Time to wrap up…

Some calm has returned to markets today, after recent turbulence in the bond markets.

UK government debt has recovered some of its recent losses, which has pushed down borrowing costs. The yield, or rate of return, on UK 10-year debt is now down 10 basis points (0.1 of a percentage point) at 5.13%, away from the 18-year high set yesterday.

US central banker Christopher Waller helped to calm investors’ worries by saying he is leaning towards holding US interest rates unchanged at this month’s meeting.

However, the Bank of England’s chief economist, Huw Pill, is pushing for a rise in UK borrowing costs.

Mortgages are already expected to rise, due to the recent jump in UK bond yields.

AJ Bell head of financial analysis Danni Hewson sums up the day:

“It’s been a brighter day for global markets as bond yields stabilised and comments from Federal Reserve governor Christopher Waller took some heat out of rate hike expectations.

“Whilst the price of Brent crude jumped to nearly to $97 a barrel as tensions in the Middle East continue to simmer, Mr Waller saying he could argue in favour of keeping the US base rate at its current level to give prices a chance to cool off helped lift market sentiment. A slightly higher than expected unemployment count added more weight to the scale, but August’s inflation data will be the ultimate test next week.

Here’s today’s stories:

Back in the financial markets, bitcoin has hit a four-month high.

The crypto asset has jumped back over the $80,000 mark to trade as high as $81,383 this afternoon.

Simon Peters, crypto analyst at etoro, explains why:

Recent moves from the US Treasury - that it will double the size of its long-dated bond buybacks and a willingness to use the General Account to support the long end of the bond market - has brought liquidity back into focus, and in turn renewed interest in bitcoin, as historically it has been a key beneficiary of increased market liquidity.

Attention also remains on the Federal Reserve, which controls short-term interest rates. While inflation remains above target, any signs of a meaningful cooling of inflation over the coming months could provide a further tailwind for bitcoin by increasing the prospect of a more accommodative monetary policy.

Going into the last months of 2026, seasonality could also play a role. The fourth quarter has historically been bitcoin’s strongest performing quarter of the year.

The Bank of England’s chief economist is to renew his push for an increase in UK interest rates today.

Huw Pill will tell the Edinburgh Chamber of Commerce that “clear, prompt and decisive policy action and communication” would help to avoid the danger that inflationary pressures from the Iran war become embedded and persistent.

Pill, who was part of the minority of policymakers who voted for a rate rise in July, argues that “acting clearly, promptly and decisively with Bank Rate” would be effective at dampening down inflation pressures.

Pill will say:

At a time of profound uncertainty, it is important that the MPC offers an anchor for the short end of the market curve, rather than gives the impression that it is chasing market expectations. As reflected in my vote in recent policy rounds, I see benefit in acting clearly, promptly and decisively with Bank Rate.

This would cut through the noise inherent in the current uncertain environment in a way that bolsters the clarity and effectiveness of our policy choices.

Siemens Energy’s Newcastle site has won an important contract in the energy world today – to make steam turbine components for Rolls-Royce SMR’s first three small modular reactors.

Those SMRs are being built on Anglesey in North Wales, and Siemens Energy is to become the first company to manufacture components – including high-pressure turbines and valve casings – for a small modular reactor anywhere in Europe.

Miatta Fahnbulleh, secretary of state for energy security and net zero, says:

This is what our golden age of nuclear looks like in practice: skilled jobs in Newcastle, stronger British manufacturing and a more secure energy future.

Producing these components here in the UK will help strengthen our energy security, reduce our exposure to volatile international gas markets, create new export opportunities for British industry, and reindustrialise the UK.

Back in April, Rolls-Royce secured up to £599m from Britain’s national wealth fund to help it in the race to develop the UK’s first small modular nuclear reactors at Wylfa, Anglesey.

Federal Reserve governor Christopher Waller has said today he is leaning toward keeping interest rates steady at the central bank’s September meeting, provided there are no surprises from upcoming inflation data.

In an interview with Reuters, Waller expressed confidence in the current inflation trends – just days after Fed chair Kevin Warsh argued that there could be ‘work to do’ to tackle inflation.

Waller said:

I’m going to paraphrase John Lennon here. Give disinflation a chance.

I’m not going to say let’s wait until next year, but let’s just wait and see if we get some improvement on this.”

These comments seem to be pushing the dollar down, adding to the yen’s rise today – Japan’s currency has now gained almost 2% today.

Newsflash: Nvidia has agreed to buy AI model platform Hugging Face for $13bn.

Hugging Face is a database of AI models, which recently hit the headlines after being hacked by a rogue group of OpenAI’s agents.

Announcing the deal, Nvidia’s CEO Jensen Huang says Hugging Face is “a vibrant home for the open model developer community”.

Huang says that the deal will speed up the spread of open models, and pledges to help scale up Hugging Face’s platform, strengthen its infrastructure and expand access to AI for developers and institutions.

Huang explains:

More than 18 million developers, researchers and creators use Hugging Face to share more than 3m models, 500,000 datasets and 1m applications. More than 200,000 companies use the platform to discover, evaluate, customize and deploy AI.

Hugging Face will remain an open platform for the entire AI ecosystem. Developers will choose the models they want, the frameworks they want, the clouds and inference service providers they want and the computing platforms they want. Nvidia compute will not be required to build on or deploy through Hugging Face.

Over in the US, the pace of job cuts have slowed despite firms using AI to cut their workforces.

Coaching company Challenger, Gray & Christmas have calculated that US-based employers announced 33,429 job cuts in July, down 27% compared with June, and nearly half as many as in July 2025.

It’s the lowest monthly total in two years.

Andy Challenger, workplace expert and chief revenue officer for Challenger, Gray & Christmas, explains:

“The pace of layoffs fell dramatically this summer. Layoff plans continue to be announced primarily in Tech, and artificial intelligence is still the story, as investments in the technology reshape organizations.

“Hiring has also increased over last year by 25%, so while AI is shifting the labor market, it is not dismantling it.

But….

Technology companies announced 9,867 job cuts in July, taking the total so far this year up to 149,023.

Challenger says:

“Tech remains the center of gravity for this year’s cuts, and AI is still the reason companies give.”

In another sign that market tensions are easing, the yen is rallying against the US dollar.

The Japanese currency has gained 1.4% so far today, to ¥156.5/$, adding to a 0.9% rally yesterday.

That taken the yen/$ exchange rate away from the 160 level that tends to make policymakers jumpy.

Last month, the yan rallied thanks to a joint intervention by Washington and Tokyo. This time, though, investors are attributing the move to increased expectations of a rate hike by the Bank of Japan.

Bank of Japan (BOJ) board member Hajime Takata can take the credit, after saying yesterday the central bank should conduct interest rate hikes nimbly to counter intensifying inflationary pressures, rather than sticking to the fixed semiannual pace anticipated by markets.

Interestingly, Japan’s top currency diplomat Atsushi Mimura has said that financial authorities remain on alert over currency market developments, adding:

“We remain on a state of heightened alert.”

Other European government borrowing costs are dipping this morning too.

The yield on 10-year German bunds is down 1.5bps to 3.36%, while French 10-year bond yields are 1.5bps lower at 4.23%.

These are small moves, but they do show that the bond market sell-off has cooled off this morning (yields fall when bond prices rise.

Just in: The UK services sector has recorded its fastest upturn in output since April.

Data provider S&P Global has reported that firms experienced a “moderate” increase in business activity last month, partly thanks to a rise in new work.

This helped to lifted the Services PMI up to 52.5 in August, up from 52.1 in July, showing faster growth.

However, firms also reported a rise in input cost inflation – Around 31% of firms surveyed said their input prices had risen during August, while less than 1% noted a decline.

This was blamed on higher fuel and transportation bills, alongside rising wages, food prices and technology costs.

Tim Moore, economics director at S&P Global Market Intelligence, explains:

“August data highlighted improving operating conditions across the UK service economy. Business and consumer spending saw further gains after declining during the second quarter of 2026, which led to the fastest expansion of output levels since April.

Service providers are increasingly optimistic about the year ahead business outlook, with confidence levels now close to those seen just prior to the Middle East conflict. However, business activity growth projections were still subdued in comparison to long-run trends amid lingering worries about inflationary pressures and geopolitical tensions.

Higher fuel prices and transportation bills reignited overall input cost inflation in August. Moreover, the rate of output charge inflation in the service sector also accelerated for the first time in four months as businesses sought to protect their margins from suppliers’ price hikes.

Inflation in Switzerland (not the cheapest place anyway) has doubled, driven up by higher enegy prices.

Swiss consumer prices in August were 0.8% higher than a year ago, figures from the Federal Statistical Office showed, up from the 0.4% rate in July.

The jump was driven by 25% increase in petroleum prices, along with pricier housing rentals, in-patient hospital services, and heating oil.

UK housebuilder Crest Nicholson has startled investors with a profits warning this morning, sending its shares sliding by over 12%.

Crest now expects to make a loss this financial year, and to build fewer homes than previously forecast.

It told shareholders this morning:

Market conditions have been more subdued than expected through the seasonally quieter summer trading period, with affordability constraints and competitive pricing continuing to weigh on open market sales rates.

As a result, Crest now expects to only complete 1,300 to 1,400 homes this year, down from previous guidance of 1,400 to 1,500.

It now expects to make a loss of around £10m on an EBIT basis (before interest and tax), down from a previous target of a profit of £5m to £10m.

Anthony Codling of RBC Capital Markets says:

Challenging market conditions will see Crest Nicholson sell 50-100 fewer homes this year than it had previously guided, small numbers which will have a big impact on financial performance, turning small profit into a small loss.

Not what the Group will have wanted as it is currently renegotiating its banking covenants, however year-end net debt is expected to be c.£30m better than previously expected due to fire remediation recoveries and land sale revenues demonstrating that Crest is taking a proactive approach to challenging market conditions.

The UK government bond market is open! And there is reassuring news for borrowers, and our political leaders.

UK bond prices are strengthening, a little, which is pushing down the yield (or rate of return) on these gilts.

10-year UK bond yields have dropped by over 4 basis points (0.04 of a percentage point) to 5.195%, away from the 18-year high set yesterday.

30-year bond yields are down 4bps too, to 5.831%.

Update: AJ Bell investment director Russ Mould reports there is “a measure of calm in government bond markets” today, as the oil price drops.

With Brent crude down about 0.5% at $95.20 a barrel, some of the fears of an inflationary shock that would drive interest rates higher may be easing.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Mortgage borrowers are being warned that borrowing rates are set to rise, as this week’s global bond sell-off ripples through the economy.

Although the turmoil in the bond markets has cooled – for now, at least – the consequences of the jump in bond yields could be serious for borrowers.

That’s because UK swap rates – the interest rates that banks charge when they borrow from each other – have been pushed up by the rise in gilt yields.

The five-year swaps rate yesterday rose above 4.52%, their highest level since October 2023. We’d expect that to result in higher interest rates on fixed-term mortgages.

AJ Bell investment director Russ Mould explains:

Credit card, mortgage and auto loan interest rates will rise if bond yields rise, as the lenders seek to preserve loan book margins and manage their risk.

Such moves would undermine Andy Burnham’s push to ease cost of living pressures.

Yesterday, the yield on UK 10-year government debt hit its highest level since 2008, before retreating to less painful levels thanks to a drop in the oil price.

Oil has been one of the key factors driving the bond market sell-off, as inflationary pressures from high prices could force central banks to raise interest rates.

Tom Simpson, managing director of homes at Yorkshire Building Society, points out that swaps rates were more volatile in March, at the start of the Iran war.

Simpson told Radio 4’s Today Programme:

All things being equal, you would expect a modest increase in mortgage rates based on what we’ve seen so far.

Simpson emphasised that the moves in the swaps market are more modest than six months ago:

“A 0.1 [percentage point] increase, which is what we’ve seen over the last week, is much less of an increase than when we saw a 0.5 [percentage point] increase in 10 days in March when the Iran war broke out.”

The agenda

• 9am BST: Eurozone services PMI report for August

• 9.30am BST: UK services PMI report for August

• 9.30am: ONS Business insights and impact on the UK economy

• 10.30am: Challenger survey of US Job Cuts

• 3pm BST: US services PMI report for August