FirstFT: Company debtors rush into bonds earlier than Trump returns

In the present day’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 document $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 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 boost funds cheaply whereas they will. Massive debtors are additionally beneath strain to refinance shortly, with $850bn of high-grade greenback debt set to mature this yr and one other $1tn in 2026, in line 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 “fairly critical risk events 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 “careful” with the tempo of future charge cuts.

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

• Bond ‘police’: With traders promoting sovereign debt in massive 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 elevate the danger that chancellor Rachel Reeves must impose tighter fiscal coverage as quickly as March.

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

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

• Lebanese politics: Lawmakers are as a consequence of elect a president in a vital gauge of how a weakened Hizbollah will have the ability to 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 towards a yr earlier within the slowest progress in 9 months. The studying underlines deflationary pressures which have pushed bond yields to document lows on this planet’s second-largest financial system. Learn the complete story.

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

3. Nuclear vitality teams are attempting to shrink reactors to the scale of delivery containers in a bid to compete with batteries as a supply of zero-carbon vitality. Firms imagine they will change diesel and gasoline turbines utilized by every little thing 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 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 financial progress and slicing 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 international 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 on-line menace to democracy, not from autocracies reminiscent of 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 very 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 improve 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 one in every 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 duty for the nation’s future, writes Kim Ghattas.

• US vitality: Whereas home vitality manufacturing would possibly rise, Donald Trump will nonetheless battle to drive down oil costs, writes Power Elements founder Amrita Sen.

• UK automobile loans: In the present day’s Massive Learn explores how the authorized fallout from hidden commissions to automobile sellers may value banks billions.

Chart of the day

Non-public firms are staking claims to radio spectrum on the Moon with the goal of exploiting an rising lunar financial system, Monetary Instances analysis has discovered. Final yr, the variety of business 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 greatest liked, most frequented locations to fulfill 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 chronic.