Market Review 13th July 2026

Everything you need to know, Simplified!

Markets stay calm as politics, oil and inflation risks keep pressure on bonds

Summary

• A quiet week for markets, but a busy one for sport – equity indices ended broadly unchanged and bond yields pushed higher, against a backdrop of Wimbledon and England's quarter-final success

• US–Iran ceasefire collapsed, lifting oil prices and inflation concerns, but markets stayed sceptical of a material escalation given little US appetite to be drawn back in

• The Strait of Hormuz remains closed – Iran ‘winning’ the economic war even as the US dominates militarily – so more conflict likely before a durable peace deal

• US equities recovered early losses, led by a late rebound in semiconductor and Artificial Intelligence (AI)-related shares; Europe lagged given its greater geopolitical exposure

• Heavy new issuance is the key undercurrent – demand remains robust (this week's jumbo Amazon bond deal the latest example), but growing supply is capping upside momentum, and the bar rises as the cheques get larger

• Yields higher on Middle East tension and hawkish Fed minutes (keeping interest rates higher for longer) – sticky gasoline prices, firm chip prices and signs of economic heat mean US inflation may be slow to fall, keeping the Fed on a hawkish path; money markets now look fairly priced

• UK politics were dominated by Nigel Farage's resignation and by-election stunt, and Andy Burnham securing backing to succeed Keir Starmer

• Gilts had another poor week; with fiscal risks skewed to further slippage we expect an elevated fiscal and political risk premium to persist

• The week ahead: US Consumer Price Index (CPI) (annual inflation seen easing to 3.8%, still uncomfortably high) and US retail sales (expected +0.3%, a slowdown from May but still a resilient consumer, with auto sales strong).

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Market Review

Sideline story: markets take a back seat to sport

Whether it was football, tennis, rugby or simply making the most of the summer weather, there was something for everyone this week. England edged their way into the World Cup semi-final, while Canaccord Wealth's own cycling team successfully completed the ‘Tour de Canaccord’ ride from London to Paris in support of our company’s charitable foundation. Against a busy sporting backdrop, financial markets were comparatively subdued, with major equity indices ending the week broadly unchanged and bond yields higher.

The week began on the back foot as the ceasefire between the US and Iran collapsed and the two sides exchanged strikes, pushing oil prices higher and elevating inflation concerns. Yet despite President Trump declaring the ceasefire "over", markets remained sceptical that a material escalation was likely, concluding that there is little appetite in Washington to be dragged back into a regional quagmire. As I commented on CNBC a few weeks ago, although the US has dominated the kinetic war, Iran is winning the economic war with the Strait of Hormuz once again closed. As both sides see themselves as ‘winning’ it’s likely more conflict is ahead of us before real progress can be made towards a sustainable peace deal.

That scepticism towards material escalation helped cap volatility, and US indices clawed back early losses as a late rebound in semiconductor and AI-related shares carried the growth-heavy benchmarks higher; Europe, more exposed to the geopolitical backdrop, fared less well.

The more interesting undercurrent, in our view, is the sheer scale of new equity and debt issuance. Demand remains robust for now – this week's jumbo Amazon corporate bond issue was simply the latest in a long line – but the volume of cash being raised is adding pressure to upside momentum, and it feels natural to expect markets to start questioning the efficiency of these gargantuan investments. For now, demand absorbs the supply, but the bar is quietly rising as the cheques get larger.

Yields pushed higher last week driven by the renewed tension in the Middle East and a somewhat hawkish set of Fed minutes. For fixed income investors, the more durable issue is that the robust AI investment dynamic makes it likely that US inflation is slow to fall as gasoline prices remain sticky despite softer crude, chip prices are firm, and with signs of economic heat we are carefully monitoring inflation risks. This should keep the Fed on a hawkish path for the time being (keeping interest rates higher for longer), and we would argue money markets are now fairly discounting the road ahead.

Closer to home, UK politics provided the drama – Nigel Farage's resignation and Clacton-on-Sea by-election stunt on one hand, and Andy Burnham securing the backing to succeed Keir Starmer on the other. Gilts had another difficult week, reacting sharply to investors’ concerns about the UK’s finances and politics.

The delicate state of the public finances appears to be dawning on Burnham and his team, and with risks still skewed towards further government.

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The week ahead

US CPI inflation

Falling gasoline prices through June is expected to have pushed month-on-month CPI into negative territory resulting in annual inflation slowing to 3.8%, still uncomfortably high for the Fed. Most economists believe that inflation has now peaked for 2026 at 4.2% in May and is on a downward trajectory towards 2% over the next three years. 

US retail sales

World cup fever has reportedly spread across America supporting an otherwise cooling trend in retail sales. Altogether retail sales data due this Thursday is expected to show 0.3% growth, a deceleration from 0.9% in May but still a reflection of a robust consumer backdrop. Particular strength in autosales is anticipated.

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