Meet the team
Tim Adams Independent Financial Adviser
Market Commentary
Hello and welcome to our latest Market Commentary.
The idea behind these updates is really simple. There is an awful lot of noise out there at the moment, so I want to cut through the headlines and explain what is actually happening and, more importantly, what it means for you and your money.
The commentary on this page is for general information purposes and does not consitute financial advice, a personal recommendation or an invitation to take any particular course of action.
The Big Picture - What's Going On
Markets have had a turbulent couple of weeks, but the important point is that this has not turned into a broad market crisis.
The story has changed, however. At the beginning of September, investors were still debating when interest rates might come down. Two weeks later, the US Federal Reserve has actually raised interest rates, the Bank of England is warning that UK rates may also need to rise, oil remains above $100 a barrel and government bond yields have moved sharply higher.
Despite all of that, the S&P 500 remains up more than 11% during 2026 and around 2% below its recent record high.
The Numbers at a Glance
S&P 500 - Up more than 11% in 2026
FTSE 100 - 10,659
Bank of England Base Rate - 3.75%
US Federal Reserve Rate - 3.75%–4.00%
UK inflation - 3.1%
US inflation - 3.4%
Brent crude oil - around $105 a barrel
US 10-year Treasury yield - around 4.95%
Gold - around $4,350 an ounce
The FTSE 100 finished Friday at 10,659.13, down 1.4% on the day, although it still managed a small gain over the week. The wider European market also fell on Friday as investors adjusted to the prospect of interest rates remaining higher for longer.
Meanwhile, Brent crude was trading at approximately $104.67 a barrel, while the US 10-year Treasury yield was around 4.95%, having briefly moved above 5% during the week — its highest level since 2007.
Why Does That Matter?
The simplest way to understand what is happening is this:
Higher oil → higher transport and business costs → greater inflation pressure → central banks keep interest rates higher for longer.
That chain is already appearing in the numbers.
UK CPI inflation rose from 2.9% to 3.1% in August, with transport and particularly motor fuel costs responsible for much of the increase. Motor fuel prices were around 23% higher than a year earlier. For context, the average UK petrol price reached approximately 161.3p per litre in August, with diesel at approximately 181.8p.
America has a similar problem. US inflation remained at 3.4%, while energy prices were up 16.3% over 12 months. US producer prices — the prices businesses pay before goods reach consumers — were up 5.4% annually.
That matters because central banks do not want a temporary energy shock to turn into permanently higher wages and prices. The US Federal Reserve therefore raised interest rates by 0.25%, taking its target range to 3.75%–4.00%. It was the first US rate rise in three years.
The Bank of England took a slightly different approach. It kept UK Bank Rate at 3.75%, but the vote was 6–3, with three members already wanting an increase to 4%. The Bank also warned that UK inflation could rise to slightly above 4% in early 2027 if energy pressures persist.
For borrowers, therefore, the message is fairly clear:
Do not assume that interest rates are about to fall quickly.
For somebody refinancing a mortgage, that could mean higher borrowing costs lasting longer than previously expected.
For savers, there is another side to the story. Higher interest rates can mean that cash deposits and savings accounts continue to offer reasonable returns.
And for somebody approaching retirement, higher bond yields can improve the prospective income available from bonds and potentially annuities — although rising yields can reduce the value of existing fixed-interest investments in the short term.
Is the Economy Actually Doing Badly?
Interestingly, not entirely, and this is one reason markets have remained comparatively resilient.
UK retail sales rose 0.5% in August and were 2.4% higher than a year earlier, suggesting that consumers have continued spending despite higher energy and borrowing costs.
The latest estimate also showed the UK economy growing by 0.4% during the second quarter of 2026, following growth of 0.6% in the first quarter.
So, we currently have an unusual combination:
Economic growth is holding up reasonably well, but inflation has also started rising again. That is precisely why central banks have become more cautious. Good economic news can sometimes be bad news for interest rates.
What Does This Mean for Your Pension and Investments?
Probably less than many of the daily headlines might suggest.
A properly diversified investment portfolio should not depend entirely on one country, one stock market, technology shares, bonds or any particular economic outcome.
Different assets should behave differently at different stages of the economic cycle.
That is the purpose of diversification.
For somebody regularly contributing to a pension or ISA, periods of market weakness can actually be useful. The same contribution purchases more investment units when prices are lower. For somebody already retired and drawing an income, volatility deserves more attention because selling investments after a significant fall can lock in losses.
That is why retirement planning should normally consider:
appropriate diversification;
sensible withdrawal levels;
adequate cash reserves;
different sources of retirement income; and
avoiding unnecessary investment decisions simply because markets have had a difficult week.
There is also an important point regarding bonds. Rising bond yields can make future returns from fixed-interest investments more attractive, but the journey can be uncomfortable because bond prices generally fall when yields rise. Cash is currently attractive too, but cash has its own risk: today's interest rate may not be available when a deposit eventually matures.
The correct balance therefore depends on the purpose of the money, the time horizon and the individual's financial plan.
What Does This Mean For Your Pensions and Investments
What Are We Watching Next?
The next week is likely to be less dominated by central-bank announcements and more about whether the economy can cope with the higher interest-rate environment.
23 September — UK, European and US preliminary manufacturing and services PMI figures. These give us an early indication of whether businesses are expanding or contracting and, importantly, whether their costs are continuing to rise.
24 September — US new-home sales. Housing is particularly sensitive to interest rates and can provide useful evidence of how higher borrowing costs are affecting households.
25 September — US consumer sentiment and durable-goods orders. These should give us further information on consumer confidence and business spending.
30 September — UK GDP update. The ONS will publish its revised estimate for UK economic growth during the second quarter.
30 September — US inflation and consumer-spending data. America's Personal Income and Outlays report will give markets another important reading on inflation and consumer spending. And, perhaps most importantly, we will continue watching oil prices and bond yields.
At the moment, approximately $100 a barrel for oil and 5% for the US 10-year Treasury yield have become psychologically important levels for financial markets.
Martyn's Final Thought
There is a lot going on.
Oil above $100.
Inflation moving higher.
Central banks talking about raising interest rates rather than cutting them.
Bond yields at levels we have not seen for many years.
And yet global stock markets remain relatively close to their recent highs. That tells us something important.
Markets rarely wait for everything to feel comfortable before moving forward.
The question for investors is therefore not:
“What will markets do next week?”
A much better question is:
“Does my financial plan still work?”
Has your income changed?
Are your expenditure requirements different?
Are you approaching retirement?
Has your attitude to investment risk changed?
Do you have sufficient cash reserves?
And does your financial plan still show that you have enough money to achieve the things that matter to you?
If the answers remain broadly unchanged, your investments remain properly diversified and your longer-term financial plan remains on course, then another volatile week in financial markets rarely requires a dramatic response.
There will always be another interest-rate decision.
There will always be another inflation figure.
There will always be another headline.
Fortunately, there is always another day.
Market figures correct to 18 September 2026. US equity figures were based on available intraday/delayed market information at the time of writing; the FTSE 100 figure is the 18 September closing level. Market prices can change rapidly. The value of investments can fall as well as rise and you may receive back less than you invested. Past performance is not a reliable indicator of future performance.