For two years the only question about interest rates was how quickly they would come down. This week the new head of America's central bank suggested the next move might be up instead.

That one idea moved almost everything else. Gold fell hard, the dollar rose, and shares finished the week roughly where they started after a wild few days in the middle. Oil went its own way, dropping sharply as the standoff with Iran cooled off.

Figures as at the close on Friday 28 August 2026. The Week column compares with the close on Friday 21 August 2026. Mortgage figures come from the weekly US lender survey published on 27 August. For borrowing rates the change is shown in percentage points, so a move from 5.28% to 5.21% is 0.07 points, not 1.3%. A bond yield is simply the annual return a lender earns for lending to the US government for that number of years, and it sets the tone for what everyone else pays to borrow.

What happened. Kevin Warsh, who took over as chair of the US Federal Reserve in May, gave his first big set-piece speech on Friday at the central bank's annual conference in Jackson Hole, Wyoming. He said inflation is running above the 2% target and that the Fed "has more work to do". Prices in the US rose 3.7% over the year to July on the measure the Fed watches most closely, and 3.3% once petrol and food are stripped out. Before he spoke, traders thought there was about a one in three chance of a rate rise at the September meeting. Afterwards they put it above one in two.

Why it matters. The Fed's rate is currently 3.50% to 3.75%, and for the past two years the argument has been about how fast it would fall. A rise is a different world. Higher rates make cash and bonds pay more, which makes anything that pays no income look worse by comparison. Gold, the classic example, closed the week down 3.3%. The dollar rose, which quietly makes imports cheaper for Americans and more expensive for everyone buying in dollars. One oddity: longer-term US borrowing costs actually eased slightly, because investors reckon a firmer hand now means less inflation later.

What to watch. The Fed's decision on 16 September. Warsh deliberately gave no roadmap, so the August inflation and jobs figures released before then will do most of the talking.

What happened. Nvidia, which makes the chips almost every AI system runs on, reported sales of $96.2bn for its latest quarter on Wednesday 26 August. That is more than double the $46.7bn it made in the same three months a year earlier. Of that, $89.0bn came from selling equipment to data centres. It told investors to expect roughly $108bn in the current quarter, and founder Jensen Huang said sales should grow about 70% in the 2028 financial year, adding that the real limit is how fast the company can make the things rather than how many people want them. The shares closed up 8.7% on Thursday, the biggest one-day gain since April 2025, then closed down 3.3% at $220.41 on Friday.

Why it matters. Nvidia is the most valuable listed company in the world, so if you hold a global tracker fund or a workplace pension you almost certainly own a slice of it. Its results have become a proxy for whether the whole AI build-out is real. The Friday wobble is the more useful lesson: when expectations are already sky high, even excellent news can be followed by a fall, because the good news was already in the price.

What to watch. The $108bn guidance for the current quarter is now a public promise. Whether the customers buying all those chips, many of them funding the purchases with borrowed money, keep placing orders at the same pace is the question that decides the next year.

What happened. On Monday 24 August the US Treasury secretary, Scott Bessent, announced what the administration called "Operation Economic Outcast": sanctions on close to 60 people and companies across shipping, aviation, gold, technology and digital assets, spread over a dozen countries. He stopped short of naming which foreign banks would be punished for dealing with Iran, saying "why would I want to blow up the global financial system?" China, which buys most of Iran's exported oil, was left off the banking list. Then the mood turned. Reports on Tuesday said Washington had paused new military strikes for now. On Wednesday Oman's foreign minister held what he called constructive talks in Tehran about safe passage for ships through the Strait of Hormuz. Brent crude, the global oil benchmark, closed the week at $88.29 a barrel, down 5.9%.

Why it matters. The Strait of Hormuz is a narrow sea lane at the mouth of the Gulf that a large share of the world's oil has to pass through. Traders spent the summer pricing in the risk that it closes. This week they decided the fight is turning into an economic one rather than a shooting one, and cheaper oil feeds through to petrol pumps, airline tickets and eventually the inflation figures that central banks are arguing about.

What to watch. Whether the Hormuz shipping arrangement is actually announced. Iran's security chief has already threatened tankers in response to the sanctions, so the calm is thin.

What happened. Salesforce, which sells the software big companies use to manage their customers, closed up 22.6% at $252.10 on Thursday after its results. Sales grew 11% and it raised its forecast for the year to 11% or 12% growth. It also announced a partnership with the AI firm Anthropic. Trading volume was nearly three and a half times its recent average. Rivals were dragged up with it, with ServiceNow closing up 10.1%.

Why it matters. For most of the past year investors have worked on the theory that if AI can write software cheaply, companies that sell software subscriptions are in trouble. Whole portfolios were arranged around that idea. A 22.6% move in one day in a company that size is not a normal reaction to decent results, it is the sound of a crowded bet being unwound. It is a reminder that a story everybody agrees on is usually already reflected in the price, and that the risk sits in whichever direction fewer people are looking.

What to watch. Whether other established software firms can show, in actual revenue rather than announcements, that AI is bringing money in rather than taking it away. One quarter from one company is not a trend.

What happened. Andrew Bailey, the governor of the Bank of England, was at the same Jackson Hole conference as Warsh, and struck a very different note. He said he sees no real sign that the jump in energy bills is feeding through into wider wage and price rises, calling those effects "quite subdued", and pointed to a softening jobs market. UK inflation rose to 2.9% in the year to July, up from 2.6% in June, almost entirely because the energy price cap went up 13%. Bank Rate has been 3.75% since December. The pound traded near $1.36.

Why it matters. The gap between what the two central banks do lands directly in household budgets. If the Bank stays put while the Fed raises, fixed mortgage deals in the UK are less likely to jump, but savings rates are also unlikely to improve much from here. A weaker pound against a stronger dollar makes American holidays, dollar-priced goods and imported fuel dearer. And Bailey's point about energy matters for a practical reason: this year's inflation is largely a bills story, not a wages story, which is the kind that usually fades on its own.

What to watch. The Bank of England's decision on 17 September, the day after the Fed's. Markets currently expect no change from the Bank, so the interesting part will be the vote split and what it says about the winter.

Americans are still spending, but on different things. July figures showed spending on physical goods fell by $49.9bn while spending on services rose by $86.2bn. The US economy grew at a 1.5% annual pace in the second quarter.

The US jobs market is not cracking. New claims for unemployment benefit came in at 203,000 in the week to 22 August, down 4,000, with 1.78 million people claiming continuously. That is a big part of why a rate rise is even being discussed.

Money keeps flowing to where rates are highest. Brazil's main share index rose for a fifth day running on Thursday to 175,135, helped by a central bank rate of 14% that pulls in foreign money. It is the same force, in reverse, that makes a US rate rise such a big deal for everyone else.

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This newsletter is for educational purposes only and does not constitute financial advice. Figures as at the close on 28 August 2026.