The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- Anthropic boss calls for AI industry to slow down – Dario Amodei, Head of AI company Anthropic, published an online essay calling for the pace of AI model development to slow down and to be closely monitored.
- Houthis threaten the Bab el-Mandeb Strait – the Iran-backed militant group tightened their grip on the Strait (accounts for ~10% of seaborne oil trade), capturing the key Yemeni port of Mokha from Saudi-backed government forces.
- US diesel prices hit new all-time high – last Friday, US diesel prices passed the symbolic $6 per gallon level for the first time ever and continued rising. The Iran War, exacerbated by Ukrainian attacks on Russian refineries, has choked global supply.
- The Fed raises rates – the US Federal Reserve (Fed) raised interest rates by 0.25% on Wednesday, citing persistent above-target inflation and a resilient labour market. Predictably unhappy with the decision, President Trump claimed that interest rates in the US “should be 1%, or less”.
- UK inflation ticks up in August – the UK’s annual inflation rate rose to 3.1% in August. Rising fuel prices were the largest upward contributor. While significantly above the Bank of England’s (BoE) 2% target, core inflation was unchanged, suggesting the recent energy shock is yet to feed through into the wider economy.
What this means for financial advisers and clients
Pacing the frontier
Anthropic boss Dario Amodei, developer of popular large language model Claude, led calls for a slow down in the rate of AI development. He was joined by Elon Musk and OpenAI boss Sam Altman in a rare case of tech-boss collaboration. In his essay titled ‘We Must Pace the Frontier’, Amodei warned that AI development had been accelerating at a ‘drastically faster’ rate over the summer, primarily driven by its ability to self-develop new code. 80-90% of Claude code is now generated automatically, by Claude itself. As AI’s capabilities grow, so do the risks, including the threat of rogue ‘AI agents’ capable of disrupting or taking over large portions of the internet.
Amodei proposed a three-point plan to address his concerns, largely focussed on independent oversight and a common safety standard. President Trump rejected such calls, arguing the only oversight needed was a ‘capable president’. AI stocks nevertheless sold off. Investors fear any sort of slowdown in development, which could hamper future growth in the sector.
Energy market turmoil
Recent developments in the Middle East are creating further upheaval in global energy markets. The Houthis, an Iran-backed militant group from northern Yemen, have been fighting Saudi-backed government forces in a civil war dating back to 2014. Over the weekend, the group captured the port city of Mokha, which sits just north of the Bab El-Mandeb Strait. The Strait, which sits at the southern end of the Red Sea, is a critical maritime chokepoint. It handles 12% of all global trade, including 11% of maritime oil.
Seizing the city, along with several strategic islands within the Strait itself, would give the Houthis significant leverage in the Yemen conflict. The developments also hand Iran another bargaining chip in its conflict with the US. If enforced, a full blockade would further isolate Gulf oil producers, further complicating the supply picture and forcing up already elevated prices.
To hike or not to hike?
This weeks’ central bank policy decisions give us insight into how key policymakers view the health of their respective economies.
In the US, the Fed raised rates by 0.25%, defying a president who has repeatedly sought to use his influence to lower rates. Fed Chairman Kevin Warsh was clear, saying inflation “is too high and has been for too long”. Officials believe the US economy is strengthening: consumer spending, capital investment and the labour market have all proved resilient, allowing policymakers to focus on tempering inflation.
In the UK, the BoE held rates at its Thursday meeting. While the inflation outlook is similar to the US, economic indicators are far more mixed. The domestic labour market remains relatively subdued, with pay growth at a six-year low and the fewest new job vacancies since 2021. Policymakers will continue to walk a tightrope as they look to rein in pricing pressures without doing undue damage to the UK’s fragile economy.
Chart of the week: the political reality of high gas prices
Source: Politico, 2026
Why’s this worth sharing?
Energy prices can have consequences far beyond the pump – analysis from Politico suggests that higher gas (petrol) prices can influence US election outcomes.
The mid-terms are now less than 50 days away, and while President Trump is not on the ballot, his party is. As a general rule, the incumbent party loses seats at the mid-term elections (though there are exceptions). These losses have generally been worse when gas prices have increased. In mid-term elections since 1978, Politico’s analysis shows the incumbent party has lost 25 more congressional seats following gas price hikes.
With fuel prices currently hovering around all-time highs, could Republicans suffer outsized losses in November? Trump’s party currently controls both chambers (House & Senate). The loss of one (Democrats are heavily favoured to win back the House) or both (recent polls suggest the Senate race is too close to call) would severely curtail Presidential power in the final two years of the Trump era.
For advisers, it's a useful reminder that geopolitical events can quickly feed through into markets and economic expectations. While today's headlines are focused on the Middle East and energy supply, the longer-term implications may be felt across inflation, interest rates and investment returns.
The Markets
UK: Equities gained after the release of August’s in-line-with-consensus inflation report, which eased pressure on the BoE.
US: The tech heavy Nasdaq gained, other indices fell back. UK investors benefitted from a weaker pound.
Europe (ex UK): Lost ground early in the week before recovering. The pound weakened versus the euro.
Japan: Equities gained, export-focussed stocks continued to benefit from the weak yen.
Asia Pacific ex Japan: South Korean stocks lost ground but were partially offset by muted gains from Taiwanese and Chinese equities.
| Name | Weekly change | YTD change |
|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | 1.22% | -1.28% |
| IA Sterling Corporate Bond | 0.29% | -0.51% |
| IA Global High Yield Bond | 0.21% | 1.69% |
| FTSE All Share | 1.55% | 11.62% |
| FTSE USA | 1.13% | 13.04% |
| FTSE World Europe ex UK | 0.43% | 9.46% |
| FTSE Japan | 1.18% | 21.94% |
| FTSE Asia Pacific ex Japan | -0.35% | 21.27% |
| FTSE Emerging | 0.35% | 11.47% |
Source: FE. GBP returns as at close of business on Thursday 17th September 2026.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
