Investors flee US long-term bonds at swiftest rate since Covid-19

In the present day’s agenda: Trump adjustments tune on Zelenskyy; Von der Leyen faces no-confidence vote; Meta wins AI copyright case; Pilita Clark on the following monetary disaster; and why fish are getting smaller

Good morning. Traders are fleeing long-term US bond funds on the swiftest price because the top of the Covid-19 pandemic 5 years in the past, in line with Monetary Occasions calculations primarily based on EPFR information.

Why it’s taking place: America’s hovering debt load is inflicting jitters among the many institutional buyers that use these funds. President Donald Trump’s “large, lovely” tax invoice, which is into consideration in Congress, is forecast so as to add trillions of {dollars} to US debt over the following decade, one thing that may power the Treasury division to promote an enormous quantity of bonds. Traders are additionally bracing themselves for greater inflation from the administration’s tariffs.

Why it issues: The outflow “displays issues over the longer-run outlook for fiscal sustainability”, a Goldman Sachs analyst stated. Longer-dated bonds are significantly delicate to inflation, which erodes the worth of fastened curiosity funds. Traders would possibly decide to diversify their bond holdings extra internationally, one asset supervisor stated, and begin demanding “extra compensation to speculate additional out the curve” on the subject of shopping for new Treasury bonds.

Here’s more on the exodus from long-term US bonds.

Right here’s what else we’re retaining tabs on as we speak:

• US: First quarter GDP estimate.

• EU: A two-day European summit begins in Brussels, whereas the European Central Financial institution’s basic council meets on-line.

• UK: Prime Minister Sir Keir Starmer will launch a brand new commerce technique centered on boosting services export, whereas Financial institution of England governor Andrew Bailey speaks on the British Chambers of Commerce’s annual convention.

• Outcomes: H&M, Nike and Walgreens Boots Alliance report earnings.

5 extra high tales

1. Trump has described Volodymyr Zelenskyy as “very good” after assembly Ukraine’s chief on the sidelines of the Nato summit. He nonetheless struck a more durable be aware on Russia. The US president has oscillated in his attitudes in the direction of either side however has grown more and more pissed off with Moscow of late. He stated yesterday that “Vladimir Putin really has to end that war”.

• Extra Nato: Allies have pledged to satisfy Trump’s demand to raise defence spending to five per cent of GDP by 2035, in a historic rearmament shift.

2. Unique: European Fee president Ursula von der Leyen is going through a no-confidence vote over a Covid-19 pandemic scandal that threatens to scupper her second-term coverage agenda. Far-right lawmakers within the European parliament declare they’ve secured adequate help for his or her movement, with one MEP telling the FT he would submit it today.

3. Meta has gained a copyright case over its synthetic intelligence fashions, with a US federal court docket ruling that its use of hundreds of thousands of books to coach them was “honest”. The tech group had argued the titles had been used to develop a transformative know-how, which was fair “irrespective” of how it acquired the works.

• Nvidia: The chipmaker’s shares hit a record high yesterday, placing it forward of Microsoft because the world’s most respected firm.

• Reddit: Chief govt Steve Huffman warned the platform was pushing to guard its on-line communities from a surge in AI-generated content.

4. Trump has branded Zohran Mamdani “a 100% Communist Lunatic” after the New York mayoral hopeful gained a shock victory within the metropolis’s Democratic main. Trump’s put up got here hours after the 33-year-old leftwing candidate emerged from obscurity to shock the national Democratic establishment.

5. Unique: Non-public equity-backed software program group Visma has chosen London over Amsterdam for a deliberate preliminary public providing subsequent 12 months. The deliberate debut of the €19bn firm, which offers small to medium-sized companies with accounting and payroll software program, is a rare win for the UK’s beleaguered stock market.

From the Journal

A US housing bubble fuelled partly by “subprime” house loans was thought of one of many principal culprits of the final monetary disaster. Fears are rising that property markets may once more be roiled, this time not by dangerous lending practices however by rising numbers of climate-related disasters placing strain on insurers and different vital monetary establishments.

We’re additionally studying . . . 

• Israel-Iran: The extent of the harm from strikes in each nations has been hotly contested, however satellite images provide an image.

• Sleepless Kyiv: Tens of millions of residents are losing sleep to Russia’s night-time assaults because the sounds of sirens, drones and explosions rock the town.

• Summer season market fling: As temperatures rise, ensure you don’t get burnt by unpredictable flare-ups in monetary markets, writes Katie Martin.

• Shrinking fish: Jap Baltic cod have evolved to be smaller and slip by means of nets, in line with landmark analysis that hyperlinks overfishing to adjustments in marine species’ DNA.

Chart of the day 

Shoplifting has been a scourge for the retail business since excessive inflation eroded shopper spending energy within the wake of the pandemic. Now, corporations are increase an arsenal of antitheft know-how to fight an epidemic of petty larceny.

Take a break from the information

It’s an odd, unsettled second in style, writes HTSI’s Alexander Fury, with geopolitical tensions affecting demand. The overwhelming complexity of the world could also be why menswear at this 12 months’s Milan Vogue Week typically resembled a pyjama party — an embrace of a gentler, easier aesthetic.