The story of the third quarter depends on where you look. Equity investors finished it within touching distance of record highs. Bond investors finished it nursing some of their heaviest losses in years.

The Federal Reserve raised rates by 25bp to 3.75–4.00% on 16 September, in a unanimous decision and the first increase since 2023. Its projections have prompted markets to reassess the outlook: twelve of eighteen participants expect one further increase this year, while four expect two and the remaining two expect no further rise. The Committee does not project inflation returning to target until 2029.

The two big stories of the week have been AI and the less eye catching but perhaps more impactful move in bond yields.

Strong jobs data raises the odds of a September hike After months of a cooling labour market, US job growth accelerated sharply in August, catching markets off guard. Nonfarm payrolls surged by 162,000, nearly three times the 56,000 economists had forecast, with an additional 55,000 in upward revisions to June and July.

Throughout July, as Europe battled heatwaves and wildfires, markets showed growing concern for those invested in AI's future. The primary driver of markets in recent years has been AI. Specifically, the enormous spending from hyperscalers Amazon, Alphabet, Microsoft, Meta and Oracle, who plan to spend just shy of $725bn on AI infrastructure this year alone. That colossal figure is having a visible impact on US and global GDP.

Headlines The brief pause following the signing of the Memorandum of Understanding has ended, with US and Israeli military action against Iran resuming. This has disrupted oil flows through the Strait of Hormuz, pushing Brent crude back above $90 and touching $100 today. These developments have reset some of the optimism seen in the back half of Q2 and have broader implications for commodity and financial markets that we are monitoring closely.

Few can doubt this man can do politics. He has executed a bloodless coup d’État against a British Prime Minister with a majority of 174, a man who had not committed any heinous sin or made a major policy error but was just deemed not quite good enough. In the days before his ascension, Andy Burnham presented an award to the indie band James. He did it really well, looking like a real music fan, not a lame politician transplanted painfully into the cool world of music.

In this episode of Wisdom Shared, Head of Albemarle Street Partners Charlie Parker and Partnerships Manager Nathan McKerlie discuss Andy Burnham’s elevation to Prime Minister, his new cabinet, and the implications for taxes, pensions, gilts and UK growth. The episode examines Burnham’s policy priorities, including devolution and industrial strategy, and outlines risks and talking points financial advisers should raise with clients over the coming months.

1. Ceasefire unravels Just weeks after a tentative truce had calmed nerves, the Middle East returned to the top of investors’ worry list. Speaking at the NATO summit in Turkey, President Trump declared that the ceasefire with Iran was “over”, and renewed hostilities quickly followed. The reaction was swift, with Brent crude jumping nearly 10% to around $78 a barrel while equities sold off, particularly European markets.​

When the second quarter began, investors were confronting an uncomfortable combination of rising inflation and slowing economic growth. Thankfully, by the time it ended, the picture had completely shifted. The MSCI World index gained 13.5% during the quarter, its best performance since 2020. The quarter was shaped by three distinct developments, each of which carries implications for the rest of the year. The first was corporate earnings. Companies reporting first-quarter re

UK Politics and Market Implications Following Prime Minister, Keir Starmer's planned departure and Andy Burnham's anticipated arrival as Prime Minister, the initial view is that the impact on UK markets will be limited. Although Burnham is seen as slightly to the left of Starmer, bond markets care more about fiscal discipline than political labels. The UK's constrained fiscal position leaves little room for any government to pursue expansionary policy without unsettling gilts

1. IPO’s are back After several years of subdued activity, the global IPO market looks to be on the verge of a dramatic resurgence. Higher interest rates, weaker valuations and cautious investor sentiment caused many companies to delay public listings between 2022 and 2025. However, improving market conditions look to have revived the IPO market.

The dominant force in markets during May was the slow, uneven progress of ceasefire negotiations between the United States and Iran. Oil held above $100 a barrel for much of the month, pushing US consumer inflation to 3.8% year-on-year, its highest reading since 2023. The Federal Reserve, now under Kevin Warsh, held rates at 3.75% and offered no forward guidance. A cut by June, which many had expected earlier in the year, is no longer on the table. The tone shifted in the sec

In this episode of Wisdom Shared, Senior Investment Manager Harry Children and CIO Fahad Hassan explore why equity markets are near all-time highs despite geopolitical tensions, higher oil prices, and sticky inflation.

Yesterday, Charlie Parker and Fahad Hassan led our latest market drop-in. Despite ongoing geopolitical tensions, sharp moves in energy markets and a highly uncertain political backdrop, corporate earnings are continuing to deliver positive surprises. If you weren’t able to attend, you’ll find below a concise overview of the key themes currently driving markets and shaping our thinking.

1. Semiconductor stock supernova The dominant positive trend in equity markets since the recovery began in early April has been strength in AI infrastructure-related stocks. This has been influenced primarily by growing evidence that large language models (LLMs) are beginning to generate meaningful revenue and are becoming increasingly embedded within enterprise workflows. At the beginning of April, Anthropic - the company behind Claude - announced a 300% increase in annualis

April marked a distinct turn in the tone of markets. The rhetoric and bluster of March gave way to hopes of diplomacy as both sides stepped back from war and brinkmanship. Investors are betting that the rise in inflation and hit to growth will prove temporary, a view that remains uncertain but has been sufficient to steady sentiment for now. First-quarter earnings have, so far, stayed close to plan. With around a quarter of US large-cap companies having reported, earnings are

1. Trump blockade and failed talks - long lasting effects The US and Iran have failed to close a deal regarding the re-opening of the Strait of Hormuz. In response, Trump has announced a naval blockade of the Strait, with an intention of intercepting vessels heading to or from Iranian ports and clearing mines laid in the waterway. By doing this, Trump has threatened to cut off Iran's oil exports and end its practice of charging ships a toll to pass, stripping Tehran of the ec

Fahad Hassan, CIO Executive summary US-Israel-Iran conflict has effectively closed the Strait of Hormuz, oil and gas prices are higher. Portfolios had already been defensively positioned — gilts exited, duration cut, UK mid-caps and European small caps removed — all of which have since fallen sharply. Macro The last month has seen a reset of inflation expectations, as the US and Israel entered a conflict with Iran. The Strait of Hormuz, a narrow body of water responsible for

It is impossible to second guess the next move in markets given the underlying complexity of the war in Iran. Particularly given the impact that President Trump’s comments are having on markets. What is becoming increasingly apparent is that even with a swift resolution to the conflict, the disruption from the war will result in inflated energy costs for some time.