Corporate borrowers rush into bonds before Trump returns

Right now’s agenda: Los Angeles wildfires rage on; China deflation fears; nuclear “microreactors”; Trump’s Arctic tussle; and personal sector eyes the Moon’s airwaves

Good morning. Company debtors have kicked off 2025 with a file $83.4bn in investment-grade and high-yield greenback bond gross sales, the very best year-to-date determine since 1990.

What’s behind the bond rush? The frenzy of latest debt gross sales comes as spreads — the distinction between the yield on company debt versus safer authorities bonds — are close to multi-decade lows, spurring firms to lift funds cheaply whereas they will. Massive debtors are additionally below strain to refinance rapidly, with $850bn of high-grade greenback debt set to mature this yr and one other $1tn in 2026, in keeping with Wells Fargo calculations. Excessive-grade debtors together with BNP Paribas, Société Générale, Toyota, and heavy equipment maker Caterpillar have led the push. US banks are anticipated to hitch the fray later this month after their earnings season.

Why it issues: The newest deal burst comes as firms lock in cheaper debt earlier than Donald Trump’s inauguration, with economists warning that the incoming US president’s telegraphed insurance policies, together with commerce tariffs, may very well be inflationary. One analyst additionally pointed to “pretty essential danger occasions in January”, together with US jobs knowledge due tomorrow, which is able to supply buyers clues concerning the future path of rates of interest. Minutes from the final Federal Reserve assembly confirmed officers have been involved about inflation and wanted to be “careful” with the tempo of future price cuts.

Read our full story on the corporate bond spree and extra on bond markets beneath:

• Bond ‘police’: With buyers promoting sovereign debt in large economies amid a deluge of borrowing, markets have entered a new era of antagonism with governments, fund managers say.

• UK gilts: Rising borrowing prices elevate the chance that chancellor Rachel Reeves must impose tighter fiscal policy as quickly as March.

And right here’s what else we’re conserving tabs on as we speak:

• Los Angeles wildfires: Flames fuelled by robust winds proceed to rage out of control as authorities start to substantiate the primary identified fatalities.

• Lebanese politics: Lawmakers are as a result of elect a president in a essential gauge of how a weakened Hizbollah will have the ability to wield its influence.

• Corporations: Buying and selling updates are anticipated from Greggs, Marks and Spencer and Tesco, which additionally stories third-quarter outcomes.

5 extra prime tales

1. China’s client costs barely rose in December, climbing 0.1 per cent in opposition to a yr earlier within the slowest development in 9 months. The studying underlines deflationary pressures which have pushed bond yields to file lows on the planet’s second-largest economic system. Read the full story.

2. Unique: Unions are involved that Lloyds Banking Group is planning to close a whole lot of places and axe extra jobs after its transfer to permit Halifax, Lloyds and Financial institution of Scotland clients to make use of any of its branches throughout the three manufacturers. Akila Quinio has more from London.

3. Nuclear power teams try to shrink reactors to the dimensions of delivery containers in a bid to compete with batteries as a supply of zero-carbon power. Corporations imagine they will change diesel and gasoline turbines utilized by all the pieces from knowledge centres to offshore oil and gasoline platforms. Here’s more on the race to develop “microreactors”.

4. 4 out of London’s 5 main airports are searching for to increase, with ministers set to rule on plans within the coming months. The choice is a take a look at of tensions between the Labour authorities’s twin missions of boosting economic growth and cutting the UK’s carbon emissions.

5. European leaders warned Donald Trump to not meddle with the continent’s borders yesterday. The feedback from German Chancellor Olaf Scholz and France’s overseas minister got here a day after the US president-elect set out his designs on Greenland and the Panama Canal.

• The FT View: Europe is confronting a new online threat to democracy, not from autocracies resembling Russia, however from the likes of Elon Musk, writes our editorial board.

Information in-depth

With Donald Trump urgent to take Greenland, the massive American army presence already on the Arctic island exhibits its important significance to US safety. As local weather change reshapes the area and opens new buying and selling routes near North America, Greenland’s geostrategic significance is prone to enhance amid America’s growing polar tussle with China and Russia.

We’re additionally studying . . . 

• AI fraud detection: Relx’s shift from publishing to the silent enterprise of identity verification has made it certainly one of Britain’s most useful firms, writes John Gapper.

• Lebanon: For many years, politicians in Beirut have blamed their inaction on outdoors forces. It’s time they took responsibility for the nation’s future, writes Kim Ghattas.

• US power: Whereas home power manufacturing would possibly rise, Donald Trump will nonetheless struggle to drive down oil prices, writes Power Facets founder Amrita Sen.

• UK automotive loans: Right now’s Massive Learn explores how the authorized fallout from hidden commissions to automotive sellers could cost banks billions.

Chart of the day

Personal firms are staking claims to radio spectrum on the Moon with the intention of exploiting an emerging lunar economy, Monetary Instances analysis has discovered. Final yr, the variety of industrial filings to a worldwide co-ordinating physique for lunar spectrum outstripped these from area businesses and governments for the primary time.

Take a break from the information

In Brussels, a few of the finest liked, most frequented locations to satisfy are tucked away in unexpected and unconventional locations, writes Javier Espinoza. For insiders, this can be a quintessential side of town’s charms, rewarding the curious and protracted.