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July saw a real shift in investors’ focus across equity markets and regions. The month was marked by a sharp sell-off in technology and AI-related stocks. The sell off begun in Asian where semiconductor stocks tumbled over rising concerns about competition and the potential impact soaring RAM prices might have on the appetite for AI. Chinese firm, Moonshot AI, unveiled new models that narrow the performance gap with US systems at significantly lower costs. According to OpenRouter, Chinese models made up 46% of all token usage by US companies at the start of July, raising further question marks over the long-term prospects for American LLMs and the investments being made by big tech…

Last week’s CPI release by the Bureau of Labor Statistics showed annual US inflation cooled to 3.4% taking some pressure off the Federal Reserve to raise interest rates. The odds of a rate hike at the next meeting in September have fallen to 42%.

On Wednesday, the Treasury Department reported that the US budget deficit soared to its highest monthly level in more than five years…

US markets bounced back last week, with their leading tech index up nearly 5% – its best week since April.

Optimism around the potential reopening of the Strait of Hormuz boosted markets in general. An array of strong quarterly earnings reports bought back some confidence in potential big tech profit growth. The highlight being a 93% quarterly revenue increase at Palantir which saw the stock surge 29.5% at the beginning of the week.

However, not everyone is convinced…

US Treasuries have been back in the news this week following the US’s intervention to prop up the yen in Japan. With Japan holding more US Federal debt than any other nation, the American’s can ill afford a situation where the yen drops so low they must sell off their US bonds.

While the US dollar remains the anchor of the global financial system, with dollar‑denominated assets forming the core of official foreign exchange reserves, recent data indicates a measurable shift in reserve composition (hence why Japan overtook China as the largest holder of US Treasuries in 2019) and, more importantly, in how incremental reserves are allocated…

Following a 9-3 vote, the Federal Reserve held interest rates for the fifth time in a row on Wednesday.

With prices rising well above the Fed’s 2% inflation target, and the ongoing situation in Iran constantly muddying the inflation picture, the Fed has been coming under increasing pressure to raise rates.

During a tough press conference, Fed Chair Kevin Warsh’s responded to questions over why the Fed didn’t hike rates saying, “we will deliver, we are focused like a laser on making sure we can do it, but the suggestion we are going to wave a magic wand is one I want to disabuse you and everyone else of.” Bond markets reacted badly to the news sending 30-year US treasury yields past 5.2% and their highest level in two decades…

New Prime Minister Andy Burnham received some positive economic data in his first week as PM. 10-year gilt yields eased to 5.07% on the back of news that retail sales rose 1% in June, beating expectations of a 0.3% decline. The World Cup and consistent sunshine helped contribute to the extra spending. Consumer confidence is now at a six-month high too. PMI data also showed UK business activity has returned to growth.

Counter to press expectations, Andy Burnham named John Healey as Chancellor. Healey resigned as Defence Secretary just six weeks ago in a row over military spending. UK defence stocks like Babcock and BAE surged on the news and the likelihood that Healey will increase defence spending from 2.7% to 3%…