Category Archives: Bonds

Global stock markets fall and bonds jump as fears grow over Ukraine war

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Investors dash to safe-haven currencies after Putin updates nuclear doctrine and Ukraine fires missiles into Russia

Global stock markets fell and bond prices have jumped after reports that Ukraine had fired a US-made long-range missile into Russia for the first time and Vladimir Putin approved changes to Moscow’s nuclear doctrine.

Investors dashed into safe-haven currencies such as the US dollar, the Japanese yen and the Swiss franc on Tuesday, after the RBC-Ukraine news outlet reported that Kyiv had carried out its first strike on Russian territory using western-supplied missiles.

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Will Rachel Reeves’s rules on debt and spending survive the budget?

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The chancellor desperately needs more money to finance growth and public spending so expect a bit of tweaking to supposedly strict constraints

Change*. If Labour’s one-word campaign slogan had an asterisk, it would have directed voters to Rachel Reeves’s budget.

Later this month the chancellor will attempt to walk the line between repairing Britain’s battered public realm, while sticking to a manifesto promise to balance the books without raising taxes on working people.

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Labour needs £25bn a year in tax rises to rebuild public services, warns IFS

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Thinktank says tax increases in budget will be necessary even if Rachel Reeves changes fiscal rules

Keir Starmer’s promise to end austerity and rebuild public services will require tax increases of £25bn a year in the coming budget even if debt rules are changed to provide scope for extra investment spending, a leading thinktank has said.

In its preview of the first Labour budget in 14 years, the Institute for Fiscal Studies said Rachel Reeves would need to raise taxes to fresh record levels to meet the government’s policy goals. The chancellor was also warned of the risk of a Liz Truss-style meltdown if the City responded badly to substantially higher borrowing.

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UK urged to protect Ukraine from legal action over private debt default

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Kyiv shouldn’t have to fight ‘shameless bondholders’ as repayment deadline nears, say campaigners

Campaigners are urging Britain’s new Labour government to prevent Ukraine being sued in the UK courts if the country defaults on its debts to private creditors.

Debt Justice said a two-year suspension of Ukraine’s debt payments was scheduled to expire on 1 August, and that action was needed to protect Kyiv from the possibility of legal action from its creditors.

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Asda-owning Issa brothers go their separate ways amid family rift

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Union warns of risks to shoppers and staff after Zuber Issa sells 22.5% supermarket stake to private equity co-owners TDR Capital

The billionaire brothers who part-own Asda have gone their separate ways, with Zuber Issa selling his shares in the supermarket to the private equity firm TDR Capital amid a rift between the siblings.

Zuber owned 22.5% of the Leeds-based grocery chain after a £6.8bn takeover alongside his older brother Mohsin and TDR three years ago. The sale of his stake had been expected for months, but was thought to have been complicated by lock-in agreements.

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Thames Water collapse could trigger Truss-style borrowing crisis, Whitehall officials fear

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Exclusive: Concerns over effect on UK’s finances lead officials to believe utility should be renationalised before general election

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

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Moody’s cuts China credit outlook to negative as economy slows

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Rating agency says Beijing may need to bail out local governments as property sector collapses

China’s ability to repay its government borrowing has been downgraded by the credit rating agency Moody’s, which said the ripple effects from a crisis in the property sector would undermine efforts to revive its flagging economy.

Moody’s warned that Beijing would need to bail out local and regional governments and state-owned enterprises that were struggling with rising debts, hampering efforts to boost investment and growth.

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Bond market sell-off sends UK long-term borrowing cost to 25-year high

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Rate tops level last seen after Liz Truss mini-budget as fears of global inflation and US political instability spook markets

Britain’s long-term cost of borrowing has hit its highest level since 1998, as political instability in the US and fears of sustained high levels of inflation triggered a sell-off in global bond markets.

The yield, or interest rate, on 30-year UK government bonds hit 5.115% early on Wednesday, according to the financial data provider Refinitiv.

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Europe’s banks helped fossil fuel firms raise more than €1tn from global bond markets

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Exclusive: Pan-European investigation looked at thousands of transactions since Paris climate agreement in 2016

Banks including some of Europe’s largest lenders have helped fossil fuel companies to raise more than €1tn (£869bn) from the global bond markets since the Paris climate agreement, according to an investigation by the Guardian and its reporting partners.

In the push to zero carbon, Europe’s biggest lenders face growing pressure to limit their financial support for fossil fuel companies through direct loans and other financing facilities.

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UK and US shares climb as banks and ministers aim to calm Credit Suisse fears

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FTSE 100 rises and European banking shares are up after early jitters over what UBS takeover deal means for bondholders

Stocks climbed on Monday in London and New York after central bankers and politicians sought to soothe jitters triggered by the emergency rescue of Credit Suisse during the weekend.

Central banks in the UK and eurozone issued statements aimed at reassuring investors that – unlike the controversial approach taken by the Swiss authorities in the Credit Suisse deal – their jurisdictions would follow a hierarchy in which equity holders would lose out before bond holders.

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UBS agrees takeover of stricken Credit Suisse for $3.25bn

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Swiss government forces through takeover at well below market value amid fears of global banking crisis

The Swiss government has forced through the takeover of stricken bank Credit Suisse by rival UBS for almost $3.25bn (£2.65bn) – well below its market value – amid fears that a failure to protect depositors would trigger a new global banking crisis.

After a weekend of frantic talks, the Swiss government and the banking regulator brokered a deal once it became clear a $54bn loan to Credit Suisse from the Swiss central bank had failed to halt the precipitous slide in its share price.

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Silicon Valley Bank fails in largest bank collapse since 2008 crisis

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US regulators seize SVB’s assets after a run on the bank, as global institutions monitor situation closely

US regulators rushed to seize the assets of top tech lender Silicon Valley Bank on Friday after a run on the bank, marking the largest failure of such an institution since the height of the financial crisis more than a decade ago.

Silicon Valley Bank (SVB), the nation’s 16th largest bank, failed after depositors – mostly technology workers and venture capital-backed companies – hurried to withdraw their money this week as anxiety over the bank’s situation spread.

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Hedge funds holding up vital debt relief for crisis-hit Sri Lanka, warn economists

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Exclusive: 182 experts say only debt cancellation offers chance of recovery but private investors are playing hardball

Some of the world’s most powerful hedge funds and other investors are holding up vital help for crisis-hit Sri Lanka by their hardline stance in debt-relief negotiations after the Asian country’s $51bn (£42bn) default last year, according to 182 economists and development experts from around the world.

In a statement released to the Guardian on Sunday, the group said extensive debt cancellation was needed to give the economy a chance of recovery and that Sri Lanka would be a test case of the willingness of the international community to tackle a looming global debt crisis.

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Bank of England left in the dark ahead of new interest rate decision

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With fiscal statement deferred and mixed government messaging on tax and spending the BoE has little to go on

The Bank of England will next week consider how much to raise interest rates without having received any guidance from the government about its tax and spending policies, after Jeremy Hunt pushed back the date for this year’s “autumn statement”.

Its policymakers meet on 3 November to decide the increase in the cost of borrowing required to tackle a rate of inflation that climbed above 10% in September.

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Another U-turn looms – how much will it save and what else could the chancellor ditch?

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Corporation tax plans likely to be latest to be dropped – bad news for Kwarteng’s credibility, but good for his balance sheet

Liz Truss is on the verge of reversing one of the last major pillars of her chancellor’s disastrous September mini-budget.

While Kwasi Kwarteng mingles with finance ministers at the International Monetary Fund gathering in Washington DC, discussions are taking place in London that would see the promise to freeze corporation tax rates binned. There is also speculation about dropping smaller measures including a more generous tax treatment of share dividends. These U-turns would come hard on the heels of the humiliating climbdown on Kwarteng’s promise to scrap the 45p top rate of tax.

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The Bank of England’s lifeboat is in choppy waters with its bond buying

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Pensions hedging crisis shows how the City never seems equipped to handle the next big financial hazard

Pension funds have found themselves embroiled in a byzantine world of exotic financial trading that many of them appear to have badly misunderstood.

On Tuesday, a third rescue mission in little more than a fortnight was announced by the Bank of England, which is reprising its role in the 2008 financial crisis as the City’s lifeboat.

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Unfunded tax cuts mean UK ‘will need £60bn spending cuts’

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IFS says Kwasi Kwarteng’s mini-budget will leave ministers making serious reductions in public services

Kwasi Kwarteng will need to find £60bn of savings by 2026 to fill the gap left by unfunded tax cuts and the costs of extra borrowing triggered by a panicked reaction on international money markets to the chancellor’s “mini-budget”, according to the Institute for Fiscal Studies.

The UK will also struggle to hit the chancellor’s 2.5% growth target, with economic forecasts by the investment bank Citigroup that the IFS uses to underpin its analysis showing the UK will struggle to grow at more than 0.8% on average over the next five years.

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Kwarteng considers extending mortgage guarantee scheme

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Initiative may continue beyond December as bank bosses raise concerns over mortgage market

The chancellor is considering extending the government’s mortgage guarantee scheme after UK bank bosses raised concerns over the state of the UK’s mortgage market at a high-level meeting at No 11 Downing Street.

The meeting on Thursday – which was attended by chief executives including Alison Rose of NatWest, Charlie Nunn of Lloyds Banking Group, HSBC UK’s Ian Stuart, Mike Regnier of Santander and TSB’s Robin Bulloch – was scheduled amid mounting fears about the potential fallout from rapidly rising mortgage rates.

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Bank of England in £65bn scramble to avert financial crisis

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Bank of England left with no action but to intervene after Kwasi Kwarteng’s mini-budget

The Bank of England has been forced into emergency action to halt a run on Britain’s pension funds after the impact of Kwasi Kwarteng’s ill-received mini budget prompted fears of a 2008-style financial crisis.

Threadneedle Street said the fallout from a dramatic rise in government borrowing costs since the chancellor’s statement had left it with no choice but to intervene to protect the UK’s financial system.

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Homeowners warned of ‘significant’ rise in UK interest rates

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Bank of England’s chief economist speaks out after mini-budget, with financial markets expecting rates to reach up to 6%

Britain’s homeowners have been warned to brace themselves for a “significant” increase in interest rates from the Bank of England in response to Kwasi Kwarteng’s tax-cutting mini-budget last week.

Huw Pill, Threadneedle Street’s chief economist, added to the concerns of millions of mortgage payers who have already seen hundreds of home loan products pulled by lenders in anticipation of a big increase in the cost of borrowing.

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