Welcome back investors. It’s nice of you to join us.
There is an old adage in investing to go away (sell) in May and return on St Leger’s Day – the final UK horseracing ‘classic’ of the season happening on Saturday.
It is a phenomenon that plenty took up across the industry if my inbox has been anything to go by. As someone who has not taken time off over August, it has been a welcome sight to see my inbox beginning to return to normality with press releases, emails and the occasional invite.
So what have those investors who left us missed?
Well, bond investors have been hard at work climbing the wall of worry. Perhaps they hate the sunshine and so chose to remain chained to their desks when the weather was warmer? It certainly would track with those of a more curmudgeonly and bearish nature.
The 30-year gilt touched 5.76%, its highest since 1998. Some might view this as worries around the Labour government now with prime minister Andy Burnham at the helm following Keir Starmer’s resignation over the summer. The 10-year is now at 5.2%, placing a premium on UK debt compared with other markets.
In truth, however, bond markets all over the world have suffered. The US 10-year treasury yields hit their highest level since 2023 recently.
There is a long list of things to worry about in other places of the market, too. In the US, investors continue to size up newly appointed Federal Reserve chair Kevin Warsh, who has left them questioning whether he is truly hawkish or secretly dovish. There are some real questions as to how he will approach monetary policy going forward.
Then there is the war in Iran, which has been through ceasefires, but currently both sides remain active and at war at the time of writing. This has led to a volatile ride for certain commodities like oil, which is back up around the $100 per barrel mark as a result.
There has even been some excitement in currency markets, with the US stepping in and buying Japanese government bonds in an attempt to strengthen the yen and put investors off the ‘carry trade'.
Despite the doom and gloom, on the equity side no one has really cared. Most markets have made mid-to-high single-digit returns over the past few months. The fanfare that was the SpaceX IPO was much-watched and, just like its rockets, shares really took off at launch, although it has since come back down to earth.
So overall, those who sold probably missed out on some strong returns. Serves you right.
While there has been a lot on over the past few months, as ever with markets, past performance is no guarantee of future returns. So what are we facing between now and the end of the year?
With inflation higher due to the war in Iran (and other factors), central banks face difficult choices at the final few meetings of 2026. In the US, the Fed is expected to raise rates next week, while the Bank of England may follow suit a day later.
There is more political intrigue on both sides of the Pond too. At home, Burnham’s first Budget will be a big moment for markets, experts said, with the government needing to “get out of the bloody way”.
In the US, against the backdrop of war, the electorate will go to polling stations for the mid-terms, a key battle it seems US president Donald Trump is likely to lose. Democrats need to flip a handful of seats to retake the House but there are whispers that they could take the Senate too.
It seems Trump is also nervous of this, offering voters $5,000 each if he wins. If it looks like a bribe and smells like a bribe…
So there is plenty to rock markets over the next few months. If you’ve come back for St Leger’s Day, it might seem appealing to head off again until Christmas in the hope of catching this year’s usual ‘Santa rally’.
But as we learned over the summer, markets can take a barrage of bad news in their stride and continue to climb higher. They certainly don't wait for you to come back from holiday.
Jonathan Jones is editor of Trustnet. The views expressed above should not be taken as investment advice.