The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- Global bond sell-off – long dated government bond yields around the world have spiked over the last week as investors are demanding higher returns to hold government debt. UK 10-year gilt yields reached 5.3%, the highest since 2008, with 30-year gilts reaching a 28-year high at 5.89%. US Treasury notes reached 4.8% and the 30-year bond is around the highest it’s been in two decades.
- Shein lists on the stock market with $26bn valuation – fast fashion retailer Shein had its first day of public trading in Hong Kong on Monday. There was a long journey towards trading on the stock market after attempts to list in the UK and US.
- Dell forecasts AI server revenue to treble – Dell computers announced it's expecting its AI server revenue to treble this year, as companies race to build data centres. It has also built a backlog of AI server orders beyond what it can output.
- Diesel crack spread exceeds $100 – the crack spread measures the gap between the price of crude oil and diesel. It has risen to above $100 for the first time in Europe, driven by the escalating US-Iran conflict and Russia's extended ban on diesel exports. The diesel price in the US has also now reached an all-time high.
- Argentina threatens oil firms – Argentina heightened tensions with the UK over the Falkland Islands during a presidential speech from Javier Milei. Milei warned that he’d impose economic sanctions on firms exploring for or extracting oil near the territory. Two companies, Britain's Rockhopper and Israel's Navitas Petroleum, are due to begin oil extraction within the next two years. It’s not clear yet as to what the sanctions will be, but given the state of oil now, it won’t help ease the prices.
What this means for financial advisers and clients
The yield is not enough
There’s been a global bond sell-off, driven by several factors, including US debt breaching $40tn, expectations that central banks will have to raise interest rates, and fundraising for AI development competing with government bond sales.
In the UK, Andy Burnham will have to present his Budget next month, and this extra cost of borrowing will eat away at his fiscal headroom. He’s promised to not fund government spending by increasing borrowing, so taxation and cost cutting might be his only options to raise money for any spending plans.
Higher bond yields could lead to higher mortgage and borrowing costs while also supporting annuity rates.
Long-term bond prices have fallen, but higher yields can also weigh on equity markets. They sometimes make bonds appear more attractive than shares, especially for companies where the earnings potential lies in the future.
There was some calm at the end of the week, as US central banker Christopher Waller said he’d keep US rates unchanged this month.
Find out more about the global bond sell-off and our approach with our recent update: What’s behind the Global Bond sell off?
Shein lost its sheen?
Shein debuted on the stock market on Monday, and it’s been a long time coming. It was valued at $26.2bn at the end of its first day of trading but had previously been expected to raise $100bn.
At one point, it was looking to list in both the UK and US, to get more global access to investors. With so few listings on the London Stock Exchange, you might have expected Shein to be welcomed with open arms. However, questions around its supply chains and environmental impact ultimately kept it away.
The company has more than 273mn monthly active users placing a billion orders a year, but now it faces regulatory scrutiny from many governments around the world. How Shein fares as a public company could become a test for the fast fashion sector more broadly. Maintaining ultra-low prices may become more challenging as regulators and governments continue to scrutinise its practices.
Diesel’s crevasse widens
The crack price of diesel is an important measure, and it’s been increasing even as oil prices have gone up and down. It reflects the cost of manufacturing diesel, rather than the sentiment around oil itself. And this level is unprecedented.
Diesel is used in logistics, with heavy goods vehicles, cargo ships and trains relying on it, so it can reflect industrial output. Diesel is also widely used in agriculture. With harvesting under way across the northern hemisphere and planting season beginning in parts of the southern hemisphere, demand remains high globally. Farmers could see their entire year’s profits wiped out due to the cost of diesel if they hadn’t fixed costs or bought in advance.
The high price of diesel will weigh heavily on inflation, as it could push up the cost of goods and food worldwide.
Chart of the week: Wedding costs
Why’s this worth sharing?
Based on this survey, the median Brit thinks a wedding should cost no more than £6,000, rising to £9,477 using a mean average.
Those who’ve got married or have supported children pay for a wedding will know that’s far from the actual cost.
We all know wedding vendors tend to charge more for things that cost less for other occasions, there is a wedding “tax”, after all. So, respondents could be feeling that’s what it should cost. But it’s still far from reality.
According to Bridebook (a wedding company), the average wedding cost is £20,604 excluding the honeymoon and engagement ring. And only a quarter of couples spend £10,000 or less.
The lesson is that actual costs often end up being far higher than initial expectations.
And we could see an example of that with AI. Forecast modelling from PwC and Oxford Economics suggests that the capital expenditure on data centres worldwide could cost between $20-50tn by 2050 depending on the speed of AI adoption and regional demand.
That's a huge range, and we're not talking about small change.
Unlike other infrastructure booms, which taper off after an initial build out, investment is expected to accelerate as chips and other computer infrastructure need to be updated every few years. Committing to spending now means costs down the line. According to the Wall Street Journal, nine major tech companies have roughly $3tn in off balance-sheet commitments, far above what they’ve reported in capital expenditure. These represent enormous ongoing obligations.
Recently, AI hyperscalers' capital expenditure has come under greater scrutiny, with investors questioning whether spending levels are justified by company fundamentals. future revenues can justify these costs. But as we’re still in the early days of AI development, it’s unclear as to how much spending is necessary. While companies are expected to foot the bill, governments will also be involved and could be on the hook to help.
Like a wedding it’s very capital intensive, but you hope for a very happy future.
The Markets
UK: The global bond sell-off and energy pressures weighed on the UK, but equities steadied later in the week.
US: A difficult start to the week, due to the global bond-sell off, a cooling labour market, and rising oil prices, was followed by a late-week rally across the indices.
Europe (ex UK): Markets mirrored global volatility this week as concerns over inflation and bond markets increased.
Japan: The yen surged to a one year high which drove a sharp sell-off in domestic stocks at the start of the week, but there was a late week tech rally.
Asia Pacific ex Japan: Equities also felt the impact of the global bond rout and escalating political tensions.
Gold: Gold saw a three-month high as continued conflict in Iran and ongoing political uncertainty fuelled demand for the traditional safe-haven asset. It’s on track for its best monthly performance since 1999.
| Name | Weekly change | YTD change |
|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | -0.08% | -1.34% |
| IA Sterling Corporate Bond | -0.32% | -0.09% |
| IA Global High Yield Bond | 0.11% | 2.03% |
| FTSE All Share | -0.12% | 11.81% |
| FTSE USA | 0.92% | 13.20% |
| FTSE World Europe ex UK | -0.72% | 10.75% |
| FTSE Japan | 2.16% | 21.15% |
| FTSE Asia Pacific ex Japan | -0.79% | 21.33% |
| FTSE Emerging | -0.48% | 11.64% |
Source: FE. GBP returns as at close of business on Thursday 3rd September 2026.
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