Welcome to this week’s Market Pulse, your 5-minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team.
Today, we’re looking at record-breaking sovereign debt issuance, new UK steel tariffs, and Apple’s decision to lean on Google to power its AI.
But first, our number of the week…
$70 billion
That’s the order volume SpaceX’s IPO has drawn from retail investors ahead of the company’s Friday debut. Retail buyers are expected to receive at least 20% of the shares on offer.
Sidekick Takeaway: Historically, IPO shares have been reserved exclusively for large institutions, only flowing to retail buyers after they hit the market. But SpaceX’s model could showcase a new approach ahead of this year’s other hotly anticipated IPOs.
Only have a minute to read? Here’s the TL;DR:
- Sovereign debt issuance has hit a record $504 billion this year as governments spend on challenges ranging from defence to demographics. But this flood of supply is pushing yields higher, risking a cycle in which weaker growth makes debt even harder to manage.
- The UK could be set to apply elevated steel tariffs in July, shielding domestic producers ahead of British Steel’s renationalisation. With steel prices up to £950 a tonne this year, the measures threaten to deepen the UK’s housing shortage. Faced with industry backlash, ministers have already begun floating exemptions.
- Apple’s upgraded AI features, due later this year, have been trained on Google’s Gemini and will route the most demanding tasks to Google’s cloud. By relying on a competitor’s model, Apple has taken an asset-light approach that spares the company from heavy spending. However, this strategy also risks trading cost savings for control.
It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.
Bond Voyage: Sovereign Issuance Hits Record High
Right now, governments have plenty of reasons to borrow.
Defence budgets are climbing, populations are ageing, and a wave of Covid-era debt needs to be refinanced.
The result is predictable: sovereign debt issuance is running at record highs, with global governments selling $504 billion of debt in 2026 so far.
Italy leads the way, having raised $81 billion. The UK, Belgium, and Serbia have also sold their largest-ever deals.
But issuing debt at this scale comes at a cost, and risks worsening the very problems governments are trying to solve.
When the fix becomes the problem
When bond supply rises, bond prices tend to fall.
Lower prices translate into higher yields – making it more expensive for governments to finance themselves:
- The UK’s £15 billion April offering is instructive. The issue drew record orders, but cleared at the highest 10-year yield since 2008.
- High sovereign yields tend to ripple outward, lifting borrowing costs across the economy. The problem: elevated rates typically slow growth, with firms scaling back investment and consumers reining in spending.
- This challenge isn’t isolated to the UK. Global long-term yields have risen in recent weeks, driven in part by rising bond supply.
When growth is weak, solving structural challenges becomes even harder – including rebuilding defence capacity, funding public services, and rolling over existing debt.
Borrowing to fund these commitments looks attractive in the short run. But a glut of this size risks worsening the challenges it’s meant to solve.
Sidekick Takeaway: For governments, the options to solve this dilemma are narrow. Without pro-growth policies that expand the economy faster than debt rises, intervention from central banks to cap long-end rates may prove necessary.
Forging Ahead: Steel Tariffs Cut Against UK Housing Supply
Government policies create winners and losers – and the UK’s new steel tariffs are no exception.
Starting in July, tariff-free quotas on steel imports to the UK will be cut by 60%. A 50% tariff will be applied above that threshold.
The aim is to shield domestic firms from foreign producers as the government moves to renationalise British Steel.
But the cost of that protection could be high, especially when it comes to housing. In fact, ministers have already signalled the possibility of reversing course.
A concentrated benefit, a widespread cost
Steel is a key input to the construction process, especially for large residential developments. That means steel tariffs could indirectly raise the cost of housing:
- The Construction Leadership Council warned that the new policies risk ‘significant’ shortages in key steel products, compounding existing challenges from the Iran War.
- Steel prices had already climbed from roughly £700 per tonne in January to about £950 in April. According to developers, this increase has added about £4,000 to the cost of each new home.
- As a result, the steel measures run directly against the government’s own housebuilding targets, and risk deepening an already acute housing shortage.
Faced with an industry backlash, the government appears to be reconsidering its policies.
Ministers have already floated exemptions for steel products that can’t be supplied domestically, just months after the measures were announced.
Sidekick Takeaway: Policies with concentrated gains and diffuse costs are often the hardest to sustain. While protecting British Steel may have merit, achieving it by squeezing housing supply is politically risky and economically questionable.
Borrowed Intelligence: Apple Bets on Google to Power Its AI
Apple has long been cast as the laggard of the AI race.
Unlike competitors, Apple hasn’t invested billions in developing its own frontier models.
Instead, its upgraded AI features (due later this year) were trained on Google’s Gemini. When those features go live, they’ll route the most demanding tasks to Google’s cloud.
Whether this agreement pays off depends on how much money Apple can save – and how much control it’s willing to surrender.
Asset-light, but not risk-free
Apple’s approach lets it deliver a frontier-grade model for a fraction of the cost of rivals.
But relying on an outside provider has risks:
- Apple already has a track record of overpromising and underdelivering on AI features. Leaning on someone else’s model could make the company slower to adapt.
- There are also privacy concerns at play. Apple has framed itself as a privacy-first company, which sits awkwardly with routing queries to a rival’s cloud.
- Nonetheless, Apple’s approach protects cash flow as investors grow wary of runaway AI spending. It also builds on the firm’s search agreement with Google, which has generated billions for Apple.
Renting intelligence rather than building it may prove to be a winning strategy. However, it also risks sacrificing flexibility and speed.
Sidekick Takeaway: Apple’s bet is that in consumer AI, the customer relationship matters more than who built the model. If that’s right, the company’s AI strategy may prove shrewd: letting competitors fund the race that Apple intends to win.
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