Bondcast - The Rates Podcast

Imogen Bachra shares her take on to watch in the week commencing 21 September. 
Fed speakers take centre stage
A full slate of Federal Reserve speakers will provide further insight following this week’s more hawkish-than-expected Fed meeting. Markets watch for signs of how closely policymakers’ views align with the latest dot plot and whether the more hawkish tone is broadly shared. NatWest has revised its Fed call and now expects an additional rate hike by the end of 2026, while removing its previously expected 2027 rate cut.
Bank of England speakers in focus
Sarah Breeden and, in particular, Clare Lombardelli will be closely watched following last week’s BoE meeting. Lombardelli is seen as an important swing voice within the MPC, so comments on the potential triggers and timing for a rate hike will be particularly relevant. NatWest retains its call for a November rate hike, although conviction has fallen from around 85% before the meeting to approximately 70%.
UK public finances ahead of the Budget
The latest public finance figures will be one of the final key data points before the October Budget. Borrowing so far this fiscal year is running above the OBR’s March projections. Higher bond yields and inflation have also reduced the government’s fiscal headroom, increasing the focus on the data. Public finances are not normally a major market mover, but the proximity to the Budget means they are likely to receive greater attention.
European data takes a back seat
The European data calendar is relatively light, with survey indicators dominating. The week’s releases are unlikely to materially change the broader macroeconomic narrative.
France and political risk
Political and fiscal developments in France remain an important market focus, with French assets having underperformed significantly. Investors will be watching for any budget-related headlines and developments as discussions evolve.

The Federal Reserve and Bank of England have both been in focus this week, with the Fed delivering a rate hike and the BoE keeping rates unchanged. In this episode, Imogen Bachra and Stuart Sparks examine what the decisions tell us about the outlook for inflation, interest rates and government bond yields – and why the BoE’s latest quantitative tightening (QT) announcement could have longer-term implications for the gilt market.

Key takeaways:

* The Fed delivered a hawkish-leaning rate hike, with the Chair offering little forward guidance and emphasising that future decisions will depend on the evolution of inflation and economic conditions.

* Markets are pricing a significant further tightening cycle, with close to 100bp of additional Fed rate hikes priced by the end of 2027. But the Fed’s projections imply a surprisingly benign path for inflation, with a return to target minus a meaningful rise in unemployment. 

* The Bank of England held Bank Rate at 3.75%, with the Monetary Policy Committee voting 6–3 in favour of no change. A November BoE rate hike remains the base case, although conviction has fallen.

* QT was the bigger market-moving announcement. The Bank plans to continue active gilt sales at £20bn a year, but will change how those sales are conducted and which maturities are involved.

* This could reduce some near-term pressure on long-dated gilt yields, however QT continues to create fiscal costs.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Stuart Sparks, Head of US Rate Strategy
 
This episode was recorded on 17 September 2026.
 
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Imogen Bachra shares her take on to watch in the week commencing 14th of September. 
* Friday's US inflation data was sufficiently firm that it feels like a 25 basis point hike from the Fed next week looks like the path of least resistance. Our base case is still that this is a one and done move. We still see labour market weakness emerging into 2027, which could ultimately pave the way for rate cuts, but clearly persistently elevated energy prices present an upside risk to this view. 
* We have the BoJ at the end of the week that's likely to follow suit with a 25 basis point hike at its meeting, we think, but we're sceptical that Governor Ueda will offer much forward guidance beyond that – instead repeating what he said in July, that in-depth deliberations will be held at every meeting. From a markets perspective, this may be a little bit disappointing with participants left wondering what exactly it is that Treasury Secretary Besson knows that they do not. This might not be the sort of hawkish surprise that they were looking for.
* The Bank of England could be the only major central bank not to raise rates next week, though we do look for the guidance to formally acknowledge upside risks to the inflation outlook, which would mark quite a hawkish shift from the July MPR, but it would reflect the tone from some of the central bank speakers at the Treasury Select Committee hearing last week. This could ultimately pave the way for a rate hike to be delivered in November, which is now fully priced by markets, but regular listeners will know that that's been our base case since March. More important from a markets perspective at the BOE meeting could be the annual vote on QT, and we see a greater risk than consensus that the pace is  maintained at £70bn compared with consensus that it will be reduced to £50bn. This could add another bearish catalyst for longer yields, which are now well above our long held 5.25% 10-year target. Global factors have been the main driver of that rise in yields, but we have long seen domestic reasons, both on the more hawkish monetary policy side, and the more bearish fiscal policy side that can't keep yields at these levels. 
* While we're on central banks, it's worth reflecting on the ECB last week that it was hawkish enough that we now see the short term terminal rate at 3% up from 2.5% previously. We think they will get there in the first half of 2027. But it's important to note that that's driven solely by credibility in the face of an energy shock, despite weak evidence so far of any contagion to core inflation. We did also upgrade our 10-year bund target from 3.3 to 3.6% both on the more hawkish ECB outlook, but also a bearish structural outlook into the end of the year. 
* Away from central banks, in the UK, it's also the big data week. It perhaps takes on a little bit less importance when it coincides with the week of the central bank decision, but nonetheless, it's another month of data on the inflation front and the labour market front that will feed into the BoE's assessment of the risks of second round effects. We see headline inflation ticking up. This is largely about energy prices. In fact, core inflation is expected to edge down, albeit that's largely a rounding error more than anything else. It doesn't change the fact that the long-term path we still think is towards higher core inflation into 2027, where we have a peak of 3.1%. Although central banks and inflation risks were the theme last week and probably likely to be the theme in the week ahead, we also remained squarely focussed on fiscal risks too.
* Next week brings about a cabinet reshuffle in Japan and we'll most closely be watching whom is announced as the minister of state for economic and fiscal policy. And although there's nothing on the calendar as such, we'll watch any headlines related to potential policies announced in the UK as we near the Labour Party conference, as well as any other announcements from President Trump as we near midterms. 
Good luck.

This week on Bondcast, Imogen Bachra is joined by market specialists Stuart Sparks and Oriane Parmentier to discuss the latest developments across the major central banks and what they could mean for rates markets.
Recorded shortly after the ECB’s meeting, the conversation begins with the central bank’s latest 25bp rate hike and the implications of higher inflation and growth projections. The discussion then turns to the Bank of England ahead of next week’s meeting, including the potential for a change in voting patterns, guidance and the pace of quantitative tightening.
The US is also firmly in focus, with the Federal Reserve’s September meeting approaching. The team considers whether the Fed could deliver a rate hike, the implications of recent inflation data and the potential tension between monetary policy and political pressure for lower rates.
Finally, the conversation examines the US long end, including the latest treasury buyback operation and what its relatively modest size tells us about the authorities’ intentions.
Key takeaways:
- The ECB is becoming more hawkish in its outlook
- The Bank of England could acknowledge rising global inflation risks
- Quantitative Tightening could be the more interesting BoE decision
- The Fed is moving closer to a September rate hike
- The long end remains vulnerable to structural inflation and fiscal risks

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guests: Oriane Parmentier, European Rates Strategist
Stuart Sparks, Head of US Rate Strategy
 
This episode was recorded on 10 September 2026.
 
You can also find this episode of Bondcast on Spotify and Apple Podcasts. 
 
Remember to hit subscribe so you can listen to the latest episodes in this series as soon as they're available and get our views on the big themes and events moving markets and shaping the economy.
 
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In this episode of Bondcast: Speakers’ Corner, host Imogen Bachra speaks to Deepika Dayal about one of the key questions surrounding the AI boom: will artificial intelligence ultimately be inflationary or disinflationary?

Deepika explains why the answer depends heavily on the time horizon. While AI could deliver substantial productivity gains over the longer term, the enormous investment required to build the AI infrastructure is already creating pockets of inflationary pressure — particularly in semiconductors, computer equipment, storage devices and software.

The conversation explores whether manufacturers can continue passing higher AI-related costs on to consumers, how AI subscriptions could affect inflation, and what economists should watch for to identify the point at which productivity gains start to outweigh the initial supply-side pressures.

Key takeaways

* AI’s inflationary impact may come before its productivity benefits. The massive infrastructure buildout required for AI is creating demand for specialised chips, computing power and data centres, putting pressure on some technology prices.

* Communication goods are behaving unusually. After roughly 25 years as a source of disinflation, prices for computers, smartphones, software, accessories and other information-processing equipment are showing pockets of upward pressure.

* Chipflation could spread beyond technology. Semiconductors are critical inputs for industries including automobiles and smart appliances. If higher chip costs begin feeding into these sectors, the inflationary impact of AI could become considerably broader.

* AI software is another potential source of inflation. Companies are increasingly monetising AI functionality through dedicated subscriptions and licences. Products such as Microsoft’s Copilot illustrate how AI features that were initially bundled into existing software can become separately priced.

* The impact on headline CPI may initially be limited. Communication goods have a relatively small weighting in the US CPI after decades of disinflation. However, the weighting is larger in the PCE deflator, the Federal Reserve’s preferred inflation measure.

* The key question is when productivity gains arrive. One early indicator could be wage growth. If AI allows businesses to increase output without proportionately increasing labour costs, wage growth could begin to moderate in labour-intensive service sectors without a corresponding increase in labour-market slack.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Deepika Dayal, US Economist

This episode was recorded on 3 September 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts.  
 
Remember to hit subscribe so you can listen to the latest episodes in this series as soon as they're available and get our views on the big themes and events moving markets and shaping the economy.
 
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