Fears of recession in Europe grew on Monday after eurozone government bond yields fell in response to China's central bank reducing key lending rates and the prospect of gas rationing in Germany.
Beijing's surprise reduction came after July's economic data proved unexpectedly weak, with factory and retail activity squeezed by its zero-Covid policy and Evergrande property crisis.
"There are two clear-cut drivers behind today's fall in yields, weak China data and concerns about the impact of gas supply disruptions on the German economy," said Rohan Khanna, research strategist at UBS.
Germany must cut its gas use by a fifth to avoid a devastating shortage this winter, its top network regulator said, as businesses and households brace for Europe's biggest energy crisis in a generation, the Financial Times reported.
Germany's 10-year government bond yield, the benchmark of the bloc, fell four basis points (bp) to 0.899 per cent.
Germany's two-year yields, more sensitive to central bank rate increase expectations, fell 2.5 bp to 0.588 per cent after briefly hitting the highest since July 22 at 0.643%.
Money markets are pricing in a 50 bps rise from the European Central Bank (ECB) at its meeting in September, in addition to a slight chance of a more significant rate rise.
Investors are waiting for the Federal Open Market Committee minutes on Wednesday and the Jackson Hole symposium next week, after Fed officials provided some hawkish comments despite US producer prices unexpectedly falling last month.
"The consistently hawkish Fed communication is not yet fully discounted in our view with markets looking for only 50 bp in September," Commerzbank analysts said in a research note to clients about the ECB's likely next move.
Italy to stay under ECB umbrella
Italy's 10-year yield fell 2 bp to 3.055 per cent, with the spread between Italian and German 10-year yields at 209 bp. It widened to more than 260 bp immediately after the collapse of Mario Draghi's government last month.
Analysts highlighted two factors behind the recent spread tightening. Firstly, the ECB's so-called first line of defence against excessive divergence among bond yields — Pandemic Emergency Purchase Programme (PEPP) reinvestments — provided significant support for the peripheral bond markets of Italy and Spain throughout last month.
Additionally, Italian right-wing coalition leaders said they would stick to European Union budget rules, easing some fears the country could distance itself from the bloc.
"In the summer months, the impulse to sell BTPs is very limited after reassuring remarks from right-wing coalition leaders and the ECB reinvestments," Mr Khanna said.
"But how long it will take to form a ruling coalition and what happens with the new government remain a big question mark. So we can see a new spread widening after the vote."
Who is Mohammed Al Halbousi?
The new speaker of Iraq’s parliament Mohammed Al Halbousi is the youngest person ever to serve in the role.
The 37-year-old was born in Al Garmah in Anbar and studied civil engineering in Baghdad before going into business. His development company Al Hadeed undertook reconstruction contracts rebuilding parts of Fallujah’s infrastructure.
He entered parliament in 2014 and served as a member of the human rights and finance committees until 2017. In August last year he was appointed governor of Anbar, a role in which he has struggled to secure funding to provide services in the war-damaged province and to secure the withdrawal of Shia militias. He relinquished the post when he was sworn in as a member of parliament on September 3.
He is a member of the Al Hal Sunni-based political party and the Sunni-led Coalition of Iraqi Forces, which is Iraq’s largest Sunni alliance with 37 seats from the May 12 election.
He maintains good relations with former Prime Minister Nouri Al Maliki’s State of Law Coaliton, Hadi Al Amiri’s Badr Organisation and Iranian officials.
Medicus AI
Started: 2016
Founder(s): Dr Baher Al Hakim, Dr Nadine Nehme and Makram Saleh
Based: Vienna, Austria; started in Dubai
Sector: Health Tech
Staff: 119
Funding: €7.7 million (Dh31m)
Financial considerations before buying a property
Buyers should try to pay as much in cash as possible for a property, limiting the mortgage value to as little as they can afford. This means they not only pay less in interest but their monthly costs are also reduced. Ideally, the monthly mortgage payment should not exceed 20 per cent of the purchaser’s total household income, says Carol Glynn, founder of Conscious Finance Coaching.
“If it’s a rental property, plan for the property to have periods when it does not have a tenant. Ensure you have enough cash set aside to pay the mortgage and other costs during these periods, ideally at least six months,” she says.
Also, shop around for the best mortgage interest rate. Understand the terms and conditions, especially what happens after any introductory periods, Ms Glynn adds.
Using a good mortgage broker is worth the investment to obtain the best rate available for a buyer’s needs and circumstances. A good mortgage broker will help the buyer understand the terms and conditions of the mortgage and make the purchasing process efficient and easier.
How the bonus system works
The two riders are among several riders in the UAE to receive the top payment of £10,000 under the Thank You Fund of £16 million (Dh80m), which was announced in conjunction with Deliveroo's £8 billion (Dh40bn) stock market listing earlier this year.
The £10,000 (Dh50,000) payment is made to those riders who have completed the highest number of orders in each market.
There are also riders who will receive payments of £1,000 (Dh5,000) and £500 (Dh2,500).
All riders who have worked with Deliveroo for at least one year and completed 2,000 orders will receive £200 (Dh1,000), the company said when it announced the scheme.
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
