FirstFT: Investors struggle to trade eurozone debt without ECB safety net


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Good morning. German authorities bonds are recording their greatest swings for the reason that eurozone debt disaster a decade in the past because the European Central Bank’s withdrawal strips the market of one in all its most vital consumers.

The yield on Germany’s 10-year Bund has moved in at the least a 0.1 proportion level vary on 79 days in 2022, in accordance to Financial Times calculations primarily based on Refinitiv information. Bund yields haven’t swung in such a variety so usually since 2011, and solely did so on someday final 12 months.

Liquidity within the area’s bond markets — the power to trade debt simply — has been hampered by fears of a looming recession, with many merchants rising bearish because the ECB raises rates of interest to curb inflation.

At the identical time, merchants can now not depend on the ECB as a bond purchaser of final resort after the central financial institution halted its €1.7tn pandemic-era asset-purchasing programme and its principal €3.3tn bond-buying scheme this 12 months.

The deteriorating buying and selling situations have led to a robust uptick in volatility in a market that acts as a yardstick for borrowing prices throughout the area.

“Market conditions are impaired in the bond markets,” stated Antoine Bouvet, senior charges strategist at Dutch financial institution ING. “Everyone has the same view so no one’s willing to take the other side.”

Thank you for studying FirstFT Europe/Africa — Gary

1. Thames Water critiques information centres’ water use The utility has launched a probe into the impression of knowledge centres, which generate big quantities of warmth, on consuming water provides to cool servers in and round London because it prepares to impose a hosepipe ban this week on 15mn clients in one of many UK’s worst drought-hit areas.

2. Russia accuses Ukraine of killing Putin supporter’s daughter Moscow’s FSB safety service has blamed Kyiv for the automotive bombing that killed nationalist commentator Daria Dugina, 29, the daughter of Alexander Dugin, on Saturday, accusing a Ukrainian lady of planting the explosive earlier than fleeing to Estonia. Ukraine denied any involvement.

3. Coal-rich Poland laments reliance on Russia Poland responded rapidly to the Kremlin’s invasion of Ukraine by banning imports of Russian coal. In doing so, it minimize one in all its principal sources of home gas provide, leading to the specter of a winter heating disaster and a scramble to discover substitutes as far-flung as Colombia and South Africa.

Warsaw’s ban on Russian coal began in April and prompted panic shopping for by Polish households © Janek Skarzynski/AFP/Getty Images

4. Turkey faucets tourism to regular fragile economic system After two years of the pandemic disruption, tourism in Turkey is on track for a file 12 months, helped by a plunge within the lira that has made it a less expensive vacation spot than many European rivals and supplied a international currency lifeline to President Recep Tayyip Erdoğan’s authorities.

5. Kenyan election end result problem Opposition chief Raila Odinga has filed a petition to Kenya’s Supreme Court difficult William Ruto’s victory on this month’s presidential election, demanding a rerun and fuelling uncertainty in east Africa’s most superior economic system. Last week, 4 of seven electoral commissioners disowned the outcomes, with one claiming the ultimate vote tally was 100.01 per cent.

The days forward

UK hosepipe bans South West Water will introduce a ban at the moment protecting Cornwall and components of Devon, the primary such restrictions in 26 years. Thames Water’s ban comes into impact tomorrow throughout the south of England, whereas restrictions for Yorkshire households start on Thursday.

Inflation information S&P Global/IHS Markit August composite, manufacturing and providers buying managers’ indices are out for the eurozone, France, Germany, Japan and the US. The eurozone studying is forecast to drop from 49.9 in July to 49.5 in August. EU August flash shopper confidence and US July house gross sales are additionally out.

Corporate earnings German property firm TAG Immobilien releases first-half outcomes, whereas US retailer Macy’s delivers second-quarter figures.

What else we’re studying and listening to

What explains the surge in methane? Levels of the potent greenhouse fuel — which has a warming impression 80 occasions higher than carbon dioxide — are rising at a file price. Scientists are not sure of the trigger and the way to curb it. The implications for local weather change are immense, placing “methane hunters” in a race towards time.

The rise and rise of Korean popular culture Korean tradition has grow to be so widespread that Ok-pop idols are invited to the White House, Ok-pop stars are international ambassadors for luxurious manufacturers and Korean tv collection break viewership information. Fashion stands out as the subsequent component of Hallyu, or the “Korean wave”, to take over the world.

A story of woe in South America’s ‘Switzerland’ Uruguay sells itself to traders as a beacon of sound governance in a area beset by corruption and turmoil. After a decade-long however failed try to develop a world-class iron ore mine, Indian tycoon Pramod Agarwal describes that status as “eyewash”.

A struggle over Taiwan might go nuclear The single most vital query a few potential struggle between the US and China over Taiwan is whether or not it might stay non-nuclear, writes Michael Auslin, creator of Asia’s New Geopolitics and a fellow at Stanford’s Hoover Institution.

Betting on crypto to bust Big Tech energy Silicon Valley enterprise capital agency Andreessen Horowitz is betting on cryptocurrencies to break up the extreme focus of energy held by just a few Big Tech corporations it performed a outstanding function in creating, Chris Dixon advised the FT’s Tech Tonic podcast. Listen to the newest episode right here.

Food & drink

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The world of canned drinks is bursting with progressive cocktails, cutting-edge winemakers and luxurious spirits

Disrupted Times — Documenting the adjustments in enterprise and the economic system between Covid and battle. Sign up here

Working it — Discover the large concepts shaping at the moment’s workplaces with a weekly e-newsletter from work & careers editor Isabel Berwick. Sign up here

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