FirstFT: inflation fears haunt Wall Street

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Global markets woke up from their summer calm yesterday as the specter of inflation returned to haunt investors.

Government bonds continued to be dumped following the Federal Reserve and Bank of England policy meetings last week. Both central banks have signaled that their extraordinary bond buying programs will be halted and brought forward the timing of expected interest rate hikes.

In energy markets, Brent crude, the international benchmark, exceeded $ 80 a barrel for the first time in three years. US natural gas prices jumped 10% and European benchmark gas prices have doubled from what they were in August.

The sharp rise in energy prices, tight labor markets and supply chain disruptions are fueling fears that inflation will be more permanent than central banks have suggested so far and will weigh on global growth and corporate profits.

The benchmark S&P 500 index fell 2%, its biggest loss since May, as more than 85% of stocks in the index fell. The high tech, high growth Nasdaq Composite slipped 2.8%, its biggest drop since March.

Government bonds extended their recent massive selloff, sending yields or borrowing costs, which move in the opposite direction to prices, sharply higher. The yield on the 10-year US Treasury bill, which serves as a benchmark for borrowing costs for businesses and households around the world, rose 0.06 percentage point to 1.55%, a record high since June.

The British pound suffered its biggest one-day decline against the dollar this year and fell to its lowest level against the US dollar since January as investors feared the fuel crisis sweeping the UK does lead to a marked slowdown in growth.

“Central banks have tried to convince us that inflation is transitory,” said Dickie Hodges, bond fund manager at Nomura Asset Management. “I think they’ve been in denial.”

As always, thanks for reading and here’s the rest of today’s news – Gordon

Five other articles in the news

1. American generals bear witness to the withdrawal from Afghanistan Two senior U.S. military officials said they believed a few thousand troops should have stayed in the country and acknowledged other tactical and intelligence failures during the chaotic exit. Do you think Washington should have maintained a troop presence in Afghanistan? Tell us in our latest survey.

Elizabeth Warren to oppose Fed second term for Powell The progressive Democratic senator from Massachusetts has said she will oppose the re-appointment of Jay Powell as chairman of the Federal Reserve, calling him a “dangerous man” to head the US central bank. Powell’s current term ends in February 2022 and President Joe Biden will have to make a decision on his appointment soon.

Japan’s ruling party chooses Suga’s successor The Liberal Democratic Party has bet its future on stability rather than betting on a new generation of leaders after choosing Fumio Kishida as its next leader. The 64-year-old former foreign minister will be appointed prime minister of Japan next Monday ahead of the general elections due by November.

Amazon launches home patrol robot The tech giant has unveiled a nearly knee-high autonomous robot, with a periscope camera and two large cartoon eyes, to patrol the house as part of a suite of new tech products that may alarm advocates of the digital privacy. The robot, named Astro, will cost $ 999 and ship to a limited number of customers later this year.

Evergrande sells its banking stake The heavily indebted Chinese real estate developer has raised Rmb 10 billion ($ 1.5 billion) by selling part of its stake in a bank to a public investment group. The sale comes as Evergrande is plunged into a worsening liquidity squeeze after missing an $ 83.5 million interest payment on a dollar-denominated bond last week.

Coronavirus digest

  • Secretary of the Treasury Janet Yellen warned that the United States could run out of money by Oct. 18 if the country’s borrowing limit was not raised. Democrats are rushing to raise the ceiling against the Republican opposition.

  • Europeans are leaving their homes to shop, eat out, travel and visit cinemas as much as they did before the pandemic, a sign of a return in consumer confidence across the country. eurozone.

  • Patients of a private health care provider in Brazil were unaware that they would be “guinea pigs” in a study on drugs including hydroxychloroquine, a parliamentary inquiry announced yesterday.

Follow our coronavirus live blog for the latest pandemic news from our network of journalists around the world.

The coming days

EU-US Trade and Technology Council The group will hold its first summit in Pittsburgh to discuss the defense of supply chains and critical technologies, such as artificial intelligence.

  • US Secretary of Commerce Gina Raimondo said the Biden administration would push US companies to trade with China despite Washington’s tough stance on Beijing on human rights and security in an interview with the FT.

Afghanistan hearings day 2 The testimony in the Afghanistan inquiry is transferred to the House of Representatives today. The House Armed Services Committee will hear from Secretary of Defense Lloyd Austin, Chairman of the Joint Chiefs of Staff, General Mark Milley and Commander of US Central Command, General Kenneth McKenzie.

Britney Spears court hearing Los Angeles Superior Court Judge Brenda Penny will be pressed today to make a crucial decision on whether to keep Britney Spears’ father, James, as conservative, or whether to end the arrangement that controls his life. The expected decision comes as a new Netflix documentary about the pop star airs. It got four stars from our reviewer Suzi Feay.

What else do we read

The strange death of American democracy A constitutional crisis is looming, writes Martin Wolf. As former President Donald Trump tightens his grip on the Republican Party ahead of the 2024 election, care must be taken to ensure that his naive and incompetent approach to the exercise of power does not happen again.

Martin Wolf:

Martin Wolf: “Neither the electoral system nor the Republican Party will go back to what it was” © James Ferguson

Beverage companies worry about sober youth “Drink better, not more”: the industry slogan not only encourages consumers to keep buying, but echoes efforts to reduce problems associated with alcohol problems. Now, as the world reopens, businesses are looking to tackle the looming problem of alcohol skeptics, writes Brooke Masters.

It’s time to put out Facebook’s digital fire hose How much control does the tech giant give users over ads? The response, despite his protests, seems to be barely zero. Many of us have our own stories of algorithm wars. Sometimes they’re trivial, but other times they’re downright cruel.

How Olaf Scholz won the elections in Germany From the start of the campaign, the Social Democrats’ candidate for chancellor Scholz fiercely attacked the many Germans who had supported Angela Merkel in the last four elections but had no strong allegiance to her Christian Union. -democrat. The approach paid off, with spectacular results.

How to Make Singles Finances Work in a World Designed for Couples Almost one in four of us live alone, but dealing with the financial and emotional pressure of dealing with everything on your own can be difficult. In this week’s episode of the Money Clinic podcast, Claer Barrett, editor-in-chief of consumers, is joined by two pundits who champion single life.

Games

What do you do after you break records for the best-selling PC game series of all time? If you are Will Wright, creator of Simcity and The sims, you’re keeping a low profile. Now the 61-year-old is preparing for his comeback.

Will Wright, creator of 'SimCity', 'The Sims' and a new project, 'Proxi'

Will Wright, creator of “SimCity”, “The Sims” and a new project, “Proxi” © Ryan Anson / AFP / Getty Images

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