The Flip Side

The UK’s fiscal policy faced a pivotal moment as Chancellor Rachel Reeves delivered her second Autumn Budget, confronting market and political pressures. The budget builds fiscal headroom mainly through tax rises deferred until 2028, sparking debate over its credibility.

Markets responded favourably, with gilt yields steady and the FTSE 250 gaining ground since. Yet sentiment remains fragile amid ongoing political uncertainty.

In Episode 78 of The Flip Side podcast, Global Head of Research Brad Rogoff and UK Chief Economist Jack Meaning debate the implications for markets, inflation and the UK’s economic future.

Clients of Barclays Investment Bank can read more on UK macro strategy with our latest reports on Barclays Live, including:

• Autumn Budget: Consolidate, but not yet
• The signal from the noise

Japan’s economic policy stands at a crossroads as Prime Minister Sanae Takaichi takes office, with the legacy of Abenomics challenged by shifting market and political realities.

The yen has halved against the dollar since 2012, superlong Japanese Government Bond (JGB) yields are at record highs, and demographic changes have reshaped demand for government bonds, setting the stage for a global debate on whether Japan’s new leadership can adapt its economic strategy to meet current challenges without causing instability at home or abroad.

In Episode 77 of The Flip Side podcast, Global Head of Research Brad Rogoff and Head of Japan FX & Rates Strategy Shinichiro Kadota analyse the credibility of Japan’s fiscal ambitions, the fragility of JGB supply-demand, and consider the impact of persistent inflation on the Bank of Japan’s rate path.

Artificial intelligence has become the defining investment theme of the current market cycle, with capital expenditure on AI infrastructure reaching unprecedented levels. Hyperscalers have announced nearly $400 billion in capex for this year alone, and forecasts suggest annual increases of 30% in the years ahead. As investors weigh the promise of this transformative technology against the risks of overbuilding, the debate intensifies: will markets continue to run efficiently or are we repeating the excesses of past tech booms that led to busts?

In Episode 76 of The Flip Side podcast, Brad Rogoff, Global Head of Research, and Venu Krishna, Head of US Equity Strategy, examine the forces behind the AI investment surge and consider the bull and bear cases that surge presents. They explore whether current spending is justified by demand, how power and infrastructure constraints could shape the outlook, and what lessons can be drawn from previous cycles of rapid tech expansion.

With AI capex now central to both equity valuations and broader economic growth, this episode unpacks the critical questions facing portfolio managers as they navigate one of the most consequential debates in today’s markets.

For deeper insight, clients can access related Barclays Research on Barclays Live:

Equity Strategy: Lost My Chain-of-Thought: Could the AI narrative stumble?

Food for Thought: Generative AI vs. cash generation

Episode 69 'Is there too much hype for AI and the hyperscalers?'

Important Content Disclosures

In June, US banking regulators, led by the Federal Reserve, proposed changes to the supplementary leverage ratio (SLR), a regulatory measure used to ensure financial stability by limiting excessive leverage.

Despite expectations that easing the SLR rules will unlock lending and liquidity in the US economy, concerns remain over potential risks to financial stability. While large US banks tend to maintain capital buffers well above regulatory minimums, critics believe the Fed’s proposal could shift capital away from the intended outcomes and toward shareholders or proprietary trading.

In Episode 75 of The Flip Side podcast, Global Head of Research Brad Rogoff and US Large-Cap Bank Analyst Jason Goldberg debate whether the SLR changes will strengthen or strain the US banking system.

Clients of Barclays Investment Bank can read more on bank capital in several recent publications:

• Large-Cap Bank Capital Outlook: SCB improvement near-term, more meaningful changes looking out
• Fed issues proposal to reduce SLR minimum, the first of several capital changes expected
• SLR relief - Why we think it helps

Despite widespread expectations of weakening demand for oil, market fundamentals are showing signs of tightening. A slowdown in US shale production and resilient demand across emerging economies could point to a potential shift in the price of oil.

When it comes to demand, elevated refining margins and unexpectedly low inventory levels suggest that actual demand may be outpacing modelled projections.

On the supply side, extended development timelines for new projects and the lingering effects of pandemic-era underinvestment have left the market increasingly exposed to potential shortfalls.

In Episode 74 of The Flip Side podcast, Global Head of Research Brad Rogoff and lead equity analyst for European energy Lydia Rainforth consider the evolving dynamics of the oil market.

Commercial & Industrial loans from banks are on the decline, and lending to Main Street and consumers from non-bank financial institutions (NBFIs) is on the rise. But here’s the paradox: traditional banks are fuelling this rise of NBFIs by lending capital to what were once their competitors. 

While this systemic shift plays out among lenders, there are questions about whether post-global financial crash regulations – such as stress testing and liquidity requirements – are keeping pace with this market as it grows. Could further growth in this $1 trillion market threaten the stability of the wider banking system?

In Episode 73 of The Flip Side podcast, our Global Head of Research Brad Rogoff and Senior High Grade Financials Analyst Pete Troisi debate whether the risks outweigh the opportunities in this evolving market. 

US Treasury bonds are widely regarded as the “world’s risk-free asset.” However, in recent weeks, global investors have increasingly shied away from 30-year US bonds, opting for flexible, shorter-term maturities, due to a combination of growing interest rate risk, sticky inflation and economic uncertainty.

As a result, 30-year interest rates are within striking distance of their highest level since the global financial crisis. This demand for risk premium is not limited just to US long-dated bonds; UK gilts and Japanese 30-year bonds have also experienced new highs recently, suggesting the bond market could be starting to rebel.

In episode 72 of the Flip Side podcast, our Global Head of Research Brad Rogoff joins Global Chairman of Research Ajay Rajadhyaksha to assess the situation and debate whether the high rates are transitory or here to stay.

Clients of Barclays Investment Bank can read further analysis of these topics in the latest Global Rates Weekly titled ‘Unusual uncertainty’ on Barclays Live.

Following the 2024 US election, predictions of a dollar rally were easy to come by, based on the presumption that President Trump would implement his proposed trade agenda. While Liberation Day and subsequent trade negotiations see some of those expectations realised, the dollar rally hasn’t materialised. In fact, the narrative has turned to widespread concern that the age of the “mighty dollar” is coming to an end.

With investors seemingly losing faith in the Greenback, Global Head of Research Brad Rogoff sits down with Themos Fiotakis, Head of FX Research, to discuss whether cyclical issues, including new trade policies, are squeezing the dollar or if more structural forces, such as the longer term de-dollarisation of reserves, are at play.

Clients of Barclays Investment Bank can read further analysis of these topics in ‘The end of the dollar as we know it?’ on Barclays Live.

Important content disclosures

The course of the US economy has changed since the beginning of April, when tariffs were introduced – and subsequently paused. This, combined with reduced immigration and already waning consumer and business confidence in the face of growing economic and geopolitical uncertainty, raises the question: have these tariffs introduced the possibility of a recession in 2025?

In this episode, Global Head of Research Brad Rogoff sits down with Ajay Rajadhyaksha, Global Chairman of Research, to unpack the economic effect, debating whether the anticipated slowdown in growth will lead to a recession in an economy that grew at 2.5% in 2024. Brad and Ajay examine key economic areas, including the labour force, consumer spending, business investment and currency effects as they discuss what’s next for the US economy.

Clients of Barclays Investment Bank can read further analysis of these topics in our Q2 2025 Global Outlook report and on our Tariffs 2.0 Hub on Barclays Live.

AI has been a major focal point for investors as tech companies compete for an edge in the race to deliver on its promises.

The hyperscalers – tech giants like Microsoft, Amazon, Alphabet and Meta – have invested heavily in developing massive data centres, spending billions to stay ahead. But could DeepSeek, the Chinese startup, force a fundamental rethink of what’s required for AI to advance?

In episode 69 of The Flip Side, Brad Rogoff, our Global Head of Research, and Ross Sandler, Head of Consumer Internet Equity Research, dive into the potential long-term effects of DeepSeek’s breakthrough. They explore whether hyperscalers still live up to the hype and how future AI innovations could alter the competitive landscape.