📈 Download the full Portfolio Performance SlidesView the portfolio breakdown: here📧 Get in touch: [email protected]📱 Behind the scenes: @_theartofinvesting on TikTok🎧 Listen on: Apple, Spotify, YouTube This week on The Art of Investing, the team ask whether the investment landscape is beginning to change as bond yields continue to climb around the world.Chris compares the very different forces driving UK and US bond markets, arguing that while America faces a growing competition for capital to fund the AI investment boom, the UK is confronting a much more uncomfortable inflation and credibility problem.The team also revisit Jackson Hole, where Kevin Warsh’s more hawkish message pushed markets towards expecting further interest rate rises, and examine the latest chapter in the increasingly public disagreement between Scott Bessent and Stanley Druckenmiller over the direction of US bond yields.Alongside the macro debate, they answer listener questions on the role of short-dated gilts in a diversified portfolio, whether higher bond yields have changed the case for the Russell 2000, and why becoming emotionally attached to an investment can be one of the most dangerous mistakes an investor makes.This Week’s Highlights:🛢️ Oil Puts Markets Under Pressure Oil prices jump sharply as conflict escalates again in the Middle East, adding to inflation concerns and weighing on industrials, commodities and interest-rate-sensitive assets.🏦 UK vs US: Two Very Different Bond Problems Chris explains why rising US yields reflect a shortage of capital, while UK bond markets are signalling much greater concern about long-term inflation and the credibility of monetary and fiscal policy.🤖 Is AI Creating a Shortage of Capital? The extraordinary sums being invested in AI and data centres are increasing demand for funding, raising the question of how high bond yields may need to go before capital starts moving out of other assets.📊 Does the Russell 2000 Still Make Sense? Mark explains why he remains positive on US small caps despite rising rates, pointing to strong domestic growth and expectations for significant earnings growth across the index.🛡️ Why Hold Short-Dated Gilts? A listener challenges the portfolio’s short-term gilt position, prompting a discussion about diversification, defensive assets and why bonds do not always protect portfolios when inflation is driving markets.❤️ The Danger of Falling in Love With an Investment The team share painful lessons from their own careers on becoming emotionally attached to positions, ignoring price action and allowing past profits or losses to influence future decisions.Portfolio Snapshot - Week 55:📊 Weekly portfolio performance: -0.9%📈 Total return since inception: +24.6%📅 2026 year-to-date return: +12.0%Top Performers:📈 Invesco EQQQ Nasdaq 100 UCITS ETF: +0.6%📈 iShares Core MSCI EM IMI ETF: +0.4%📈 iShares MSCI India ETF: +0.3%Underperformers:📉 XLI SPDR US Industrials ETF: -4.0%📉 BlackRock World Mining Trust PLC: -2.2%📉 iShares Russell 2000 ETF: -2.0%Portfolio Changes:No portfolio changes this week.The portfolio fell 0.9% as higher oil prices and rising bond yields weighed particularly heavily on cyclical assets, while technology and emerging markets provided some support. The portfolio remains up 12.0% year to date and 24.6% since inception.Big Questions This Week:Are rising global bond yields beginning to change the investment landscape?Why are bond yields rising for very different reasons in the UK and the US?Could the enormous demand for capital from AI eventually pull money out of equities?Do short-dated gilts still have a role in the portfolio if they have delivered little return?Has the rise in bond yields weakened the investment case for the Russell 2000?How can investors avoid becoming emotionally attached to a winning or losing position?What You’ll Learn:✔️ Why rising bond yields do not always mean markets are worried about inflation✔️ What UK bond markets are signalling about long-term inflation expectations✔️ How the AI investment boom is increasing competition for capital in the US✔️ Why short-term bonds can still play a defensive role within a diversified portfolio✔️ How higher interest rates affect small and mid-sized companies differently✔️ Why successful investors need to separate their emotions from their investment decisionsDisclaimer:This podcast is provided for educational and informational purposes only. The content presented is not intended as personal investment advice or a recommendation to buy, sell, or hold any particular securities or investments. All discussions regarding the model portfolio are illustrative and for educational purposes.Your capital is at risk. The value of shares, ETFs and ETCs can fall as well as rise, which could mean getting back less than you originally put in.

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