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President Trump may not be on the ballot, but the 2026 US midterms are shaping up to be a referendum on his presidency. Paul Diggle and Lizzy Galbraith unpack strong Democratic momentum, what Aberdeen's election model implies for control of Congress, the key Senate battlegrounds to watch, and what different election outcomes could mean for fiscal policy, AI regulation, and financial markets.

The global monetary policy cycle has turned back to hiking, following two years of (nearly) synchronised rate cuts. In this episode of Macro Bytes, Chief Economist Paul Diggle is joined by Jon Butcher, Felix Feather and Sree Kochugovindan from Aberdeen's Global Macro Research team to discuss the shift back towards monetary tightening. A week or two on from major decisions from the US Federal Reserve, Bank of England, European Central Bank and Bank of Japan, the team assesses whether policymakers are delivering a small number of "risk management" rate hikes, or embarking on a sustained tightening cycle. The discussion examines the economic forces driving rate hikes, including high energy prices, currency developments, and rising estimates of neutral interest rates. The team also explores an increasingly important issue: the growing intersection between central banking and politics.

AI may be digital, but its success depends on a very physical reality: data centre construction. As investment in AI infrastructure surges, local opposition is growing too, with concerns over power use, water consumption, visual intrusion, and noise all prominent. In this episode, Paul and Lizzy are joined by Nancy Hardie from Aberdeen’s sustainability team, and Tim O'Reilly from datacentre developer Tritax. They explore the economics, politics and geopolitics of the AI infrastructure buildout. Is opposition to datacentre construction a risk to the “AI trade”? Is this backlash a stand-in for broader societal concerns about who benefits from, and who pays for, the AI revolution? And what does responsible datacentre construction look like in practice?

Long-term bond yields have been hitting multi-decade highs. Lizzy Galbraith and Paul Diggle discuss the drivers of this increase in government borrowing costs, what policymakers can and can’t do about it, and at what point higher yields weigh on the economy and broader financial markets. The AI capital investment boom and hyperscaler issuance are playing an important role in driving yields up, but that may turn mean that the impact is different to what conventional wisdom would suggest.

Andy Burnham is set to become Britain’s Prime Minister on 20 July and promises a new style of governance - “Manchesterism”. Luke and Lizzy discuss what Manchesterism means in practice, whether devolution is a credible growth strategy, how a Burnham government might navigate financial markets, and how tight fiscal constraints could ultimately limit both its policy agenda and political fortunes.

Many economists and investors try to predict the business cycle in order to time their investments into financial markets. In this episode, Paul and Luke speak to Tyler Goodspeed, author of “Recession: The Real Reasons Economies Shrink and What to Do About It”, who rejects much conventional wisdom on the business cycle, arguing instead that recessions are the result of external shocks that cannot be predicted. They discuss why humans are pre-disposed to see patterns in economic data, the usefulness or otherwise of business cycle timing indicators, and the likelihood of the current energy shock causing a recession.

Most central banks started the year preparing to cut interest rates further. Then geopolitics intervened. In this episode Paul and Luke unpack how the Iran-driven energy shock has upended rate expectations, why different central banks are responding in different ways, and what that means for inflation and growth. We also tackle two key market questions: what will new Fed chair Kevin Warsh do with the balance sheet, and can equities stay resilient as inflation spikes and yields rise?

Near earth orbit is increasingly a site of economic activity, and a domain of great power competition. Paul and Luke are joined by Hannah Lee, Thematic Investment Researcher at JP Morgan, to discuss how the collapse in launch costs has opened up a wide range of commercial use cases for space, the prospect of placing data centres, semi-conductor fabrication, and pharmaceutical development in orbit, and the way in which space has become a strategic military domain.

The UK local and devolved regional elections are shaping up to be rough for the incumbent Labour party. Speculation about political leadership change is likely to increase as a result. If there is a change of UK Prime Minister (and Chancellor), who could it be, what would be the process, and most importantly for Macro Bytes, what are the economic and market implications? Paul and Lizzy lay out the runners-and-riders, and the possible policy changes across tax-and-spend, regulation, Europe, and defence policy.

The release of China’s Deepseek R1 model last year, which rivalled many US large language models but was trained at a fraction of the cost, seemed to kick-off a new realm of competition between the US and China. Luke is joined by Robert Gilhooly, Senior Emerging Markets Economist at Aberdeen, to discuss the nature of the AI race between the US and China, who is currently winning, whether government strategies around things like export controls and energy policy can help determine who the winner might ultimately be, and whether even framing the contest as a “race” with a single “winner” is the right way to think about how the technology and policy is likely to evolve.

The Iran war is now in its 5th week, longer than many in the market seem to have been expecting, and it continues to be a source of significant asset price volatility. Paul and Luke are joined by Victoria Scholar, Head of Investment at interactive investor, to consider the market and investor reaction to the conflict. They discuss the significance of the oil price as both barometer and transmission mechanism of the conflict, the performance of EM vs DM markets, investor interest in gold, where diversification can be found in a geopolitical crisis, and whether retail investors can be better contrarians at market turning points.

The war in Iran and the wider Middle East has dealt a significant blow to asset prices. Paul, Luke and Lizzy look at the US and Israel’s war aims and examine why Iran’s response has been larger than expected. They go on to consider what asset prices appear to be pricing in about the likely outcome of the conflict, and what this could mean for growth, inflation and interest rates. They also reflect on how US policy fits within Trump’s broader foreign policy agenda.

The war in Ukraine is now four years old, and the nature of modern warfighting - and Europe’s defence needs - has shifted dramatically as a result. Lizzy and Paul talk to John Ridge and Erin Hallock of the NATO Innovation Fund, a multi‑government‑backed venture capital fund, about the accelerating pace of innovation on the battlefield, why governments must procure and adopt defence technology far faster to turn late‑stage prototypes into scalable capability, and how the Fund is finding and funding early‑stage defence, security and resilience businesses.

2026 has started with a flurry of political shocks. Luke and Lizzy talk to Jens Larsen, Practice Head of Geoeconomics at Eurasia Group, about the structurally elevated geopolitical volatility that investors now face and why this matter to markets. They discuss the fundamental drivers of heightened political risk, including the end of the unipolar moment and the re-emergence of great power competition, the break down in operating consensus that underpinned domestic politics until recently, the chance of US military action in Iran, and whether UK fiscal policy will change significantly under a potential new prime minister and Chancellor.

With President Trump threatening fresh tariffs on various economies, trade wars are back in focus.  Moreover, the risk of the trade war spreading to a capital war has become more pressing. The EU has been considering activating its “Anti-Coercion Instrument” in response to US threats to Greenland, which could see services trade and capital flows targeted.  Paul, Luke, and Lizzy discuss how a capital war could be the next stage of the global trade war, where the EU may have leverage over the US in such a conflict, the prospect of European institutions dumping US treasury holdings, and whether the US capital account surplus is really a chokepoint trading partners could exploit.