Company debtors rush into bonds earlier than Trump returns

As we speak’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 report $83.4bn in investment-grade and high-yield greenback bond gross sales, the best year-to-date determine since 1990.

What’s behind the bond rush? The frenzy of recent 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. Huge debtors are additionally beneath strain to refinance rapidly, with $850bn of high-grade greenback debt set to mature this 12 months 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 affix 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, might be inflationary. One analyst additionally pointed to “pretty important danger occasions in January”, together with US jobs information due tomorrow, which is able to supply traders clues in regards to the future path of rates of interest. Minutes from the final Federal Reserve assembly confirmed officers have been involved about inflation and needed to be “cautious” with the tempo of future price cuts.

Learn our full story on the company bond spree and extra on bond markets beneath:

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

• UK gilts: Rising borrowing prices increase the danger that chancellor Rachel Reeves should impose tighter fiscal coverage as quickly as March.

And right here’s what else we’re preserving tabs on at present:

• Los Angeles wildfires: Flames fuelled by sturdy winds proceed to rage uncontrolled as authorities start to substantiate the primary recognized fatalities.

• Lebanese politics: Lawmakers are attributable to elect a president in a important gauge of how a weakened Hizbollah will be capable of wield its affect.

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

5 extra prime tales

1. China’s shopper costs barely rose in December, climbing 0.1 per cent in opposition to a 12 months earlier within the slowest development in 9 months. The studying underlines deflationary pressures which have pushed bond yields to report lows on this planet’s second-largest economic system. Learn the complete story.

2. Unique: Unions are involved that Lloyds Banking Group is planning to close a whole lot of areas 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 extra from London.

3. Nuclear power teams try to shrink reactors to the scale of transport containers in a bid to compete with batteries as a supply of zero-carbon power. Firms imagine they will change diesel and gasoline mills utilized by the whole lot from information centres to offshore oil and gasoline platforms. Right here’s extra on the race to develop “microreactors”.

4. 4 out of London’s 5 main airports are in search of to develop, with ministers set to rule on plans within the coming months. The choice is a check of tensions between the Labour authorities’s twin missions of boosting financial development and reducing 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 brand new on-line menace to democracy, not from autocracies equivalent to Russia, however from the likes of Elon Musk, writes our editorial board.

Information in-depth

With Donald Trump urgent to take Greenland, the big American navy 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 rising polar tussle with China and Russia.

We’re additionally studying . . . 

• AI fraud detection: Relx’s shift from publishing to the silent enterprise of identification verification has made it considered one of Britain’s Most worthy firms, writes John Gapper.

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

• US power: Whereas home power manufacturing may rise, Donald Trump will nonetheless battle to drive down oil costs, writes Vitality Features founder Amrita Sen.

• UK automotive loans: As we speak’s Huge Learn explores how the authorized fallout from hidden commissions to automotive sellers may value banks billions.

Chart of the day

Personal firms are staking claims to radio spectrum on the Moon with the purpose of exploiting an rising lunar economic system, Monetary Instances analysis has discovered. Final 12 months, the variety of business filings to a world 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, among the finest cherished, most frequented locations to satisfy are tucked away in sudden and unconventional areas, writes Javier Espinoza. For insiders, it is a quintessential side of town’s charms, rewarding the curious and protracted.