Inflation Archives

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.

Middle East Conflict Negatively Impacts UK Inflation

Written by IntaCapital Swiss on April 22, 2026. Posted in Iran, News & Reports. Leave a Comment

Recent data released by the ONS (Office of National Statistics) confirms that inflation in the United Kingdom climbed in March, driven by increasing energy costs as a result of the US/Iran/Israel conflict. The CPI (Consumer Price Index)* increased by 0.03% to 3.30%, increasing from 3.00% from the previous month, with an 8.70% increase in the price of fuel also from the previous month at the petrol pumps, being held up as the culprit.

*CPI – The consumer price index is a key economic indicator that measures the average change over time in prices paid by households for a representative basket of goods and services such as housing, food, transport and healthcare. It is primarily used as an index to measure inflation or deflation.

The increase of 8.70% in the price of motor fuel has been confirmed by analysts as the biggest monthly gain since February 24^th 2022, when Russia invaded Ukraine. Analysts also advise that service inflation, which is a key component when it comes to underlying price pressure, also increased from 4.30% to 4.50% in March, largely due to volatility in the price of airfares which jumped 10.00% in the same month. Airlines have been adjusting to these operational challenges by passing on costs driven by a twofold surge in jet fuel prices and the temporary closure of airspace across the Persian Gulf.

The current Middle East crisis has turned inflation forecasts on its head, with the current 53-day war bringing oil and gas exports from the Persian Gulf to a near standstill. Indeed, the conflict has seen the benchmark price of Brent Crude surging more than 55% to just shy of $120p/bl at its peak, from circa $72p/bl on February 27^th this year, and it is currently trading today at $99.83p/bl.

Before the conflict, inflation was on track to hit the BOEs (Bank of England) target figure of 2.00%, with promises of more rate cuts, however, analysts suggest that inflation will stay around the 3.00% mark. But, they expect that figure to accelerate at the beginning of Q3, raising the potential for an increase in interest rates. Experts suggest that if the conflict continues, food prices in the UK will be dramatically affected, with food inflation hitting close to 10.00%.

Financial commentators noted that data from the ONS for March confirmed that higher petrol and crude oil prices had increased the costs to businesses for raw materials leaving factories. All in all, the British consumer should brace for an increase in the price of food, petrol and diesel, and more expensive holidays as the country moves towards the summer period.

United Kingdom Suffers Cost of Borrowing and Energy Shocks

Written by IntaCapital Swiss on March 25, 2026. Posted in News & Reports. Leave a Comment

The cost of borrowing for the UK government has soared to its highest level in eighteen years (when the global financial crisis 2007 – 2009 gripped the world) due to the economic shocks emanating from the US/Iran/Israel conflict. The Strait of Hormuz remains closed and 1/5 of the world’s crude oil remains in the ground, building fears of inflation shocks to many countries. In the United Kingdom, as of close of business on Friday 20^thMarch, 10-year Gilts yields (a benchmark for government long-term borrowing costs) rose by 0.76%, capping a 5.00% rise since the start of the war in the Middle East.

A Comparison with Global Markets

Experts suggest that the sell-off in UK government bonds is even more brutal than in 2022 when the previous Prime Minister Liz Truss introduced her mini-budget, which resulted in the UK government bond market taking a heavy beating. Analysts point to the fact the jump in the UK’s borrowing costs has not been matched in other economies, for example the corresponding rate on the 10-year German government Bund is only up 0.38% and in the United States the US treasury benchmark borrowing costs are up 0.41%.

The UK’s Energy Vulnerability

Analysts point to why the UK government bond market is having a much worse time than many of their counterparts, which is due to the economy being more vulnerable to oil and gas price rises than many of their peers. In 2024, data shows that 35% of the UK’s total energy consumption was made up of natural gas (Europe’s reliance on gas is now only circa 1/5^th of total energy consumption), which heats the vast majority of homes in the United Kingdom. This sadly reflects on the government once again not learning from the energy shock created by the invasion of Ukraine by Russia on 24^th February 2022. The UK is therefore much more vulnerable to imported inflation (America being fairly secure as a net exporter of LNG). Data released shows that UK 1-year inflation expectations have risen 1.8% since the US/Iran/Israel conflict began, a much bigger increase than their peers in the USA and the Eurozone.

Inflation and the Interest Rate Outlook

UK government bonds are highly sensitive to rising inflation; notably, 2-year gilt yields, which track Bank of England interest rate expectations, recently climbed to an over a year high of 5.35%. Brent Crude is currently trading at $106.77pbl with market expectations of the price going higher the longer the Strait of Hormuz remains closed, and money markets are now anticipating a rise in interest rates of 75 basis points this year. The energy shock is exacerbating the outlook on inflation and as the cost of borrowing rises, so will the effect on businesses and consumers in the United Kingdom. Already, costs of both diesel and petrol at the pumps have gone up, as have certain foods in the supermarkets.

The Impact on Households and Industry

Householders in the UK are already seeing mortgage deals pulled from the market, and as of July, this year consumers have been warned to expect a whopping 20% increase in energy bills. This increase could prove devastating for many households who are already struggling to pay their energy bills at today’s prices, especially alongside fuel and food price increases, making a very hard second half of 2026 for consumers. Elsewhere, in the airline industry, experts suggest that around the top 20 quoted airlines have lost a combined total of $54 billion in market value. The price of an airline ticket is also about to go through the roof due to jet fuel more than doubling in price since the Middle East conflict began. Despite the tendency for official narratives to focus on external pressures, consumers continue to face the direct consequences of these price spikes as historical economic patterns repeat themselves.

The UK is at Risk of Inflation and Energy Spikes Due to the Iran Conflict

Written by IntaCapital Swiss on March 11, 2026. Posted in Iran, News & Reports. Leave a Comment

Rising Borrowing Costs and Market Volatility

The United Kingdom’s borrowing costs are going up with great rapidity as the country is exposed to a surge in inflation due to the current war in the Middle East between Iran, the United States and Israel. The potential inflation crisis has been reflected in the UK’s increased cost of borrowing as the benchmark 10-year Gilt* yield rose 10 basis points on Friday 6^th March.

*10-year Gilt (Government Bond) – Represents the yield/interest rate the government must pay to borrow money for ten years. It is referred to as the benchmark as it reflects investor sentiment on the health of the UK economy and future Bank of England policy decisions.

Energy Security and Domestic Policy Vulnerability

The UK’s Energy Secretary, Ed Miliband, said that after an extremely serious drop-off in tankers transiting the Strait of Hormuz, the country is now at the mercy of international energy markets.

The Iran crisis has exposed significant vulnerabilities in the Labour government’s energy strategy. By retreating from North Sea oil in favor of current green policies, the UK’s heavy reliance on imported fuel has been thrust into a harsh spotlight. Whilst the costs will not be seen by household bills immediately, the inevitability of upcoming increases will soon filter through leaving residents of the UK further out of pocket.

Impact on Petrol and Diesel Prices

At the pumps, diesel has surged to a 16-month high, rising by approximately 6p to 148p per litre, a level not seen since August 2024. Petrol prices followed suit, climbing by 4p to an average of 137p. For the average consumer, this translates to an additional £2.00 to fill a 55-litre petrol car, while diesel owners are facing an increase of roughly £3.30 per tank.

Shifting Expectations for Bank of England Policy

Elsewhere, analysts report a significant shift in expectations for the Bank of England’s March 19th policy meeting. While markets were previously almost certain of a 25-basis point cut, the ongoing conflict has prompted a major reprice, with holding interest rates now seen as the most likely outcome. Experts advise that due to the surge in energy prices, inflation could return to 3.5% later in the year, and if Brent Crude continues to increase (up circa 27% last week), the cost of living for consumers will continue to increase.

Will the UK’s Inflation Figures Strengthen the Bank of England’s Hawkish Bias?

Written by IntaCapital Swiss on May 28, 2025. Posted in News & Reports. Leave a Comment

The latest data released by the ONS (Office for National Statistics), shows the United Kingdom’s inflation rate, the CPI (Consumer Price Index), jumped to 3.5% from 2.6% in April of this year, driven mainly by increases in water, energy and other price increases. Service inflation was seen accelerating from 4.7% to 5.4% and is an area the Bank of England watches closely for signs of underlying price pressure, and Bank officials had expected this figure to be 5%. Elsewhere Core Inflation (does not include food and energy) climbed to 3.8% which is the highest it has been since April 2024. Earlier this month, the Bank of England’s MPC (Monetary Policy Meeting) voted on yet another rate cut where two members voted to hold rate cuts, and the above figures bear out their cautiousness.

The Bank of England’s target inflation figure is 2%, and the current rate of inflation is well above that target and furthermore, the Bank of England expected this figure to rise and peak at 3.7% in September of this year. Other data shows consumer prices rising by 1.2%, the biggest rise for 24 months. Consumers in April were hit with a number of increases such as volatile air fares (up 16.2% year on year), water bills, local authority taxes, train fares and an across-the-board basic cost increase, which added to a pretty damning April for the government. However, analysts have noted that the Easter holidays were probably responsible for the jump in airfares (biggest month-on-month jump for April on record) and expect this figure to diminish before the summer holidays begin.

Experts suggest the financial markets are in favour of an end of year interest rate of 4% for the first time since the end of March/early April. This sentiment translates into one more rate cut this year suggesting that the Bank of England’s MPC will slam the door shut on an interest rate cut at its next interest rate meeting on Thursday 19th June 2025, with traders cutting an August interest rate cut from 60% to 40%. Markets also remember comments from the Bank of England’s Chief economist, Hugh Pill, who voiced in a hawkish speech that he feared interest rates were not high enough to keep the lid on inflation, and analysts suggest that it would not take too much for the swing voters on the MPC to move into the hawk’s camp especially after what the Consumer Price Index had recently shown.

Indeed, Mr Pill voted against a rate cut of ¼ of 1% earlier in May where he also said, “In my view, that withdrawal of policy restrictions has been running a little too fast of late, given the progress achieved thus far with returning inflation to target on a lasting basis. I remain concerned about upside risks to the achievement of the inflation target”. We will wait on the MPC’s meeting in June but the likelihood according to experts is a rate hold, plus we will also wait and see if Donald Trump’s economic policies impact further the global economy with any fall-out influencing decisions taken by bank officials. Elsewhere in April, it has been revealed that government borrowing for the month was £10 Billion, with data confirming this figure to be a new record. All in all, not the best 30 days with newspapers dubbing the month as “Awful April”.

Will the United Kingdoms’ Interest Rates Fall Soon?

Written by IntaCapital Swiss on December 7, 2023. Posted in Uncategorized. Leave a Comment

The financial markets are betting that, despite the negative comments by the heads of the European Central Bank (ECB), the Federal Reserve and the Bank of England, interest rates will fall in the first three to six months of 2024. The loudest negative voice pouring cold water on interest rate cuts is the Governor of the Bank of England, Andrew Bailey.

With the United Kingdom economy flirting with recession and inflation falling below 5% everyone from the Prime Minister downwards to first-time home buyers are saying that interest rates must surely fall soon. Indeed, recent data released from the British Retail Consortium showed inflation dropping to 4.3% in November of this year (a drop of 0.9%), the lowest level since June 2022.

Despite the good news regarding inflation, after a visit to the North-East, the Governor of the Bank of England said interest rates will not be cut in the foreseeable future. On top of that he reiterated the same point that was made after the last MPC (Monetary Policy Committee) meeting, that it is too soon to have this conversation, which is the Bank of England speak for “go away”.

The 2% benchmark figure for inflation will not be reached until the end of 2025 as advised by the Bank of England itself. So, whilst the Prime Minister Rishi Sunak has met his political promise of halving inflation, from an economic standpoint it has little significance. Indeed, inflation has dropped from a high of 11.1% in October 2022 to 4.6% in October 2023, but Andrew Bailey has advised that halving it once again could be very difficult.

The Bank of England are quick to point out that much of the recent falls in the inflation figures are due to falls in Ofgem’s energy price cap, as the spikes caused by the war between Russia and Ukraine come out of the inflation figures. However, to do this again and again would surely be nigh on impossible or exceptionally difficult. The Governor also pointed out that to get to the 2% inflation target is a game of two unequal halves. He went on to say the second half is “hard work” with the remaining task being done by restrictive monetary policy. He further added that the drop in inflation by 2% from 6.7% in September to 4.6% in October, (due to the fall in the energy cap as mentioned above) will not be repeated again.

Interestingly, one highly respected financial institution has advised that their experts are now predicting a 50 basis point interest cut in the fourth quarter of 2024. They went on to say that with the loosening in the labour market interest rates may be reduced by the Bank of England earlier than predicted but expect the bulk monetary easing to take place throughout 2025 culminating in the 2% interest rate target. There are obviously differing views within the financial markets as to when interest rates will be cut, but for first time home buyers and those households struggling with bills and mortgage repayments, the sooner the better.

Tag: Inflation