The infoshot to help kick-start your week

Coming up this week:

Federal Reserve Beige Book – Wednesday

The Federal Reserve will release its next Beige Book on Wednesday. Published eight times a year, April’s edition showed mixed growth due to price pressures. With the conflict in Iran dragging on and continuing to inflate energy prices it’s likely we’ll see more murky economic conditions.

Andrew Bailey speaks – Tuesday and Thursday

The Bank of England Governor, Andrew Bailey, will speak twice this week. On Friday, in his speech delivered at the Reykjavik 2026 Economic Conference, he said the bank will continue to take a wait-and-see approach over whether the Iran war could trigger interest rate hikes.

Last week:

Ceasefire extension with Trump

Reports that the US and Iran were progressing towards another ceasefire extension pushed oil prices lower and buoyed US markets last week. If signed off by President Trump, the tentative agreement will extend the ceasefire by 60 days and start talks over Iran’s nuclear programme.

However, peace deal optimism took some blows over the weekend following US strikes on radar sites in Iran and Iranian missile attacks on Kuwait. Israel also stepped up their activities in Lebanon, capturing the Beaufort Castle. Today, Benjamin Netanyahu has instructed Israeli forces to bomb southern parts of Beirut. Any deal between the US and Iran will be contingent on Israel ending the fighting in Lebanon. Oil prices have risen 3.5% at the time of writing. The conflict had a major impact on the latest US Consumer Price Index (CPI) numbers which showed inflation accelerated to 3.8% in April, its highest level since May 2023. Energy costs shot up 17.9% with gasoline up 28.4% and fuel oil up 54.3%.

Japan and Korean markets continue to surge

Leading Asian markets surged again last week. Japan’s largest index rose more than 3% taking it to new highs. South Korea’s major index is now up 100% in 2026, with technology companies Micron Technology, SK Hynix and Samsung leading the way thanks to their positions in the AI supply chain. Playing a key role in the AI supply chain has helped Japan and Korea counter the disruption caused by the conflict in Iran and the closing of the Strait of Hormuz. Other South Asian countries like Singapore and Malaysia are also benefiting. They’ve seen exports of electronic goods sharply rise in the last 12 months by 46.4% and 66.7% respectively.

The AI boom is also dominating US market growth again, sending the US information technology sector up 17% in May. To put this in perspective, US materials, industrials, communication services, financials, consumer staples, utilities and energy sectors all fell between-0.01% and -4.80% during the same period.

UK markets down and Milburn interim report released

Falling house prices and energy price concerns dragged our home market down last week. According to Nationwide, average house prices fell 0.6% in May as demand was hit by the prospect of interest rate rises triggered by the war in Iran.

Recently we looked at the latest concerning UK unemployment numbers, which showed 13.5% of young people are not in employment, education or training (Neet). Following on from this, on Wednesday we saw the release of the independent interim report led by former minister Alan Milburn on young people and work. The report found that work opportunities for young people are “shrinking” at an alarming rate with one in six set to be Neet within the next five years. One million Neet young people is estimated to be currently costing the UK economy £125bn a year. The report blames the situation on the Covid pandemic, smartphones and the sharp decline in entry-level and hospitality jobs, and states that there is no evidence of a link between migration and youth unemployment.

The infoshot to help kick-start your week

Coming up this week:

US GDP and inflation data – Thursday 

Analysts will be keeping a keen eye on US GDP and inflation numbers on Thursday. Increases in defence and security spending have kept the GDP forecast at 2%. Thursday’s update to the PCE index will be being studied closely by the Federal Reserve in advance of their next meeting in three weeks’ time.

Peace talks in Qatar

Iranian and US delegates are set to begin new peace talks in Qatar. Despite the impending negotiations, US forces have launched strikes in Southern Iran targeting missile launch sites and mine-laying boats. The talks will aim to reopen the Strait of Hormuz, reach another 60-day ceasefire agreement that also covers Lebanon, and set up further discussions over Iran’s nuclear enrichment programme.

Last week:

US markets break more records despite worries about the economy

Major US markets closed last week at an all-time high thanks to optimism around a peace deal between the US and Iran and more AI enthusiasm. Markets once again seemed immune from broader concerns about the US economy as 30-year Treasury bond yields climbed to their highest level in 19 years, and the minutes from the last Fed meeting highlighted growing concerns around inflation.

The world’s most valuable company, Nvidia, posted stronger than expected earnings on Wednesday. Data centre revenue nearly doubled for the period and revenue beat expectations. CEO Jensen Huang called it “an extraordinary quarter” and said that “demand has gone parabolic” due to the arrival of Agentic AI. However, the record-breaking quarter wasn’t enough for investors. Nvidia’s share price fell during after-hours trading amid concerns about the evolving data centre landscape and major tech firms starting to develop their own chips.  

In other AI news, Elon Musk’s lawsuit against OpenAI, and its CEO, Sam Altman, was thrown out of court last Monday. Musk had accused Altman of deception when he moved OpenAI from a non-profit to a for-profit company. The jury decided that Musk had waited too long to file his case, leaving his claims expired.

UK unemployment rises while vacancies shrink

UK unemployment unexpectedly rose to 5% between January and March. According to ONS director of economic statistics, Liz Mckeown, hospitality and retail sectors “have seen some of the largest falls in vacancies and payroll numbers”.

Job vacancies fell by 28,000 to 705,000 taking vacancies to a five-year low. Firms have been citing economic and geopolitical uncertainty as reasons for halting recruitment. The fall in graduate jobs has continued this year. The jobs platform Adzuna recently estimated there has been a 35% fall in vacancies in the last 12 months. All this has hit younger workers particularly hard, with the youth unemployment rate now at 14.7%, its highest level since 2014.

Japan GDP and inflation data

Japan’s GDP results surpassed analysts’ expectations, posting a 2.1% expansion in Q1, thanks to higher consumption and export numbers. Export growth was helped by a 29.3% increase in semiconductor equipment sales.

Inflation also eased more than expected, down to its lowest level since March 2022. Government action and subsidies in response to the Iran war, saw energy prices fall 3.9% in April.

The infoshot to help kick-start your week

Coming up this week:

Japan GDP and inflation data – Tuesday & Friday 

The Japanese Cabinet Office is due to release Japan’s Q1 GDP data on Tuesday. Analysts are expecting to see a moderate rise largely thanks to AI sector driven growth. The impact of the energy shock caused by the war in Iran is more likely to be visible in Japan’s inflation numbers when published on Friday. Higher energy costs are expected to push up the overall inflation number although energy subsidies and the release of oil reserves should mean the impact is less significant than in other parts of Asia. 

International Research Forum on Monetary Policy 2026 – Monday & Tuesday

Members of the European Central Bank (ECB) and the US Federal Reserve will meet this week in Frankfurt at the 14^th edition of the International Research Forum on Monetary Policy. This year’s programme includes talks on oil shocks, fiscal policy and inflation, and wealth redistribution. This year’s keynote speech is being delivered by Italian economist Giancarlo Corsetti. He’ll be focusing on trade wars, exchange rates and monetary policy.

Last week:

US-China summit

President Trump took an entourage of top US CEOs to Beijing for the latest US-China summit. In his opening night speech at the state banquet, Trump heralded basketball and the popularity of Chinese takeaways as demonstrations of America’s deep ties to China. In quite a stark contrast, President Xi referred to the “Thucydides Trap” to issue a warning to the US about what can go wrong when an established power feels threatened by a rising power.

Trump left Beijing claiming he’d struck “fantastic trade deals, great for both countries” but no breakthroughs or business deals were officially announced. The current trade war truce that was sparked by last year’s Liberation Day tariffs is set to expire in November. President Xi is expected to visit Washington for another summit in September. How much help China has promised to provide regarding the situation in Iran is unclear, however Trump said on Friday that he will consider lifting the sanctions on Chinese firms that purchase Iranian oil.

Markets fall on Friday

Following a record-setting few days for US markets, most major indexes fell on Friday. Concerns over rising bond yields across the globe, a tech selloff, high US inflation data and elevated oil prices may all have had an impact.

30-year bond yields in the US hit their highest level in 12 months, and the UK and Japanese equivalents reached their highest levels since the late nineties. Here in the UK, concerns over the leadership of the Labour Party pushed our home bond markets (Gilts) and the pound down, and the yields on those Gilts up.

The shrinking likelihood of US Fed interest rate cuts and profit-taking caused much of the tech selloff on Friday. The US Consumer Price Index (CPI) data for April showed inflation rose 3.8% annually, the highest jump for three years. The annual rate was 0.1% ahead of expectations. Energy price rises accounted for more than 40% of the gain. The report also showed that average US hourly wages have fallen 0.3% in the last year. Kevin Warsh’s role as Fed Chair was also confirmed by the US senate last week, but with inflation going in the wrong direction it’s looking increasingly unlikely that he’ll be able to cut interest rates anytime soon.

Last night, in amongst a batch of posts containing AI-generated images, including one of himself and a topless alien, Trump took to Truth Social to threaten Iran again, “For Iran, the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them. TIME IS OF THE ESSENCE!” In response, oil prices rose again this morning hitting Asian markets when they opened.

The infoshot to help kick-start your week

Coming up this week:

Trump peace proposal 

All eyes continue to be on the conflict in Iran after President Trump called Iran’s reply to his proposed peace plan “totally unacceptable”. Earlier on last week Trump predicted that the war in Iran will be “over quickly” and said that most people understand his goal of ending Tehran’s nuclear ambitions. But Israeli Prime Minister Benjamin Netanyahu said that Iran’s stockpile of enriched uranium must be “taken out” before the war against Iran can be considered over. Trump had proposed that Iran permit shipping to pass through Hormuz while Washington ends its blockade of Iranian ports, with month-long nuclear talks to follow. Oil rose again on Monday following Trump’s social media posts.

US CPI – Tuesday

US CPI inflation is forecasted to increase from 3.3% in March to 3.7% in April, with the conflict in the Middle East adding another layer of inflationary pressures on top of the tariff shock.

Trump visit to Beijing – Wednesday to Friday 

US and Chinese officials have reportedly intensified discussions to extend the current trade truce and explore potential agreements on agricultural purchases, AI safeguards, and supply chain resilience. A successful meeting between the two leaders this week could therefore provide an extra boost for Chinese equities, which have lagged their Asian peers even as regional markets rallied last month due to AI optimism and easing concerns over the Iran war.

Last week:

UK elections

Sir Kier Starmer has insisted he will carry on as prime minister despite a disastrous set of local election results for Labour which have seen his own MPs call for his resignation. Local election results showed Nigel Farage’s Reform UK making sweeping gains, while  Starmer’s Labour Party lost more than half the seats it was defending, fuelling political uncertainty. The turmoil has caused 30-year UK bond yields to rise to 5.81%, their highest level since July 1998.

US nonfarm payroll data 

Nonfarm payrolls in April increased for the second consecutive month, marking the strongest two-month period for nonfarm payroll increases since 2024. The US economy added 115,000 jobs, up from a forecast of 62,000, while last month’s initial print of 178,000 is now 185,000. Job gains in healthcare, transportation and warehousing, and retail were notable drivers. The unemployment rate remained at 4.3%. However, the percentage of people working or seeking work fell to the lowest level since October 2021.

The infoshot to help kick-start your week

Coming up this week:

Iran ceasefire under threat as tensions escalate

All eyes will be on the conflict in Iran after tensions escalated during the Bank Holiday weekend. Yesterday, President Trump announced operation “Project Freedom” in an attempt to help the hundreds of ships trapped in the Strait of Hormuz. Trump warned Iran’s forces they would be “blown off the face of the Earth” if they attacked US ships. Countering, Iran threatened to strike any US navy ship approaching the Strait and claimed to have struck a US frigate with missiles. This weekend, the UAE accused Iran of firing missiles into the region for the first time since the ceasefire. The ceasefire is now in its fourth week. American military have had time to restock and refuel, and if a deal can’t be reached the situation could be set to escalate.

Complicating the situation further, on Saturday, Beijing ordered Chinese companies to defy US sanctions on private refiners linked to the Iranian oil trade. China purchased more than 80% of Iran’s oil exports in 2025. Ahead of Xi Jinping’s summit with Trump later this month, Beijing appears to be taking a more aggressive stance on trade and US investments. For example, last week they blocked Meta’s $2bn purchase of AI agent developer Manus. 

US payroll data – Wednesday 

US payroll numbers recovered in March, climbing by 178K. Another set of strong numbers this week, combined with rising inflation, would lower the pressure on the Fed to cut interest rates this year.

Last week:

Interest rate decisions

As expected, the Bank of England, Federal Reserve, Bank of Japan and ECB all held interest rates last week. The Bank of England said further rate rises were likely due to the Iran war and its impact on energy prices and inflation. The Bank estimates average household gas and electric bills will rise from £1,641 to “close to £1,900” in July. They also think food inflation could rise to 4.6% by September.

Over in the US, Jerome Powell chaired the Fed Committee for the last time. During the press conference afterwards, he announced that he will remain on the Fed’s Board of Governors until the investigations against him and the Fed are “well and truly over, with transparency and finality”. 

Big tech contributes to best month of the year while US public debt exceeds GDP

Amazon, Alphabet and Microsoft all demonstrated returns from their AI investments during their Q1 reports last week. Double digit gains were achieved in cloud computing units as the firms benefited from the intense demand for AI infrastructure. Palantir also reported sharp growth with US revenue up 133% as they try to make their AI Platform (AIP) the default option for US firms. The largely positive earnings reports from US firms have helped the largest US index record its best month since November. Meta, who don’t do cloud computing, failed to meet expectations and their plans to increase capital expenditure were met with alarm from investors. Though Meta CEO, Mark Zuckerberg, said the business was “on track to deliver personal super-intelligence to billions of people”. Meta, Microsoft and Amazon all announced or confirmed an array of layoffs as they continue to shrink their workforces.

AI spending helped US GDP rise to 2% during the first quarter of 2026. However, last week’s reading wasn’t enough to stop US public debt exceeding US annual GDP. On Thursday, the Committee for a Responsible Budget (CRFB) announced that US public debt has now reached $31.27tn, surpassing the country’s $31.22tn annual GDP. This is the first time US public debt has exceeded the size of its economy since World War Two. The nation’s gross debt, including money the federal government owes to itself, is approaching $39tn. The US is spending more servicing interest payments than it does funding defence or Medicare.  

The infoshot to help kick-start your week

Coming up this week:

Interest rate decisions – Tuesday to Thursday

The Federal Reserve, Bank of England, Bank of Japan and the European Central Bank will all hold meetings this week to make their latest decisions on interest rates. Across the board, no rate changes are widely expected. However, analysts and investors will have a firm eye on the statements and guidance to gauge the likelihood of rate changes later in the year and get a better grasp of the economic fallout from the conflict in Iran.

This week’s Federal Reserve meeting could be the last presided over by Jerome Powell. His likely successor, Kevin Warsh, faced some tough questioning from senators during his confirmation hearing last week. He denied Elizabeth Warren’s characterisation of him as President Trump’s “sock puppet” and said, “The president never once asked me to commit any particular interest rate decision, and nor would I ever agree to do so if he had”. Republican Senator Thom Tillis was still withholding his support due to the US Justice Department’s investigation into Jerome Powell. On Friday, it was announced that the department had dropped the investigation, potentially clearing the way for Warsh.

Mag’ 7 earnings – Wednesday & Thursday

Five of the “Magnificent Seven” tech companies report their first quarter earnings this week. Aside from earnings, the reports will also provide updates about their massive AI spending plans.

Last week:

AI helps Asian and US markets defy war

On Tuesday, Trump indefinitely extended the US’s ceasefire with Iran. During the week, Iran seized two ships, and the US continued its blockade of Iranian ports, turning thirty ships back around. Oil prices rose steadily throughout the week. However, for some markets, like the week before, AI optimism outweighed energy concerns. Japanese and South Korean markets reached record highs today. Their dominance in the semiconductor and memory chip markets has largely been behind the recent tailwinds.

US markets have fully recovered from their major slump at the end of March. 28% of large US firms have now reported their Q1 earnings, so far 84% are beating estimates.

UK updates on inflation and unemployment, BoE warning

Without a meaningful UK presence in the AI industry, the lack of progress in Iran meant UK equity markets fell last week.

The latest UK Consumer Price Inflation (CPI) from the Office for National Statistics (ONS) showed inflation rose as expected by 3.3% in March. The Iran war has caused the biggest jump in fuel prices for three years.

The UK unemployment rate unexpectedly fell to 4.9%. The fall was driven by an increase in the number of people not actively seeking work, including fewer students looking for work while studying. This meant the inactivity rate rose from 20.7% to 21%.

On Friday, the Bank of England (BoE) issued another warning about inflated stock market valuations. The bank’s Deputy Governor, Sarah Breeden warned, “There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.” She didn’t suggest when or by how much markets could fall but said she feared the impact of risks like private credit and the AI boom crystalising at the same time.

DeepSeek spares markets this time around

DeepSeek, the Chinese AI startup who shook up markets in January 2025, launched a preview of their new model on Friday. It didn’t disturb markets like it did last year (Nvidia actually finished the week at a record high), but the pricing is significantly cheaper than its American counterparts and it’s easier to optimise, raising questions for DeepSeek’s US rivals. That said, Tesla has announced that their capital expenditure plan for 2026 will treble in order to invest more in AI, robotaxis and robotics, and Meta will cut staff by 10% to compensate for already-announced increases in AI spending. We would expect market watchers to take a keen interest in the evolution of earnings from, and investment in, AI that will be announced by other “Magnificent Seven” companies later in the week.

The infoshot to help kick-start your week

Coming up this week:

Starmer addresses parliament about Mandelson vetting scandal – Monday

Prime Minister Sir Keir Starmer is set to address MPs this afternoon over the Peter Mandelson vetting scandal. Starmer is under pressure following the news that the Foreign Office overruled Mandelson’s vetting failure so he could become British Ambassador to the United States in December 2024. Starmer says he was not informed of the Foreign Office’s decision.

Despite calls from opposition leaders for Starmer to resign, reports suggest it’s unlikely Labour MPs will also call for his resignation. Investors will be keeping an eye on today’s statement to gauge how long-lasting and impactful the current political turmoil might be. 

Kevin Warsh confirmation hearing – Tuesday

Kevin Warsh, Trump’s pick to succeed Jerome Powell as Chair of the Federal Reserve, will testify in front of the Senate Banking Committee tomorrow. His nomination must be approved by a majority of the committee before a full Senate vote.

Powell’s term is set to end on 15 May 2026. Last week, Trump threatened to fire Powell if he doesn’t step aside at the end of his term. Powell is planning to remain in his post until Warsh is confirmed in the Senate. Several Republicans have said they will block Warsh’s appointment until the criminal investigation into Powell over the renovation of the Federal Reserve office is dropped. 

UK CPI (March) – Wednesday

On Wednesday, the Office for National Statistics (ONS) will release the latest Consumer Price Index (CPI) report. The data will provide an insight into the war in Iran’s impact on inflation here in the UK. The current forecast is for the annual CPI rate to increase from 3% to 3.3%.

Last week:

Positive week for markets as they ride the conflict wave

Broadly speaking, markets across the globe had a positive week following several optimistic updates about an end to the conflict in Iran, and the reopening of the Strait of Hormuz. On Wednesday, President Trump said the war was “close to over” and that during a call with President Xi, China was very happy that he was “permanently opening” the strait.

However, after being briefly reopened on Friday, the shipping route was shut again Saturday evening. The Islamic Revolutionary Guard Corps Navy (IRGCN) said it would stay closed until the US lifted its blockade on Iranian ports. Trump said the blockade will remain in place until a peace deal can be reached. Oil prices have risen in response to the closure. However, this morning Japanese markets haven’t fallen in tandem for a change as optimism around the AI sector has trumped concerns about the crisis in the Middle East.

A resolution still looks some way off. Iranian state media have reported that Iran are not planning to take part in another round of peace talks. Trump has again threatened to destroy power plants and bridges if a deal can’t be reached.

UK GDP better than expected

The latest GDP report from the Office for National Statistics (ONS) showed UK GDP increased 0.5% in February. That’s higher than the 0.1% forecast. January’s flatlining figure was also revised upwards to 0.1%. Strong performances in services and manufacturing contributed heavily to the growth.

In contrast, the International Monetary Fund (IMF) cut its growth prospects for the UK due to the knock-on effects of the Iran war. The IMF estimates that UK GDP will rise by just 0.8% this year, down from the previous forecast of 1.3%. The 0.5% cut is bigger than the downgrades for the other G7 countries.

Big US banks break records

Market volatility, and its subsequent increase in client trades, helped several major US banks post record-breaking profit numbers last week. Collectively, Bank of America, Morgan Stanley, Goldman Sachs, JP Morgan, Citi and Wells Fargo have taken in $47.4bn in profits in the first quarter of 2026