Macroeconomics

European bank results for the first quarter of 2026 have revealed a strong start to the year, allaying some of the concern that the prolonged conflict in the Middle East might impact bank fundamentals to some extent.

Credit markets have been remarkably resilient in the face of significant geopolitical and macroeconomic volatility in recent weeks.

With tensions in the Strait of Hormuz increasing over the weekend and markets getting used to oil prices well in excess of $100 per barrel, this seems an opportune moment to zoom out and look at the state of play in fixed income markets, considering the unsettling reality of a longer-than-expected conflict in the Middle East.

With no end in sight to the US-Israeli war with Iran, and tensions escalating once again over the weekend, investors are bracing for more volatility. Inflation fears have ramped up significantly, reflected clearly in government bond markets where rising yields show rate cuts being priced out and rate hikes increasingly being priced in.

We have had an eventful few weeks of AI-driven volatility in markets, with markets seemingly swinging from “everyone’s a winner” to “everyone’s a loser” faster than technological progress itself.

News of governments achieving their budgetary objectives or borrowing less than market forecasts has been a rarity in the last few decades.

As Jerome Powell enters his final months at the helm of the Federal Reserve (Fed), market participants have been busy analysing the past speeches of his nominated replacement, Kevin Warsh, with the aim of forming a view as to how his hand is likely to be played.

Amidst an economic data blackout caused by the US government shutdown, markets received a bit of positive news on Friday with the release of the US CPI report which showed consumer prices in September increased at a slower pace than expected.

The labour market in the UK continues to cool off along the lines of what the Bank of England (BoE) expects. Yesterday, the Office for National Statistics (ONS), released its monthly labour market data report, highlighting a rise in the unemployment rate and a reduction in some wage inflation measures.

France is in the news again. Prime Minister Lecornu became the latest casualty of the French politics saga that began just over a year ago when president Macron called a surprise early election.

Last week was one of the most volatile on record. President Trump's announcement of a 90-day pause in reciprocal tariffs for every country bar China sparked one of the largest rallies in equity indices in recent history.

With the recent economic spotlight dominated by President Trump’s rhetoric and Germany’s blockbuster fiscal expansion plans, Wednesday brought the UK back into focus with the latest round of inflation data and the Spring Statement from the Chancellor, Rachel Reeves.