Bond markets are struggling this year as investors worry about inflation and the sustainability of rising government debt levels.
Equity markets, meanwhile, continue to push higher, supported by strong corporate earnings.
The conflict in the Middle East remains unresolved and is again putting upward pressure on oil and natural gas prices, as shown in the top-left chart of our Iran/Middle East Conflict Dashboard.
Markets also paid close attention to new Fed Chair Kevin Warsh’s first Jackson Hole speech — see our summary below.
AI remains a major driver of markets, but the race is increasingly becoming a price war as well as a technology race. Companies are using cheaper Chinese models for routine tasks and reserving costly frontier models for the hardest problems — putting pressure on leading providers to cut prices, even as they continue a game of one-upmanship with ever more frequent and capable model releases.
Sources: ECB, MSCI ACWI, Rebased to 100 as at 31.12.25, investing.com, FT and Acuvest.
August and YTD Numbers
Inflation: Back in the Spotlight
Viewed against the inflation highs reached in 2022, the trend had been encouraging, with inflation moving steadily back towards central bank targets (2%). More recently, however, renewed volatility in energy prices has begun to push it in the wrong direction. And after several years of higher prices, the cumulative impact is now being felt in a very real way through the cost of living for many families. This renewed inflation pressure may force central banks to keep rates higher for longer or even consider further increases. The ECB is expected to raise rates today (10/9/26) by 0.25% which would bring the policy rate to 2.5%.
Source: Trading Economics
Warsh’s message: don’t expect a roadmap
Each August, many of the world’s leading central bankers, economists and investors gather at Jackson Hole in Wyoming for the Federal Reserve Bank of Kansas City’s annual symposium. It is closely watched because speeches there can signal how policymakers are thinking about inflation, interest rates and the economy and can move markets.
This year, Federal Reserve Chair Kevin Warsh used his speech to signal a change in tone. He wants a “quieter Fed”, with less forward guidance and fewer attempts to steer markets towards the next rate decision. His concern is that markets watch the Fed, while the Fed watches markets thus creating what he called a “hall-of-mirrors”. Instead, he wants markets to form their own view while the Fed retains greater flexibility.
Warsh described the US economy as resilient, labour markets as consistent with full employment and financial conditions as not especially restrictive. He stressed that inflation remains the problem, running at 3.7%, well above the Fed’s fixed 2% target. His closing line summed it up well: “I stand here today committed to a discipline, not to a decision.”
For investors, that suggests rates could stay higher for longer or even rise if inflation remains stubborn.
Trump under pressure coming into US midterm elections
Republicans are increasingly worried that Trump is not connecting with voters on the cost of living and the economy. With Democrats gaining ground in the polls, Republicans now face a real risk of losing control of either the House or the Senate in November. In response, Trump has announced a $5,000 “dividend” payment for every US adult in a clear attempt to wrestle back momentum. The measure, if implemented, would cost around $1 trillion.
Source: JP Morgan 31/08/2026
Dementia: Reasons for Hope
Dementia is a condition that touches many families, either directly or through someone close to them. It is coming up on three years since my father passed away, having suffered with dementia, so it is a subject I pay particular attention to, especially when there are meaningful developments in our understanding of the disease.
A recent Economist article highlighted some genuinely encouraging evidence. Dementia rates among older people have been falling in a number of developed countries, while research increasingly suggests that the risk can be reduced or the onset delayed through better cardiovascular health, exercise, education, treating hearing loss (which may help preserve cognitive health and social engagement) and maintaining strong social connections. One particularly striking study found that a shingles vaccine was associated with a 20% reduction in the risk of developing dementia for at least seven years. Researchers are still working to understand why, but findings like these suggest that dementia may be more preventable, or at least more capable of being delayed, than was once thought.
There is still a long way to go, and total case numbers are likely to rise as populations age. But the direction of the research is more hopeful than many people may realise.
So – What Should Investors Do?
Staying the Course in an Uncertain World
With uncertainty around inflation, interest rates, geopolitics and markets, it is natural for investors to feel uneasy. But for long-term investors, the playbook remains familiar: stay patient, stay diversified, and stay focused on the bigger picture.
Our key messages remain:
1. Stay Invested: Markets move quickly, and missing even a handful of strong recovery days can have a meaningful impact on long-term returns.
2. Trust Your Plan: A well-diversified portfolio is built to withstand periods of uncertainty like this. If your goals have not changed, your investment strategy should not either.
3. Look for Opportunity: Volatility can be uncomfortable, but it can also create opportunity. For disciplined investors, periods of uncertainty can provide attractive entry points over time.
The Bottom Line:
Markets are balancing energy risk, inflation uncertainty and rapid technological change. The Middle East conflict may drive short-term volatility, but AI, productivity and long-term growth drivers remain important counterweights. Staying the course with a robust plan — and good advice — remains the most effective response.
John Tuohy is Chief Executive of Acuvest, an Irish-owned, independent advisory firm specialising in wealth management, pensions, and investment advisory services for individuals, companies, pension schemes, charities, and institutions. John is a Chartered Financial Analyst (CFA) and a Fellow of the Chartered Association of Certified Accountants.
