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The premium above super-safe US Treasuries that investors are demanding to buy corporate debt has dropped to its lowest level in more than a decade.
The collapse in the difference between yields — or spread — is a sign that investors are growing increasingly confident that recent rises in inflation will not hinder the economic recovery.
The spreads between US Treasury and corporate bond yields have tightened markedly this year, as investors gained confidence and clamoured to own marginally higher yielding assets.
However, an increasing number of investors are coming around to the Federal Reserve’s mantra that price rises will prove transitory as the economy reopens, pushing measures of expected inflation lower.
1. DUP leader Edwin Poots quits The head of Northern Ireland’s largest political party has agreed to step down just three weeks into the job, thrusting Stormont’s power-sharing government into jeopardy less than 24 hours after Westminster interceded to prevent its collapse.
2. Dollar boosted by Fed shift in tone The dollar notched its largest two-day gain of the year after Federal Reserve officials brought forward the anticipated timing of the first US post-pandemic interest rate rise. Investors stashed a record amount of cash in an overnight facility at the Fed after the central bank started paying interest on the money to prevent negative rates.
3. Channel 4 privatisation Downing Street will steer the 38-year old public broadcaster towards privatisation as soon as 2022, with ministers launching a formal consultation within weeks after Oliver Dowden, culture secretary, decided to reopen the debate over the “best model” for Channel 4, including an outright sale.
4. NZ looks to UK and EU to diversify beyond China New Zealand is aiming to agree free trade deals with the UK and EU this year to diversify its export markets amid tensions with China. But Damien O’Connor, trade minister, said Wellington would continue to expand its trading relationship with Beijing.
5. JPMorgan-Nutmeg deal The US lender has agreed to buy the UK digital wealth management platform, netting it billions of pounds in assets as it prepares to enter Britain’s retail banking market. JPMorgan did not disclose the price of the transaction but two people familiar with the matter said it valued Nutmeg at about £700m.
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ECB meeting European central bankers gather in Frankfurt today to debate issues including changing the bank’s inflation target and making monetary policy greener.
Iran presidential elections As Hassan Rouhani prepares to step down, data show the deeply unpopular centrist has fallen short on many promises. A victory for conservatives risks being marred by the lowest turnout since the 1979 revolution.
Boohoo shareholder revolt Boohoo is set to face an investor rebellion at its annual meeting as shareholders and advisers raise concerns about the role of its co-founders in a labour abuse scandal.
Euro 2020: England vs Scotland Thousands of Scotland football supporters have descended on London ahead of the European Championship match against England despite calls from the capital’s mayor for those without tickets or a safe place to watch the game to stay away.
The west’s misplaced awe of Russian spycraft If you pour money into espionage and recruit foreign agents motivated by communism or venality, you will discover some secrets. But they have a tendency to go off the rails. Even when Russian spies hit the bullseye, such as helping Donald Trump get elected, there was probably an element of fluke, writes Simon Kuper.
Football vs the culture wars Going to a football match in the middle of a pandemic feels like an endurance test. You must wear a mask at all times and no bags larger than a piece of A4 paper are allowed (why?), writes veteran tournament goer Gideon Rachman, as he reflects on tensions between the sport and politics.
Why we lose track of spending in a cashless society What looks like fraud, feels like fraud but isn’t fraud? A company website that pops up when you search for a government agency but charges a fee for forwarding your details to the real website. Tim Harford worries that we live in a blur, spending cash without perceiving what happened. Covid-19, with its shift to online spending, has catalysed this process further.
Chinese entrepreneur who challenged the state Sun Dawu, one of China’s most outspoken businessmen, sought to deliver a life of “serenity” for local farmers. That vision is in jeopardy following his arrest over a dispute with a neighbouring state-owned farm that has spurred concerns of a government crackdown on private enterprise.
Family feud at Velodyne illuminates Spac pitfalls David Hall and Brad Culkin are inventors, longtime colleagues and brothers-in-law. But after a Spac deal and a boardroom bust-up at their 3D sensor business, Velodyne Lidar, they are now, in Hall’s words, locked in a “fight to the death”.
Looking for something to watch this weekend? FT film writer Danny Leigh reviewed In the Heights, The Reason I Jump, It Must Be Heaven, The Hitman’s Wife’s Bodyguard and The Father — plus the reissued 1996 classic Fargo.