The Summer That Was 2026

• On Friday 31^st July, the US intervened by selling EUR/JPY; in response to questions about the operation from Senator Elizabeth Warren, US Treasury Secretary Bessent wrote on X “I hope her next letter will demonstrate that she has learned the difference between a currency purchase and a swap or a loan”.
• On Thursday 13^th August, the US sold 30y bonds at 5.216%, the highest auction yield since 2001.
• On Monday 17^th August, the Diesel crack spread, a measure of refining profitability, hit an all-time high.
• On Wednesday 19^th August, the US Treasury announced “increased sizes of nominal long-end liquidity support buybacks”.
• On Friday 28^th August, the VIX fell to its lows of the year.
• US oil imports from Saudi Arabia dropped to zero for the first time in 40 years.
• Jane Street suffered a $15bn loss in July due to the Situational Awareness loss and AI-related stock losses. An internal memo said “We generally worry most about sharp drawdowns, and buy puts that would help in those scenarios. The losses in AI stocks were relatively spread out throughout the month, so those short-term hedges provided little help”. The memo also stated that trading revenue was negative for the first month since 2016.
• The AI-focused hedge fund Situational Awareness almost went under and had to sell the bulk of its stock portfolio to Citadel.
• San Francisco Fed economic letter warned “After two decades of concerns primarily about changes in demand, the stock-bond correlation recently flipped, suggesting that the perceived source of risk to the economy has shifted towards supply shocks”.

• Hedge funds own 8.5% of the US Treasury market, more than China, Japan and Saudi Arabia’s official holdings combined:

• Chancellor Merz approval ratings fell to record lows and 84% of respondents to a Forsa Institute poll said no party adequately addresses their problems.
• CDU politicians told Politico of internal discussions about a Kanzlertausch, or “Chancellor swap” to remove Merz.
• The AfD are poised to take their first region, polls for the Saxony-Anhalt election on 6^th September show.
• Marine Le Pen comes first in all six second-round run off French Presidential election scenarios polled by Elabe.
• France 10Y yield reached its highest level since 2008, Japan’s 10Y yield hit highest level in 29 years.
• As water levels in the Rhine fell to record lows over the summer heatwave, vessels were carrying only 20% of their usual cargo.
• The BIS 2026 Annual Report flagged concerns over the scale of the AI boom, producing this chart for comparison with “historical episodes of investment booms”:

• Crossbench peer Jim O’Neill turned down a job with Andy Burham, warning that increasing taxes would be “stupid” as “all that’s telling you is that they’re not thinking about growth as sincerely as they claim they are. They’re just being scared and lazy and constrained in dealing with the sacred cows”.
• Chancellor Healey said of changes to council tax, “these sort of decisions, if they’re relevant to the Budget I’ll set them out in a couple of months’ time”.
• Path to meet NATO defence spending target will be set out at the Spending Review next year, not the October Budget.
• Andy Burnham said returning the Elgin marbles is now a matter for the British Museum, reversing his prior call to ‘send them back, no strings attached’.
• Plans to put Thames Water into a Special Administration Regime have been delayed due to concerns about cost and legal ramifications.
• UK National Planning Policy Framework will approve all homes within walking distance of “well-connected” train stations.
• Russia threatened to target British factories that produce drone and missile components for Ukraine after the UK agreed to hand over their blueprints.
• Iran-linked hackers shut down UK power plant.

Here is a collage of our team’s travels this summer: