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In 2026, the five hyperscalers (Microsoft, Amazon, Alphabet, Meta and Oracle) will spend around USD 820 billion in capex, compared with USD 750 billion in operating cash flows. This means that their investments are exceeding available cash flows and that this funding gap has to be financed through debt.

The Fed raised its interest rates by 25 basis points (bps) to 3.75–4.00% on a unanimous vote, framing the move as insurance against energy prices bleeding into core inflation, while the Bank of England held its rates at 3.75% despite a more hawkish tilt in its minutes.

The AI boom has pushed the world’s five hyperscalers (Microsoft, Amazon, Alphabet, Meta and Oracle) into a new era of financing. In 2026, their capital spending is expected to exceed operating cash flow, with investment projected to reach USD 5.6 trillion by 2030, raising fundamental questions about how this unprecedented expansion will be funded.

Oil’s surge past USD 100 a barrel amid the escalating conflict in the Middle East drove a broad sell-off in government bonds and equities last week, as inflation fears pushed yields sharply higher across the US, eurozone and UK.

US President Trump’s approval rating is among the lowest for a sitting president in post-World War II US history and leaves an 80% probability that the US House of Representatives will shift to Democratic control, with US Senate facing a 50:50 chance of switching to Democratic control.

Our outlook for risk assets remains constructive, supported by broadening earnings growth, though tempered by persistent inflation and an oil market showing little sign of easing. Against this backdrop, we are raising our target range for US 10-year yields to 4.25–4.75%, with rising yields and oil prices standing out as the principal risks to our central scenario.

Strong jobs data reignited inflation concerns and increased rate-hike odds, as escalating US-Iran tensions pushed Treasury, Bund, and gilt yields higher, though September Fed odds held steady at 60%.

The joint US-Japan yen intervention – the first coordinated currency action between the two countries in 15 years – signals how seriously policymakers now regard the yen’s weakness. While the immediate impact was substantial, the medium-to-long-term effectiveness hinges on the fundamentals, and above all on the wide US-Japan rate gap that keeps carry trades attractive and leaves the yen vulnerable unless the Bank of Japan (BoJ) tightens rates further or the US Federal Reserve makes rate cuts. What are the key hurdles the BoJ must overcome to support currency stability without undermining growth?

Warsh’s hawkish tone on core PCE and rate primacy, backed by resilient data, raised the odds of a September rate hike, while Nvidia’s guidance kept the AI cycle intact, though equity gains stayed narrow and earnings-dependent.