FirstFT: ECB to firm up plans to avoid tensions in bond markets

The European Central Bank is expected to step up its pledge this week to support the debt markets of vulnerable eurozone countries if they are hit by a selloff, as policymakers prepare to raise rates for the first time in addition to ‘a decade.

Most of the board’s 25 members are expected to support a proposal to create a bond-buying program to prevent borrowing costs for member states, such as Italy, from spiraling out of control, according to several people involved in the issue. the discussions.

Even without a new program, the ECB already has an additional 200 billion euros to spend buying distressed government debt under its existing bond-buying program. These funds would come from the anticipation of reinvestments of assets maturing for up to one year.

Rates officials, meeting in Amsterdam this week, are likely to clash over when to stop buying more bonds. Some plan to call for a halt in purchases as early as Thursday, weeks ahead of schedule, although they admitted only a minority might back the idea.

Almost all board members agree that the ultra-loose monetary policy the bank has pursued for more than a decade will come to an end, with a rate hike of at least 25 basis points almost certain at the next policy meeting of the bank. ECB on July 21.

Thank you for reading FirstFT Europe/Africa. Do you have any comments on the newsletter? Let us know at [email protected]. Here’s the rest of today’s news. — Jennifer

Five other stories in the news

1. IPOs in the US and Europe fall 90% in value this year The value of initial public offerings in the United States and Europe have fallen this year as Russia’s war in Ukraine and rising inflation and interest rates forced companies to put IPO plans on hold. stock Exchange.

“Once things stabilize, we will see a return to activity, even if it does not reach last year’s levels. People don’t abandon ship – they take a break” – Martin Glass, partner at law firm Jenner & Block

2. Ukraine rejects Macron’s warning against Putin’s ‘humiliation’ President Volodymyr Zelensky’s chief of staff hit back yesterday after the French president said it was important not to ‘humiliate’ Russia over the war in Ukraine, saying ‘the responsibility of the aggressor is not is not humiliation, but justice” and pointing to the bombardment of Ukrainian cities.

3. Fall in demand for the CFA financial analyst qualification A professional qualification known as the “toughest exam in finance” is falling into disuse, with candidates for the Chartered Financial Analyst program performing well below pre-pandemic levels for the third year in a row.

4. Ryanair requires South African customers to take the Afrikaans test In a crackdown on fake passports, the airline is banning South African nationals from boarding flights if they fail a quiz in Afrikaans, a language they may not speak and which has been used forcibly under apartheid. The unannounced test sparked accusations of racial discrimination.

5. UK businesses are testing the four-day working week About 70 companies with more than 3,300 workers will begin a six-month trial this week to test whether a shorter working week – without cuts in staff pay – can be adopted without loss of productivity, after the pandemic caused a redesign of working approaches.

The day ahead

Sunak asked about the cost of living UK Chancellor Rishi Sunak will appear before the Treasury Committee to answer questions about his recently announced support package. A strike is planned by 4,000 members of the railway, maritime and transport unions after the RMT criticized Transport for London for threatening to cut 600 jobs.

D-Day Anniversary It is the 78th anniversary of the 1944 Normandy landings, one of the greatest amphibious military assaults in history, in which Allied forces began to liberate mainland Europe from Nazi Germany during World War II. world.

Apple’s WWDC Apple’s annual Worldwide Developers Conference begins. The iPhone maker will announce updates to its software platforms and may reveal or tease new products.

Summit of the Americas Heads of state from across the Americas will gather in Los Angeles for a meeting overshadowed by arguments about who should be invited, who could boycott the event and what it can accomplish.

What else we read

Can we buy now, pay later and survive the cost of living crisis? The sector has been supercharged by the e-commerce boom during Covid-19 and has become a ubiquitous retail lending choice. But its business model is now under intense pressure as high energy and household prices push customers to tighten budgets, threatening their ability to maintain payments.

The “lost” oligarchs of Ukraine The war is changing the fortunes of Ukraine’s business elite. Some of the country’s wealthiest men played a vital role in supporting the country against Russian aggression in 2014, cementing their political influence and financial interests. But eight years later, they have become more marginalized and their economic weight has diminished.

Critical time for Boris Johnson The British Prime Minister faces a crucial by-election in rural Devon this month and growing pressure to step down. His reputation has been marred by a party scandal during the Covid shutdowns and the worst cost-of-living cut in a generation, with allies admitting rebel Tory MPs could trigger a vote of no confidence this week.

There’s another act coming in this market drama US stocks pulled back from the edge of the cliff – the 20% drop that defines a bear market. Many are wondering how this drama, the worst start to the year since 1970, will end. Ruchir Sharma’s view is that this is an intermission and the next act will bring another step down.

How ESG investing took hold The acronym is less than two decades old, but it may already be nearing the end of its useful life. With allegations of greenwashing at the highest level, should funds still bundle environmental, social and governance factors?

Travel

On an angling trip by train, Ruaridh Nicoll trades London’s rush hour for Hampshire’s peaceful, trout-filled streams that flow as clear as air.