# Lethargic mood on markets as G20 summit continues with energy crunch, AI boom and government debt front of mind

By Susannah Streeter — 2026-09-01

Susannah Streeter, chief investment strategist at Wealth Club, said: “The Tuesday after a bank holiday is always a struggle, and that’s playing out on markets, with the Footsie largely in early trade. The lethargic mood is being exacerbated by renewed conflict between the US and Iran, keeping worries bubbling about high energy costs, inflation and debt, and the knock-on effect on growth.

“Brent crude, the benchmark, has climbed to hang around $91 a barrel after hostilities erupted again in the Middle East. US forces struck Iranian rocket launchers on Larak Island in the Strait of Hormuz, prompting retaliation from Tehran, including missile attacks on two US bases in Jordan. With Trump now threatening further action against Iran, including against Kharg Island, Iran’s key oil export hub, supply worries are once again front and centre. Shipping levels through the Strait of Hormuz have dropped markedly, underlining the chronic nature of the disruption, with hopes of a resolution repeatedly dashed.

“This is the awkward backdrop for the G20 summit, with finance ministers grappling with an energy squeeze that’s continuing to pile on inflationary pressure. US Treasury Secretary Scott Bessent has blamed weak investment, poorly designed tax systems and skills gaps for sluggish global growth, while talking up America’s own numbers, with US growth benefiting from a wave of AI infrastructure investment.

“They are likely to have been highly irritating remarks for other countries, given that the Iran conflict has induced an energy crunch which is holding back growth. Eyewatering sums are being poured into creating the backbone for the AI revolution, helping to power the US economy, but there remain questions about the future returns from this mega investment cycle. And while that spending is boosting growth, it is also adding to inflationary pressures and sucking in vast amounts of capital.

“The Fed is increasingly wary about those inflationary pressures, with Chair Kevin Warsh at Jackson Hole on Friday saying that the Fed would have work to do if underlying inflation does not move clearly and sufficiently quickly towards its two per cent target. Although he stopped short of giving explicit forward guidance, his comments have still raised expectations of a rate hike in September. So US government borrowing costs are climbing again, with the yield on the 10-year Treasury note rising above 4.78 per cent, a near 20-month high. With bond markets so closely interlinked, what’s happening Stateside is also showing up in UK government borrowing costs, which have taken another sharp turn upwards.

“It’s clear that investors are increasingly wary about government debt piles, and the sheer scale of the AI investment boom adds another complication. Huge amounts of capital are being funnelled into data centres, chips and the infrastructure needed to build out AI, money which might otherwise have found its way into government bonds. That is adding to the competition for capital and helping to push up yields as investors demand higher returns elsewhere. Although Bessent’s message to his fellow finance ministers was to fix their own economies, there are big risks in the AI investment cycle, particularly if the returns fail to live up to the huge sums being poured into it.”

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