News & Reports Archives

Global Energy Crisis Deepens

Written by IntaCapital Swiss on September 16, 2026. Posted in News & Reports. Leave a Comment

As the United States/Iran conflict widens, Saudi Arabia has closed its crucial east/west pipeline after it was attacked by drones launched from Iraq, and officials confirm the attack originated in the southeastern province of Maysan. Saudi officials have yet to announce how badly the pipeline has been damaged, however, the president of Lipow Oil Associates suggested that a pump station had been seriously damaged and that engineers may be able to bypass the station resulting in a lower output, though on-line pictures show that repairs may take months. A meeting between the gulf states and Iran to be held in Salalah regarding the Strait of Hormuz has subsequently been cancelled due to the pipeline attack by Iran.

*Saudi Arabian East/West Pipeline – This pipeline is known as the Petroline and stretches for 746 miles from the Abqaiq oil fields in the eastern province (close to Bahrain and Qatar on the Persian Gulf coast) to the port city Yanbu on the west coast by the Red Sea. The pipeline was built during the 1980’s allowing Saudi Arabian oil exports to bypass the tanker war in the Persian Gulf, which was a result of the war between Iran and Iraq. The pipeline serves as a strategic and critical lifeline not only to Saudi Arabia but to the global economy, and is currently pumping 7 million barrels a day, which is the pipeline’s maximum capacity.

As result of the pipeline closure, the Benchmark Brent Crude price has risen and is trading today at circa $107.84 p/bl having briefly gone through the $108 p/bl mark. WTI (West Texas Intermediate) is also up, trading within a range of circa $101.81 p/bl – $103.86 p/bl, having recently surged past the $100 p/bl mark. During the past week, oil prices have continued to rise due to the on-going conflict in the Middle East, and in the US, consumers saw the retail price of diesel shoot past $6.00 per gallon, being a record price for the fuel. Experts note that supply chain difficulties are the reason for the recent surge in energy prices, and the longer the east/west pipeline remains shut, there remains the potential for further increases in energy prices.

Furthermore, Iranian backed Houthi rebels have been advancing towards coastal areas of the Red Sea which border the strategic Bab el-Mandeb Strait or Gateway*, and with the Houthis attempting to seize the Yemeni port city of Mokha, could well impact maritime security in the area – resulting in pushing crude oil prices even higher. The Houthis have already been disrupting shipping in this area through its control of Hodeida, another port city, and if they take control of Mokha this would most certainly see the rebels tightening its grip on the strait.

*Bab el-Mandeb Gateway – Often translated from Arabic as the “Gate of Tears” or the “Gate of Grief”, possibly an apt description considering the current state of affairs in the Middle East. It is located between the Horn of Africa and the Arabian Peninsula and is one of the world’s most critical maritime chokepoints, as well as a crucial shortcut between Europe and Asia. Historically, the gateway has handled circa 10% – 12% of all global trade and acts as a primary artery for energy transportation between Asia, the Middle East and Europe. Analysts advise that millions of barrels of petroleum products transit the gateway daily and its closure will have a direct effect on the global economy.

Elsewhere, European gas prices have had five weeks of consecutive gains, and at the start of this week continued to head north as risks to supply were compounded by the closure of the east/west Saudi pipeline. Due to the Middle East confrontation, LNG supplies from Qatar have been crippled and Europe is heading into winter with its lowest level of gas storage for twenty years.

Today, the competition is cut throat for LNG cargoes that do not have cross geographically charged checkpoints, and as winter approaches, experts advise there is the potential for a global fight for fuel. Data shows that the competition for LNG is intensifying in Asia where spot prices for LNG surged to levels not seen since 2022, and as buyers in Asia and Europe compete for alternative cargoes, the price for European natural gas has dramatically risen.

The IEA (International Energy Agency) has warned that oil consumption for the remainder of 2026 will fall and have accordingly cut forecasts for oil demand as the Middle East Conflict between the US and Iran continues unabated. The IEA projects that the drop in oil demand for 2026 will be 2.5 million b/pd (barrels per day), and due to the current crisis, it is estimated there will be a deeper shortfall in supply than originally advised.

Forecasts for Benchmark Brent Crude Oil at the close of 2026 vary among major financial institutions and energy advisory firms: JP Morgan projects $78/bbl, HSBC has revised its estimate to $90/bbl, the EIA (U.S. Energy Information Administration) predicts $89–$90/bbl, and Barclays maintains an average forecast of $100/bbl. Some analysts predict even higher prices, but the world waits to see if there is any conclusion to this conflict on the horizon, as consumers globally see their costs of living going forever higher.

Escalation in the Middle East Crisis as Brent Crude Hits the USD101 Mark

Written by IntaCapital Swiss on September 16, 2026. Posted in Iran, News & Reports. Leave a Comment

Benchmark Brent Crude oil climbed above $101, hitting its highest price per barrel since July this year, with recent prices being quoted at $101.69 p/bl (per barrel) with West Texan Intermediate trading at circa $96.14 p/bl. Increased concerns about the shipment of crude oil through the crucial Strait of Hormuz, due to escalating attacks within the region along with the Iranian-backed Houthi militants targeting Saudi Arabian energy facilities, have been responsible for driving up the price of crude oil.

In the meantime, the Iranian media have announced that the country will not back down in the face of increased strikes from the American task force, and have promised to escalate their counterstrikes if the United States continues to target infrastructure and oil tankers. Whilst their leaders acknowledge that the country is suffering from severe economic pain, they feel that the existential threat they are facing from the US leaves them no choice but to carry on fighting.

The US/Iran war has now entered seven months of hostilities, with comments by officials on both sides suggesting that there is little chance of the war ending in the near future. As proof of this, on Tuesday a US warship was forced to evade an attack by Iranian ballistic missiles and in response destroyed five Iranian energy tankers, with Iran then launching twenty missiles at an airbase in Jordan currently being used by the US. President Trump has continued his dialogue, suggesting that Iran is at the end of the road and the war will end immediately after the mid-term elections in November, which many observers suggest is nothing more than a gesture to the American voters.

Experts confirm that one of the main planks of the White House’s war with Iran was that the Iranian people would rise up and oust the government, but a mass uprising late last year due to severe economic pressures only led to thousands of innocent people being slaughtered by Iranian authorities. The current blockade on the Strait of Hormuz has stopped Tehran from exporting most of its petroleum, plus, they are unable to import a cross section of goods vital to the populace and the economy. Officials in the Iranian government have said that the US must go back to the failed Memorandum of Understanding signed in June if any talks are to take place.

Benchmark Brent Crude oil has increased by circa 70% since the start of this year, and today, November settlement briefly went above the $102 p/bl mark, though it is still well below its March/April 2026 wartime peak of $126.41 p/bl. Some experts suggest that the price of Brent Crude due to supply chain conditions could reach $120 p/bl by close of business 31^st December 2026. On the diesel front, analysts advise that the current crunch in the global diesel refining sector will keep prices elevated due to tight supply in this arena. The market is also having to cope with Ukrainian drone strikes on refineries in Russia, which has resulted in Russian authorities extending the current ban on diesel exports.

Experts suggest that the big loser in the diesel market will be North West Europe, as the onset of the winter months will produce a dramatic increase in consumption of this energy product. Whilst exports of diesel from the United States have partially alleviated tightness in the European market (import dependent), analysts suggest that this will not cover the increase in consumption come the winter months. Market observers note that the war is set to continue despite briefings to the contrary from the White House. In fact, no lesser figures than US Vice President JD Vance and Secretary of State Mario Rubio have both suggested that the Middle East conflict could run through to the end of President Trump’s presidency in January 2029.

The ECB Raises its Key Interest Rates

Written by Joesph Patterson on September 11, 2026. Posted in News & Reports. Leave a Comment

On the 10^{th of} September 2026 and for the second time since the commencement of the United States/Iran conflict (28^th February 2026), the ECB lifted its three key interest rates by 25 basis points. The central bank hiked its key benchmark deposit rate to 2.5%, whilst at the same time, they hiked the interest rates of both their Main Refinancing Operations and the Marginal Lending Facility by 25 basis points to 2.65% and 2.9% respectively.

*ECB Interest Rates – The ECB has three interest rates; the Key Deposit Rate is the interest rate banks receive when they deposit monies overnight with the ECB. The other two facilities are the Main Refinancing Operations which is the rate the banks pay when they borrow money from the ECB for one week. Lastly, the Marginal Lending Facility is the rate banks pay when they borrow money overnight from the ECB.

Those close to the meeting of the governing council advised that there was a broad consensus among members to raise interest rates, with the President of the ECB, Christine Lagarde, being quoted as saying the latest hike was a “no brainer”, noting the increase in rates was agreed unanimously. A statement from the ECB read, “the conflict in the Middle East continues to generate inflation pressures, and inflation is set to remain well above target for an extended period.”

Officials advised that projections showing inflation averaging 3% this year and slowing to 2.7% next year were a key driver for the general council reaching today’s decision on interest rates. Officials went on to say that, “the outlook remains highly uncertain, with risks to the upside of inflation and the downside of economic growth.” President Lagarde further warned that higher energy costs are set to feed through gradually into core and food-price inflation.

Recently released data for last month confirmed that across the 21-country eurozone, surging oil and gas prices pushed inflation past the 3% mark, well above the ECB’s benchmark target of 2%. Officials noted that recent conflict escalations between the United States and Iran in the Middle East could have further negative effects on inflation, pointing to further price increase which could impact wage-setting. President Lagarde added that, “the war in the Middle East is weighing on activity, and surveys are pointing to a slowdown, especially in services. The increase in energy prices will lift inflation further over the summer and keep it well above target in 2027.”

Analysts advise that financial markets have significantly adjusted their expectations upward, pricing in at least two more interest rate increases by the ECB, spanning a period of late 2026 through to early 2027. The hawkish shift in sentiment by traders is due to the on-going and increasing fighting in the Middle East conflict, which has pushed the Benchmark Brent crude price back above the $100 p/bl mark (which hit the $102 p/bl earlier this week), but as of today, is trading at circa $101.69 p/bl.

Is OPEC’s Future Under Threat

Written by Joesph Patterson on September 9, 2026. Posted in News & Reports. Leave a Comment

On the 28^th April this year, the United Arab Emirates officially announced they were leaving OPEC and OPEC+, and formally walked away three days later on 1^st May, ending a 59 year membership that began in 1967. A number of reasons for leaving OPEC include a frustration with OPEC+ production caps limiting the UAE’s output to circa 3.4 million bpd (barrels per day), leaving just under 30% of overall production offline. As a result, the UAE wanted independence from OPEC in order to maximise revenue before global oil demand begins a permanent decline. Another problem was sitting at the same table with representatives from Iran, who due to the Middle East crisis, had persistently attacked the Emirate with drones and missiles, threatening their economy.

*OPEC – Short for the Organisation of the Petroleum Exporting Nations and is a coalition of 23 oil producing countries of which the full members are: Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of the Congo, Saudi Arabia, United Arab Emirates and Venezuela.

**OPEC+ – There are a further 10 non-OPEC partner countries that form the OPEC+ and make up the DoC (Declaration of Cooperation), consisting of: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan. The whole group’s modus operandi is to cooperate to influence the global oil market and stabilise prices.

The UAE is not the first member to resign as Indonesia left in 2016, Qatar in 2019, Ecuador in 2020 followed by Angola in 2023. At the time, experts, analysts, and oil commentators all sounded the death knell for OPEC—but it never happened. OPEC simply carried on as if nothing had occurred. However, the UAE is a different matter, being OPEC’s third largest producer and second highest spare production capacity. Indeed, OPEC lost circa 15% of its total capacity severely weakening its position and ability to adjust and set global prices. Furthermore, in late July this year, it was reported that Venezuela was considering resigning its membership from OPEC, however a final decision has yet to be made.

Coming quickly on the heels of the UAE’s decision to resign from OPEC, alongside rumblings of discontent from Iraq, this announcement leaves experts questioning whether OPEC and OPEC+, led by Saudi Arabia, can continue to hold together oil prices. A former senior oil marketing official from Oman’s Energy Ministry noted, “The critical question is whether this marks the beginning of a broader wave of withdrawals, the very cohesion and credibility of OPEC could be at stake”. Further erosion in recent years of OPEC dominance can be seen by rivals outside of OPEC and OPEC +, such as Brazil and Guayana and shale drillers in the United States.

In volume terms, Venezuela resigning from OPEC would have little short-term impact. However, the country possesses massive oil reserves that, alongside US supermajors, could be unleashed onto the market over coming decades, with analysts noting high-level US-Venezuela discussions over 100-year leases on several oilfields. Losing Venezuela would deal a major blow to OPEC’s prestige. As a founding member back in 1960, its departure carries immense symbolic weight, with a former OPEC secretariat analyst observing, “This would be a big hit to OPEC.”

Is The US Dollar Debasement Trade Back in Earnest?

Written by Joesph Patterson on August 26, 2026. Posted in News & Reports. Leave a Comment

A number of experts advise that the “Debasement Trade”* is back as investors unload the US dollar, due to fiscal and political uncertainty and piling into alternative assets such as gold and Bitcoin, with the cryptocurrency hitting a three month high and passing the $80,000 mark. However, a number of other experts suggest that the debasement trend is not real, and just because there has been a dip in the dollar, there is no need to expound on the debasement theory.

*Debasement Trade – A financial strategy where investors invest in assets such as Bitcoin and gold as a hedge against the devaluation of fiat currencies, with key takeaways being rising sovereign or government debt, geopolitical instability, and inflation.

Currency commentators suggest that the reason for the latest fall in the US dollar started with interventions in the currency markets to support the Japanese Yen, as instigated by the US Treasury Secretary Scott Bessent. Scott Bessent then tried, unsuccessfully, to rein in long-term borrowing costs by announcing further plans to buy back long-term government bonds and issue shorter term treasuries. These two steps taken by the Treasury Secretary have revived talks of debasement, despite the fact that he maintains that the White House through the Treasury still has a strong US dollar policy.

However, government debt has now gone roaring past the $40 trillion mark, and with yields on treasuries elevated, the sustainability of such debt is becoming harder with analysts suggesting that this will weigh on growth and devalue the US dollar. Some well-known experts have encouraged investors to sell the dollar and buy gold and Bitcoin, driven by market speculation (despite claims to the contrary) that both the President and the Treasury Secretary are comfortable with a weaker dollar.

One problem for the White House is that come November, the upcoming mid-term elections are just around the corner, and with mortgage rates still rising and gasoline prices still high at the pumps, commentators suggest that the bond buy-backs, hopefully lowering long-term yields, may well be politically motivated. The problem, suggest some analysts, is that by pushing this programme too hard it may reignite inflation, forcing the Federal Reserve to hike interest rates, which is exactly what the White House does not want.

On the flip side of the debasement argument, some analysts point out that the debasement trade is flawed and there is not enough evidence to support this theory. Indeed, they note that there is no global selling of US dollar denominated assets as global investors continue to hold sizable amounts of US Treasuries. They also note the current strength of the US stock market as a nod to their anti-debasement theories, as overseas investors need to purchase dollars in order to buy US stocks and shares.

However, looking forward, many experts agree that enthusiasm for the debasement trade may prove to be short-lived. The recent moves within the gold, Bitcoin and the US dollar markets may start to substantially cool as no one can see where the next catalyst for these moves will be coming from. Analysts point out that the buy-back schemes initiated by Secretary Bessent are on the small side in relation to the Treasury market itself. On the cryptocurrency front, Spot Bitcoin ETFs (Exchange Traded Funds) have recently had their strongest inflow for ten months, but will this continue if the debasement debate goes away?

Escalating Yields of Global Sovereign Bonds

Written by IntaCapital Swiss on August 21, 2026. Posted in Iran, News & Reports. Leave a Comment

Earlier this week, global sovereign bond yields surged to multi-decade highs as hopes faded for a US/Iran/Israel peace deal, which has kept oil and energy prices elevated — escalating fears for increases in inflation. The 30-year US Treasury yield went above the 5.3% yield (the highest since 2007, with long-term borrowing costs across European and Asian benchmarks spiking to multi-decade highs). According to experts, the massive sell-off in global debt is due to elevated oil prices fuelling inflation fears, highly elevated government fiscal deficits, and massive corporate debt issuance for AI infrastructure.

Analysts advise that investor concerns regarding inflation, government debt and the debt laden AI boom, have converted into selling longer maturity bonds with a heavy price being paid by governments as their costs of borrowing keep rising. Indeed, analysts confirm that in Germany, government costs of borrowing were this week at their highest level since 2011. In France, government borrowing costs were also at their highest point since 2008. Meanwhile, in Japan, government bonds were close to their all-time high recorded in June 1984, and the United Kingdom equivalent long-dated yields were approaching 6%.

Analysts point to AI “hyperscalers” who have dramatically increased borrowing, while governments continue spending at a vastly increased rate. This has been a key factor in pushing up government bond yields, as buyers demand higher returns to keep purchasing the avalanche of bonds coming onto the market. Unsurprisingly, when the US Department of the Treasury held a $25 billion 30-year Treasury bond auction on Thursday 13^th August this year, the sale cleared at a high yield of 5.216%, marking the highest borrowing cost for a 30-year bond auction since 2001. Experts pointed out the yield was driven by swelling budget deficits and strong investor demand for higher returns.

*AI Hyperscalers – Defined as large-scale cloud providers or tech giants that operate massive, globally distributed data centres which are packed with specialised chips to train, host, and scale artificial intelligence models. They supply the immense computing power and infrastructure required for the modern AI boom. The biggest AI hyperscalers are: AWS (Amazon Web Services), GCP (Google Cloud Platform), Meta Platforms and OCI (Oracle Cloud Infrastructure), and together, these companies control over 70% of the world’s total AI computing infrastructure.

Experts advise that competition for capital has reached levels rarely seen in recent times. Driven by the rapid AI build-out and other factors mentioned above, this capital scarcity is directly pushing bond yields higher. Data released shows that so far this year, Alphabet, Amazon and Meta alone have issued circa $220 billion in bonds which almost double the total amount of bonds issued in 2025 (which stood $108 billion at close of business 31^st December 2025).

In the US, Treasury Secretary Scott Bessent announced a fresh attempt to rein in long-term borrowing—doubling the size of liquidity support for 10- to 30-year Treasuries from his original announcement two weeks ago. This had the effect of lowering the 30-year yield by circa 10 basis points to 5.18%, encouraging a small domino effect on long dated government bonds in other countries. However, this has only increased the Treasury Department’s borrowings, and with the public debt now in excess of $40 trillion for the first time, experts suggest that this is only a temporary fix.

Mid-term elections are in November, and with consumers having to pay higher mortgages, fuel costs, and energy bills, a voter backlash could lead to a lame-duck presidency for the next two years. There is no end in sight for the Middle East conflict, and if Democrats regain control of the Senate, as pollsters currently expect, the US could be rudderless for two years, with long-dated bond yields perhaps elevating even higher than this week’s record peaks.

The Disconnect Between Fuel Prices and the Price of Crude Oil

Written by IntaCapital Swiss on August 12, 2026. Posted in News & Reports. Leave a Comment

On the 9th August, the Benchmark Brent Futures for October hit $84.11p/bl (per barrel) which is still well below the highest price per barrel of $126.41 recorded on 30^th April 2026, as Iran continues to demand tougher concessions in on-going negotiations with the United States. Global Benchmark Brent Crude was trading at circa $72.30p/bl on 27^th February 2026, the day before the USA launched its attack on Iran, and even though the price is currently about $14p/bl higher, the price for diesel and petrol remain inflated at the pumps due to record premiums over crude oil.

Experts advise that if indeed the Strait of Hormuz reopens, consumers and businesses will not see a reduction in fuel at the pumps, as the gap between crude oil and its refined products has spiked in recent weeks. Analysts note that the diesel commodity is currently trading at a premium of roughly $70 per barrel over crude oil. While slightly down from its recent record high of $90 per barrel, this remains far above historical levels of around $20 per barrel.

Analysts advise that this current disconnect is due to the global shortage in refining capacity, with some of the world’s largest refiners being cut off by the closure of the Strait of Hormuz. Furthermore, China is currently restricting exports of refined products, and Ukraine’s drone attacks on Russia’s refineries has not helped matters.

A number of experts point out that global inventories are diminishing by the day and Europe is particularly vulnerable due to years switching investments to green energy, ignoring investing in refineries, and are now reliant upon imports for much of their domestic consumption. In Europe, analysts advise another reason that diesel is trading at a higher than normal premium is because the marginal barrel price of diesel in Europe is becoming more expensive, due to the market paying a higher price to pull replacement barrels into a physically tight European system.

Europe is also facing upward pressure on diesel and petrol prices as energy supply chains begin to run out of water. The water levels in the Rhine are reaching record lows which is restricting barge traffic, and in turn it has pushed gasoil freight rates to record levels. Authorities will now have to adapt energy supply routes to these critical weather conditions, which experts estimate will not be ending any time soon, placing further upward pressure on fuel and energy prices. In fact, experts warn that Europe could face a serious diesel shortage this winter due to limited domestic refining capacity and its heavy reliance on imports.

Experts note a deal to reopen the Strait of Hormuz remains distant. Tehran has rejected direct talks with the United States, and even though Iran and Oman are apparently close to agreeing terms on shipping lanes within the Strait, Iran has said they will not reopen the Strait unless the United States accede to their demands. The US/Iran/Israel continues to drag on, and analysts advise that refined crude products could well increase in price as the months go on.

Bank of England Keeps Interest Rates on Hold

Written by IntaCapital Swiss on July 31, 2026. Posted in News & Reports. Leave a Comment

Today, the Bank of England’s (BOE) Monetary Policy Committee (MPC) in a split vote, voted 6 – 3 to keep interest rates on hold in a range of 3.5% – 3.75% for the fifth time in a row. The three members of the MPC who voted to increase interest rates by 25 basis points, to 4.00%, were external members: Catherine Mann, Megan Greene and Chief Economist Huw Pill. Once again, officials reiterated earlier statements, and maintaining guidance stressed that “the panel were ready to act” to halt lingering inflation.

UK officials are signalling that domestic price pressures are easing quicker than earlier predictions, despite tensions in the Middle East with an ‘on-again off-again’ war where currently, Iran and the USA have reopened hostilities. BOE officials further noted that there were clear signs of easing on the domestic inflationary front. They also highlighted evidence suggesting that higher prices and increased wage demands resulting from the energy shock were indeed scarce.

BOE Governor, Andrew Bailey, said after the meeting that, “There is little evidence of second round effects, although it is too early to take much comfort in that. Holding bank rate is appropriate as global conditions look to be more uncertain and inflationary, while domestic conditions are, on balance, more benign as regards the prospects for inflation”. Given the tone of the Governor’s take on today’s decision, experts suggest that the core of the MPC appear to be nowhere close to voting for an increase in rates.

Some analysts believe that the committee could change their thinking if energy prices increase,second-round inflationary effects materialise, or the Middle East conflict escalates. Officials noted that inflation is currently below the level that the central had previously predicted, but the bank does expect that in the coming months, the economy will witness an increase in price growth. This means consumers will experience an increase in household energy bills alongside a fresh rise in costs at the fuel pumps.

The BOE has issued a number of inflation forecasts showing differing scenarios for the cost of oil and gas. First, they restored their original forecast from April, which was based on a prediction through to the 20^{th of} July pointing to inflation hitting 3.2% by close of business 31^st December 2026, before returning to circa 2.00%, the bank’s benchmark target in 2027. The second scenario which shows Brent Benchmark crude hitting the $100p/bl mark and remaining above that mark shows a pessimistic prediction of inflation reaching the 4.5% mark in Q2, 2027. The third scenario by Q2, 2027, shows inflation peaking at 3%, with a downgraded prediction of second round effects* if there is a faster resolution to the current conflict in the Middle East.

*Second Round Effects – In these scenarios, second round effects are price and wage-settings stemming from the current shock that have the potential to raise Eurozone inflation beyond the near-term in a persistent manner.

Interestingly, in all of the above scenarios, GDP growth is predicted to be circa 1% in 2026 and 2027, before gaining some positive traction in 2028. Experts suggest that the MPC’s concerns on second-round effects appear to have receded as there seems to be a more dovish attitude, suggesting that inflation will not negatively impact broader inflation. After the rate hold, the swaps and futures markets have trimmed their expectations for an increase in interest rates at the upcoming policy meeting on 17^th September 2026, pricing in a roughly 40% implied chance for an increase in rates.

Federal Reserve Keeps Interest Rates on Hold

Written by IntaCapital Swiss on July 30, 2026. Posted in News & Reports. Leave a Comment

Players in the financial markets have recently been at odds with one another as to whether or not the Federal Reserve would hike or keep interest rates on hold. Today, the FOMC (Federal Open Market Committee) kept rates steady at a range of 3.5% – 3.75%, marking the fifth consecutive meeting that the central bank has opted to keep rates on hold. Policymakers voted by 9 – 3 in favour of a rate hold with Cleveland Federal Reserve, President Beth Hammack, Minneapolis Federal Chairman, Nel Kashkari, and Dallas Federal Reserve, President Lorie Logan, being the three dissenting voices who all voted to hike rates.

Officials hinted that an interest rate rise could arrive this September, as the continuing Middle East conflict has ensured a rapid rise in energy prices. Officials suggest this could be a catalyst for an increase in headline inflation, which in June this year fell to 3.5%, the first decline in five months, but still remains elevated above the central bank’s target of 2%. Indeed, the inflation rate has remained elevated above the Federal Reserve’s target for more than five years, with a dissenting governor, the Dallas Federal Reserve Chairman saying, “Every month of above-target inflation has compounded the strain on Americans’ budgets”.

In a post-meeting press conference, Federal reserve Chairman Kevin Warsh explained why interest rates were not raised this time around by saying, “If inflation continues to be elevated through the forecast period, interest rates could well be part of that solution, but I wouldn’t say it’s in isolation”. The Chairman went on to explain that market rates since their last policy meeting had climbed anyway, suggesting that investors are doing some of the work for the Federal Reserve. The chairman stated that this was partially due to his decision to row back on future potential rate moves the central bank usually offers in on-going statements. He added, “Markets have made decisions because we stepped back in part from trying to influence them. Market judgements have moved up on what nominal rates are across the Treasury curve”.

Experts point out that combined with an AI fed boom in demand, the current on-going US/Iran/Israel conflict, (now almost five months old), and a new slate of tariffs, inflation could remain in an elevated position for some time to come. Indeed, with the stop go policies regarding the Middle East conflict emanating from the White House, the price of crude oil bounces between above $100p/bl to somewhere between $85 – $90p/bl, suggesting that if the war stopped tomorrow, consumers would not see their energy bills decrease for many months to come.

Analysts point out that some of the pressure was taken off policymakers to raise rates due to data confirming a reduction in inflation last month, with consumer prices falling for the first time since 2020. However, policymakers remain under pressure from when the White House restarted the Middle East conflict, which sent oil prices past the $100p/bl mark, despite the fact it now hovers around the $83p/bl mark. Analysts point to the swaps/futures markets which are pricing in circa 70% possibility of a 25 basis point rate hike at the FOMC’s next policy meeting on September 15 – 16, 2026, which would lift the target range of Federal Funds from 3.50% – 3.75% to 3.75% – 4.00%. Indeed, driven by persistent inflationary pressure and hawkish dissent within the FOMC, short-term interest rate swaps and futures are favouring tightening over cuts.

Is The AI Investing Boom Sustainable?

Written by IntaCapital Swiss on July 29, 2026. Posted in News & Reports. Leave a Comment

The sustainability of the AI (Artificial Intelligence) spending boom has come under scrutiny due to China’s progress in advanced chip making, which has resulted in a sell-off of semiconductor stocks and shares throughout the world. Although the MSCI (Morgan Stanley Capital International) World Semiconductor Index is still up 28% since the 1st January this year, this month, it has fallen by 16% recording its worst performance since 2022. Data also shows the Philadelphia Semiconductor Index falling for the fourth session in a row, and the tech heavy US Nasdaq-100 fell 1.80% having already fallen by 10.00%.

In South Korea, the Kospi fell by 11.00% with chip giants such as SK Hynix Inc (fallen by a total of 47% from their record high last month) and Samsung Electronics Co both falling by more than 14.00%. Indeed, SK Hynix Inc has suffered a $600 billion collapse in just over a month, which analysts say is due to an increase in leveraged-induced volatility and overcrowding, and has gone from one of the world’s most fashionable and hottest trades to portfolio managers now questioning whether to hold or sell. Today, South Korea led the Asian sell-off in semi-conductor shares with selling carrying on through Europe and onto the United States, with key chip companies taking the brunt of the sell-off.

Analysts suggest that one of the main reasons for the sell-off in superconductor shares are reports that Chinese companies have begun mass producing machinery that is critical to the manufacture of advanced microchips, critical to the performance of AI. Indeed, experts in the semiconductor industry report that China-based Shanghai Yuliangsheng has begun producing lithography machines. These machines use high-powered lasers to imprint designs onto silicon wafers, which are then used to manufacture chips. Analysts advise that later this year Shanghai Yuliangsheng is expected to start delivering lithography machines to leading Chinese chipmakers.

Experts acknowledge that up to now, this technology was dominated by leading western chip giants and suggest the progress that China has made in the chipmaking arena has placed the semiconductor market in a bit of a panic, as the Chinese progress could threaten the competitive position of global chip equipment and chipmaking leaders. Adding to market concerns was the Shanghai stock market debut on Monday 27^th July of the Chinese memory-chip maker CXMT, as analysts suggest this company may well intensify global competition in the memory industry. One industry expert suggested that CXMT will be one of the big industry’s weights and this was borne out by the company’s valuation soaring by 466% on market debut.

A report suggesting that a Chinese state-backed company had begun to mass produce immersion deep ultra violet lithography machines for chipmaking has also spooked the markets, with investors worrying if the payoff would be worth the billions being invested in AI development. Experts advise that investors are also worrying about the increase in “circular deals”, as there are interconnections between AI start-ups and technology manufacturers, where losses can be magnified if AI do not match up to heightened market expectations. A circular deal in this instance is where a primary supplier such as a chipmaker or cloud provider invests capital or provides financial backing to an AI model developer, who then immediately routes that money back to the investor by purchasing their hardware, cloud or infrastructure services.

A number of market commentators within this arena suggest that short-term semiconductor stocks face high volatility, sharp global selloffs and technical pressure, driven by recent repricing, despite underlying AI demand remaining strong. Key items include near-term downside momentum, heavy data-centre spending and high valuations, resulting in global chip stocks recently shedding over $1 trillion in a broad market correction as investors deleverage and re-evaluate risk.