croft has stressed since the onset of the crisis that traffic is unlikely to ever fully return to February’s volumes.

Europe has been caught in an economic crossfire between the U.S. and Iran. A bank-led rally followed the onset of peace negotiations but partially reversed as the conflict resumed.

Hot summer nights create mixed results for Europe

Against this background, the combination of the historic heatwave across the UK and continental Europe and a North American World Cup broadcast schedule featuring late-night kick-off times will distort typical economic performance for short-term and structural reasons. Global workforce data from UKG projects up to a $17 billion drag on productivity from World Cup sleep deprivation and next-day absenteeism, while over 70% of UK workers report heat-induced capacity drops.

Six of the last eight teams in the World Cup were European, and while some South American countries seem to experience a market impact from World Cup wins, Bloomberg found little evidence of that in European markets.

Hospitality usually gets a boost from the World Cup but less so when games take place outside traditional hours. The sector also benefits from good weather, but the gains fall unevenly, and margins are squeezed by higher energy and labour costs. Data from Tenzo showed uncooled city-centre venues losing footfall, while outdoor and air-conditioned locations thrived.

Certain categories of household expenditure have soared, such as the 320% year-on-year surge in cooling appliance sales in the UK, with household air-conditioning penetration at around 20% across Europe.

The chart measures the Cooling Degree Days index, which shows how much and for how long the outside air temperature rose, or is expected to rise, above a specific baseline temperature.

Source: European Commission

If these extreme summers persist into a long-term trend, structural risks will intensify.

According to the United Nations, persistent heatwaves transition from seasonal inconveniences into structural drags on growth, with projected multi-billion-dollar gross domestic product (GDP) output losses across France and Germany due to permanent cross-border supply chain friction and road/rail infrastructure degradation.

We expect corporate capital expenditure to shift defensively towards climate adaptation and cooling infrastructure alongside productivity-enhancing innovations.

Prime minister-in-waiting

Andy Burnham looks set to become prime minister around 20 July, while Ed Miliband is considered the most likely candidate for chancellor. With both men positioned to the left of the current leadership, some observers worry about the implications for gilts.

We’d caution against overreacting. Politicians often soften in office, and Burnham has already walked back his more combative remarks and committed to the existing fiscal rules. The memory of the Liz Truss episode remains fresh, centrist Labour MPs act as a counterweight and Burnham has ruled out an early election.

Indebtedness is a genuine long-term concern, but the immediate political risk should probably be discounted.

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

15/07/2026

Please see the below article from Tatton Investment Management discussing market resilience, the AI investment cycle and Europe’s banking challenges, received this morning – 13/07/2026.

Markets keep calm and carry on with business

Just as markets had downgraded Middle East risks, they flared up again – and once more the reaction was strikingly measured. Spot oil spiked 12% after Iran targeted ships in the Strait and US forces hit Iranian targets over two days. Iran’s response – up to 15 missiles and dozens of drones – was reportedly intercepted before impact, and with technical discussions between the two sides continuing, Brent has settled back, falling 5% from Tuesday’s $80.50 peak. Bond yields and equities followed the same pattern: a rise, then a retreat.

We observe that markets are increasingly focussed on company stories rather than geopolitics. The chip sell-off ran its near-term course, helping tech outperform, while SK Hynix’s ADR share sale in the US – the third-largest listing in global history – went well despite no discount, even as its diluted Korean share base fell another 10% (given the company’s market capitalisation size, a distortion worth remembering when reading current emerging market index performance).

M&A is coming up on the rails to challenge for investor attention. The battle to take easyJet private, with bids from Castlegate and Apollo, is one of several foreign bids for discounted UK companies: Segro, Schroders and UK Power Networks have all been picked up, mostly by private equity. After a poor 2025 and first half of 2026 for listed private equity (“SAASpocalypse” exposure), the step-up in M&A may signal improving liquidity – which would support stable-to-rising valuations and a broadening of equity performance. Less happily, the UK’s CMA approved the Hovis-Allied Bakeries merger only because both were loss-making; as a result, cheap bread is likely to be less cheap, and high interest costs mean debt holders in consumer-facing businesses may face write-downs.

Meanwhile, Japan’s finance minister Satsuki Katayama announced a multi-year budgeting framework, with pension funds “encouraged” to buy domestic assets – bond yields duly fell. Instructive, perhaps, for an incoming UK Chancellor, especially with Business Secretary Peter Kyle telling the Guardian he will consider mandating UK investment “because I’m in a rush”. Next week, US bank earnings kick off the second-quarter season – and the focus shifts further from geopolitics to corporates.

UK 1840s Railway Mania: teachable takeaways for today’s AI boom

Commentators usually compare the AI buildout to the dotcom bubble; we look further back, to Britain’s 1840s Railway Mania. Early lines were highly profitable and expansion was self-sustaining – building railways required materials that themselves needed rail transport. Investment poured in (Charles Darwin and John Stuart Mill included), until capital goods demand outran what the industrial base could provide, leading to inflation. This strong growth paired with loose financial conditions forced the Bank of England to raise rates in late 1845, and – as almost always – these rate hikes burst the bubble. By 1847 the most popular shares had fallen around 80% from the peak. Parliament had approved some 9,500 miles of new lines in 1846, with an estimated 8-12% of GDP invested; still, about a third were never built.

Yet the burst was not the end. Growth stayed strong, railway utilisation accelerated after 1850, a second boom followed in the 1860s, and the network laid the groundwork for a century of British industrial strength. Many bubbles are a sign of something genuinely valuable – early on, though, we just do not yet know how much of it we need.

The key warning sign for a mania ending in a bust is vast capital required before meaningful profits can be generated – true of the railways and of the TMT bubble. Today’s AI capex, by contrast, has mostly been funded by recycling profits from already hugely profitable businesses. At the moment big tech valuations are falling not because their share prices are dropping but because profits are outpacing them. As long as AI-driven expansion keeps profits strong – and monetary policy does not over-tighten liquidity – it is hard to see share prices substantially falling. And even a burst bubble would not stop AI being an economically and socially transformative force over the long term.

European banks – what European banks?

Italy’s UniCredit is on the cusp of controlling Germany’s Commerzbank, having acquired 47.6% of its shares after a surprisingly large take-up of its €44bn offer. Political obstacles remain – the German government has pushed back strongly, and BaFin is investigating following a criminal complaint from Commerzbank’s workers’ council – but few expect these, or the ECB approval process, to stop CEO Andrea Orcel getting his prize.

The real story is what the difficulty reveals: Europe’s fractured banking system. Basel III capital rules effectively prevent assets raised in one country funding loans in another via subsidiaries, limiting the scale benefits of a multinational bank (though the branch model, used successfully by Nordea, is an exception). The banking union’s third pillar – a European deposit insurance scheme – remains missing, so national regulators and voters fear a supranational bank misusing their deposits. That is why Europe has so few successful cross-border commercial banks beyond Santander and Nordea, and why newer cross-border players are digital upstarts like Revolut and N26.

The barrier is ultimately political: governments favour national champions, and the benefits of integration are intangible to voters. Progress on the Savings and Investment Union has been minimal, despite Europe’s need to put its abundant savings to work. If a true banking union comes, UniCredit will be well placed to benefit – but this deal should not be read as a sign that the union is any closer.

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

Marcus Blenkinsop

13^th July 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 08/07/2026.

U.S. job market cools – what’s next?

We examine what a cooling jobs market could mean for interest rates as the Federal Reserve aims to get inflation back to 2%.

Key highlights

• U.S.-Iran ceasefire ends: The U.S. responded with strikes as Iran harassed ships along the Strait of Hormuz’s southern route, ending the ceasefire.
• How long can hyperscalers maintain AI investment momentum? As the market increasingly looks to AI as a bellwether, the question remains of how long hyperscalers will continue investing significant sums into their AI infrastructure.
• U.S. jobs growth stalls as AI drives layoffs: The U.S. only saw 52,000 new jobs created in June, while AI has been named the most common reason for layoffs throughout 2026.

U.S.-Iran ceasefire ends

The second quarter ended with a pretty good week for stocks, but plenty of drama remains.

Tension remains despite oil prices falling significantly since the likelihood increased that the Strait of Hormuz would reopen. Iran harassed ships taking the southern route, which goes through Omani waters, and the U.S. responded by revoking a waiver on Iranian oil sales and striking 80 targets within Iran.

The two parties reaching an agreement remains challenging. The oil price rose but remains well below its recent peak.

Cracks in the capex story – or healthy consolidation?

AI infrastructure has become the modern market bellwether. While questions remain over the efficacy of hyperscaler capital expenditure (capex), there seems to be less controversy about holding the beneficiaries of that capex – the semiconductors and memory chip producers and associated electrical suppliers.

The remaining controversy refers to how long hyperscalers will keep pumping significant, upfront capital investment into their AI infrastructure. The most recent niggle of doubt comes from leaks suggesting Meta could lease computing capacity. That might be welcome as a source of revenue, but when Mark Zuckerberg has discussed it previously, he has described it as a solution if Meta was to overbuild.

The leaks came after xAI agreed to lease computing capacity to Anthropic, and with token costs (the per unit pricing of AI models) having slipped nearly 20% from their May peak, it created some nervousness that the world might already have enough computing capacity, which would obviously imply lower future orders. However, that would seem difficult to square with the lengthening backlogs revealed by other hyperscalers.

While chip stocks have eased back from their peaks, they look more like a healthy consolidation after an outstanding performance than a reversal.

From a technical perspective, market breadth has been picking up. This is encouraging at a time when the market seemed to rally despite a weak economy.

One important aspect is that the resumption of oil flow in the Strait of Hormuz has led to an easing of inflation pressure. Data on U.S. real income and spending growth has shown how higher inflation has been eating into real incomes, causing them to shrink marginally relative to last year. This means that Americans have reduced their savings to a historically low level. It’s not yet unsustainable, and evidence seems to indicate that immediate future spending growth is likely to be maintained. But some relief through lower inflation needs to come for real spending to be maintained.

U.S. jobs growth stalls as AI drives layoffs

The latest U.S. non-farm payrolls report was downbeat, with just 57,000 new jobs created in June. The labour market doesn’t seem strong enough to generate significant wage demands, although a shrinking labour force means that it isn’t too slack either.

Source: LSEG Datastream

The best outcome for the economy would be wage growth without inflation through faster productivity. Is that happening? The fact that the Challenger jobs report cited AI as the most common reason for layoffs throughout 2026 suggests that it might be. The report only covers a small fraction of the total layoffs in a given month, but if it’s indicative of a broader trend then it would seem to indicate that companies are beginning to make efficiency savings through AI.

Source: Challenger, Gray & Christmas

Germany accepts pensions reform package

Pension spending is a growing fiscal challenge across the Eurozone, and it’s set to rise by around 1% of GDP by 2035 as populations age.

Germany faces a particular challenge: its working-age population is falling faster than that of most peers, yet its pension system is almost entirely pay-as-you-go and unfunded. Its retirement assets equate to less than 15% of GDP, compared to around 80% in the UK and 150% in the U.S., according to Capital Economics.

The Merz government initially made things worse by extending the suspension of Germany’s sustainability factor until 2031 and expanding mothers’ pension entitlements. The ‘sustainability factor’ refers to a mechanism within Germany’s pension system that limits the pension level if there are more retirees than active workers paying in. The moves are estimated by Capital Economics to add 0.4% of GDP to pension spending by 2035.

However, this week, Merz’s coalition government accepted a reform package from an independent commission that improves things. Its two most significant recommendations are a six-month increase in the state pension age and the creation of a compulsory Defined Contribution (DC) scheme (modelled on Sweden’s premium pension system). This is expected to channel around €30 billion per year into capital markets including equities, venture capital and private equity.

It will take decades to realise the benefits. But the long-run implications are significant: the DC scheme could structurally increase institutional demand for European equities and create new flows for asset managers and private equity. It’ll build up slowly, but the concept seems sound.

Andy Burnham’s Labour leadership speech

Reform was also in the air during Andy Burnham’s speech last week, which established his intention to succeed Sir Keir Starmer as prime minister.

This would have been a bigger deal a few weeks ago but Burnham’s critical conversion to backing existing fiscal rules – abandoning his previous scepticism of bond market constraints – has been the primary source of market reassurance.

With fiscal policy constrained, the attention has shifted to reforms that may come with immaterial costs, such as devolution. It’s true that the UK has become more centralised over the past 20 years. What’s less clear is whether devolution will improve growth.

Research suggests that the critical form of devolution that would improve performance would be the devolution of revenue raising, rather than simply spending larger grants from central government.

Procurement reform is the most immediate corporate sector implication. Burnham explicitly commits to ending “chasing cut-price deals around the world” and applying social value weighting to all eligible public contracts, including defence. This is a material positive for UK-based manufacturers and suppliers in steel, defence and energy and food – and a risk for international incumbents.

Utilities are a clear watch item. The commitment to greater public control of water, energy and transport – modelled on Greater Manchester’s bus franchising –  is a directional warning for private operators of listed infrastructure assets. Having seemingly accepted that they can’t be brought into public ownership, stricter regulation seems more likely.

Housing and construction represent the most concrete fiscal and sectoral opportunity. A large-scale council house building programme using public land, framed explicitly as a fix for what Burnham calls the “ruinous impact” of the housing crisis on public finances, would be a significant positive for the construction sector. However, house building has been promised by previous governments and not delivered.

The most positive thing from the UK perspective has been the lack of a negative reaction from the gilt market.

We expect that Burnham will feel constrained from radical policy by the fact that the mandate he’s inheriting was won based upon Starmer’s manifesto. He’ll need a significant bounce in the polls to be tempted to seek a mandate of his own. But the biggest single constraint on governments is the bond market’s reaction to any policies, which he’s managed to tame for now.

So, with significant tax benefits and a tailwind from the tentative reopening of the Strait of Hormuz, we continue to take advantage of high UK yields.

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

09/07/2026