The UK’s labour market remains “stubbornly inflationary”, with unemployment up 0.2% year-on-year in Q2 2026 to 4.9%.

UK inflation rose by 2.9% in the 12 months prior to July 2026, according to data from the Office for National Statistics (ONS).

The government borrowed more than expected in July, according to figures published as Chancellor John Healey draws up his first Budget as reported by the BBC. The ONS said borrowing, the gap between what the government spends and what it collects in tax, was £1.8bn during the month.

Official forecasters had expected a surplus of £500m, meaning the government borrowed £2.3bn more than predicted. Economists warned the figure will restrict Healey and Prime Minister Andy Burnham’s room for manoeuvre as they target measures aimed at easing the cost of living for households, with little room to increase borrowing in the Budget on 27 October. [Ed – terrific!!!]

All in all, it has not been the best week for the UK economy which doesn’t seem to be the fittest at the moment. It seems we need to rig a toning session up for the economy somehow, but then I could do with one too.

Despite that the FTSE100 share index ended the week on a positive note as data showed the UK private sector sped up in August and a soaring gold price supported miners.

On Wednesday US Treasury secretary Scott Bessent tried to calm bond markets by announcing the Treasury would double the size of a bond buyback programme starting next month to $4bn (£2.9bn). This is an attempt to reduce the supply of 10-year to 30-year bonds and boost their prices. However, US long-term government bonds were sold off again the following day.

David E. Rovella at Bloomberg says this signals that Wall Street’s verdict is in. The buyback proposal won’t remedy the growing problem faced by the federal government when it comes to borrowing costs. A rally in bonds fizzled out and stocks fell on bets the Treasury’s plan to curb the massive expense is just a short-term fix.

Thirty-year yields rose even as the Treasury Secretary touted the potential for a bigger buyback in an upcoming fiscal plan. The latest action on Wall Street follows a series of Treasury decisions that have signalled growing concern about rising long-term yields. Government financing costs are trickling down to the broader economy. The $40 trillion bill, it would seem, is coming due.

“My view is that the ‘Bessent put’ is still going to fail to keep yields down from multi-decade highs over the longer term,” said Hardika Singh at Fundstrat Global Advisors. “Making yields go down over the longer period will require the painful work of bringing down the debt.”

So, in summary, a slightly disappointing week on the far side of the pond but better here. That’s where truly diversified portfolios come into their own!

Market Commentary

In their latest Weekly Digest, Rathbones’ Senior Asset Allocation Analyst Adam Hoyes observes the striking parallel between Sheffield Wednesday’s difficult season and the Japanese yen’s recent weakness. Both have hit historic lows, before showing tentative signs of recovery with a little outside assistance. While short-term volatility remains inevitable for both, underlying fundamentals suggest that, over the long run, better days lie ahead.

While short-term currency moves are notoriously difficult to predict, the picture over longer time horizons is clearer – almost every exchange rate model we look at, including our own, points to the yen being significantly undervalued. Coordinated intervention from Japan’s Ministry of Finance and the US Treasury has provided some near-term support, but the real case for optimism rests on fundamentals.

With the Bank of Japan adopting a more hawkish stance and Japan remaining remarkably cheap for its level of development, we believe the yen has more room to strengthen than to weaken. As a result, we’re comfortable continuing to hold Japanese equities without hedging the currency exposure.

This week Janet Mui, head of market analysis at RBC Brewin Dolphin, presents three key factors supporting market resilience despite continued tensions in the Middle East and cooler economic data.

Key highlights

• Cooling data provides breathing room: Signs of slower economic momentum reduced pressure on the Federal Reserve to immediately raise interest rates.
• Markets are learning to live with geopolitical risk: Despite continuous tension between the U.S. and Iran and disruption to The Strait of Hormuz, the S&P 500 reached fresh highs.
• Strong profits are supporting the bull market: An exceptional U.S. earnings season and growing evidence of AI monetisation are helping broaden the equity rally beyond a handful of technology leaders.

Watch here

And with an appearance a little later than usual [Ed – were you panicking?] the Team at Tatton Investment Management have prepared their usual offering in this week’s Tatton Weekly covering the following:

• The might of the bond market returns- Bond markets woke wider capital markets from their summer doze with fears that ever-higher yields bond markets may scare away Goldie-Locks. Even the fearless Trump administration seems to have taken note.
• What’s gone wrong with bond yields? – Government bond yields keep rising and have now become a headwind for equity markets. Are fears of resurging inflation and fiscal recklessness to blame? Our insight piece opens the lid on an otherwise unpopularly tricky subject. 
• Unitree: The $50 Billion Robot – Despite questions in the West over security and scalability, a Chinese robotics business debut on the stock market catapulted its value from $9bn to $50bn, and it’s not even the biggest robotics firm in China.

Deever, diva, diev, Oh, What’s It Called?

Two-thirds of the way through 2026 (nearly). It FEELS like a lot has happened. And a quick scroll through the Wikipedia entry for 2026 kind of backs that up …

Source: Wikipedia. It’s not even the end of August!

Venezuela! 😲 AI! 😲 Iran! 😲 Oil! 😲AI, but a different bit! 😲 Space X! 😲 Trump! 😲 Inflation! 😲

But if you hadn’t been able to read the headlines, and just used market movements to set your emotional temperature, it’s been a different story. 

We’ve pulled out one of our favourite charts; Big Market Days (BMDs for short).

Instead of talking about “volatility” or “standard deviation”, we just do some counting, looking at the number of days where a market moves up or down by large (more than 1%) amounts. Doesn’t matter if it’s up or down, it’s just about how bumpy the journey through the year is.

 And if you look at the S&P 500 in 2026, we’re tracking to be a little below average. 30 BMDs so far, vs. an average of 53 per year (since 1954). Still four months to go, but a smooth road so far. 

Source: LSEG/7IM, 2026 data is to August 14^th, past performance is not a guide to future returns.

It’s the same story in the FTSE All-Share: 29 days so far in 2026, vs an average of 61 BMDs (let us know if you want the chart). Smooth sailing.

The one place it HASN’T been calm is in South Korea. The KOSPI 200 (the FTSE equivalent) has already had113 BMDs (since 1992 as that’s as far back as the data goes).

Source: LSEG/7IM, 2026 data is to August 14^th, past performance is not a guide to future returns.

But it’s actually WAAAAY worse than that. The KOSPI 200 has moved by more than 4% on 48 days this year. I guess you’d call them VVVBMD’s. 

That’s a third of all trading days this year. And for added context, the S&P 500 hashad 28 “4%-er” days in the last 15 years! 

The problem is simple. The KOSPI 200 is really the KOSPI TWO.

Source: KOSPI

Two AI/Semiconductor/Tech companies make up 60% of the index, and boy are they pinging around, dragging the other 192 companies with them. Not nice if you’re a Korean passive investor.

If only there were a word for not-having-too-much-concentration …

IS A Cash Holding the Best Way?

To show the scale and widespread use of cash ISAs, Mehir Choughule at Tideway provides some statistics below – all from the most recent data published by HMRC:

• In 2023/24, 15 million adult ISAs were opened, out of which around 10 million were cash ISAs (an increase of c27% from the previous tax year);
• £360 billion was held in cash ISAs as of 2023/24;
• Interestingly, AJ Bell has done further analysis here and over 1 million ISA holders have over £50,000 in cash ISAs but nothing in Stocks and Shares ISAs

There are obviously caveats to data such as the above – interest rates surged in 2022, which were reflected in attractive cash ISA rates around that period, and there are households who treat cash ISAs as proxies for their emergency or ‘rainy day’ fund (and this will be the right decision for a lot of them).

However, this is increasingly coming into the crosshairs of the government, and there have been changes announced that will come into effect from next tax year with regards to cash ISAs:

• The annual cash ISA allowance for under-65s will decrease to £12,000 (although the overall limit remains at £20,000).
• Under-65s cannot transfer from a Stocks & Shares ISA to a cash ISA.
• A new 22% tax charge will apply to interest earned in uninvested cash inside a Stocks & Shares ISA to close off any potential loopholes.
• Money Market funds can still be held in investment ISAs, but they cannot make up 100% of a portfolio.

As we have seen in the past, it’s unlikely that any tax changes will stop there, particularly as the need to find new taxes continues to grow.

So, what are the solutions? A common misconception that we have heard is that you must hold stocks (i.e. equities) within a Stocks & Shares ISA (perhaps a branding issue) and this is off-putting if you are a nervous or inexperienced investor. However, there is no need for you to take an extreme approach, where you are either 100% cash or 100% equities – there is a ‘middle’ way, with fixed income, which marries higher returns than cash with significantly less volatility than equities.

The main advantage of an ISA is its tax-free nature and, therefore, the greatest benefit is its ability to shield its owners from Income Tax – particularly if they pay tax at 40% or 45%. Hence, if you can hold income-generating assets within the ISA, you not only could save yourself some tax, but you also benefit from capital growth above what you would get in cash rates.

An example of how some fixed income-only models have performed alongside cash rates can be seen below to illustrate the paragraph above:

This demonstrates that you do not need to take a great amount of risk to outperform cash ISA rates. If you would like to know more, please speak to your usual JB Wealth Advisor.

Unusual Stuff That I have Seen

Silvano Boatto, Ing MRICS Registered Valuer, Founder & Principal, REAL ALPHA, posted in LinkedIn

𝗧𝗵𝗲 “𝗜𝗰𝗲 𝗦𝗶𝗹𝗸 𝗥𝗼𝗮𝗱” 𝗶𝘀 𝗺𝗼𝘃𝗶𝗻𝗴 𝗳𝗿𝗼𝗺 𝗴𝗲𝗼𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗰𝗼𝗻𝗰𝗲𝗽𝘁 𝘁𝗼 𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗶𝗮𝗹 𝗲𝘅𝗽𝗲𝗿𝗶𝗺𝗲𝗻𝘁.

China’s Sea Legend has launched a scheduled seasonal container service between Ningbo-Zhoushan and Northern Europe via Russia’s 𝗡𝗼𝗿𝘁𝗵𝗲𝗿𝗻 𝗦𝗲𝗮 𝗥𝗼𝘂𝘁𝗲, with transit times of 𝗿𝗼𝘂𝗴𝗵𝗹𝘆 𝟮𝟬 𝗱𝗮𝘆𝘀 to Felixstowe — potentially around half the time required by conventional Asia–Europe maritime routes.

The significance is not the current volume, which remains marginal compared with Suez. It is the emergence of a 𝘁𝗵𝗶𝗿𝗱𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰 𝗔𝘀𝗶𝗮–𝗘𝘂𝗿𝗼𝗽𝗲 𝗹𝗼𝗴𝗶𝘀𝘁𝗶𝗰𝘀 𝗰𝗼𝗿𝗿𝗶𝗱𝗼𝗿, alongside Suez and the Cape of Good Hope.

For investors, the implications extend well beyond shipping:

• new relevance for Northern European ports and logistics hubs;
• potential changes in warehouse and distribution-network geography;
• increasing strategic value of Arctic infrastructure, energy and connectivity;
• greater optionality in global supply chains exposed to geopolitical chokepoints.

There are still major constraints: seasonality, insurance, ice conditions, infrastructure, and geopolitical risk mean that the Northern Sea Route is not yet a substitute for Suez.

But the direction of travel is worth watching. If regularity, vessel size, and navigation windows continue to improve, the Arctic could gradually alter the economics — and eventually the 𝗿𝗲𝗮𝗹 𝗲𝘀𝘁𝗮𝘁𝗲 𝗴𝗲𝗼𝗴𝗿𝗮𝗽𝗵𝘆 — of Europe–Asia trade.

Quartet Investment Management Fun fact

Jackson Hole, which will host the world’s central bankers next week, was originally an agricultural economics conference. It has since become one of the most closely watched events in global financial markets, with past speeches triggering significant market moves.

From Jeremy Clarkson to Jeremy Seigel perhaps!!

Miscellaneous

The number of estates claiming money back due to overpaid inheritance tax (IHT) for losses on property more than doubled last year reports MoneyWeek. Families that reclaimed overpaid IHT for losses on property sales surged from 5,070 in 2024/25 to 10,550 in 2025/26, according to new Freedom of Information (FOI) figures. It comes after a major slowdown in house prices, particularly in London and the Southeast, where estates are more likely to have an IHT liability due to higher property values. The latest data from HMRC shows 55% of the IHT taken in England in 2023/24 came from estates in these two regions.

Despite this Cover magazine announces that Inheritance tax (IHT) receipts for April 2026 to July 2026 were £3.2bn, £100m higher than the same period last year. For July, IHT receipts totalled £868m, compared to the £844m recorded in July 2025. This continued rise followed receipts of £871m in June 2026 and came after a fifth consecutive record year for IHT receipts, which reached £8.5bn in 2025/26. Simon Martin, head of UK technical services, Utmost, said the increase in IHT revenues raises questions about the UK’s attractiveness to wealthy individuals. “While these changes may increase tax revenues in the short-term, it raises wider questions about the UK’s attractiveness to entrepreneurs and wealth creators who are more internationally mobile than ever, particularly when other jurisdictions offer significantly more competitive tax regimes,” he said. “Albeit down on last month, IHT revenues remain well above historical levels, reflecting the continued impact of frozen thresholds alongside rising asset values, which are bringing more families within scope of the tax.

Diverting cash away from local council pension schemes could help fund social care, according to Baroness Ros Altmann, in another piece from MoneyWeek. The former pensions minister and current member of the House of Lords said the Local Government Pension Scheme (LGPS) for England and Wales had a record surplus at end-March 2025, with an estimated £150bn more than needed to pay the promised pensions. She said local authorities were “wasting council tax on pension contributions” which could be used for social care instead. She explained how in recent years, councils have spent about £1 in every £4 on pension contributions and may only be planning to reduce to £1 in every £5, which Altmann said is still too much. “Freedom of Information request responses from 254 of 317 councils showed that local authorities spent an average of 23.5 per cent of council tax revenue on pension contributions,” Altmann said.

I have an 80^th birthday party to attend this weekend so I’m off to see how many of the extended family I can remember and to relive those embarrassing stories of things that happened as a child that I’d managed to convince myself weren’t real! Whatever is left of my ego has next week off to recover so I hope to catch up with you next time.