Records in New York, nerves in the gilt market

Records on Wall Street, with yields alongside

The Nasdaq closed at a record on Monday. The Wall Street Journal's headline noted that bond yields were marching higher at the same time. On Tuesday the S&P 500 joined it, and The Guardian reported that both indices surged to record highs after a rally in AI chipmakers.

The advance was narrow. The Journal's account of Tuesday's session described a record "powered by tech—and not much else". Less than an hour earlier the same paper had run a column on rates under the headline "Whatever Happens to Bonds, Stocks Win". Those are two rather different accounts of one session, and both appeared on the same evening.

The economic data were less festive. CNBC reported that the US trade deficit widened to $105.6bn, the widest since just before the Trump tariffs were enacted last year. That figure sits awkwardly beside the index records, though the market showed little sign of minding on the day. Meanwhile, the Journal reported that Wall Street bonuses are expected to hit another high this year, which would follow a high already reached before.

Overnight the mood in Asia was quieter. The Nikkei was flat, supported by electronics and machinery shares. Gold ticked lower in early trading as investors awaited the minutes of the Federal Reserve's latest policy meeting, due later in the week.

Gilts, the Budget and the price of money

London told a different story. This is Money reported that nervous investors were fleeing stocks to take advantage of soaring bond yields ahead of the Budget. It is not often that a government bond is the more exciting of two assets, but the yields now on offer have made it a contender.

Pressure on the government came from a familiar quarter. A former Bank of England chief economist told Andy Burnham to 'take knife' to public spending in order to calm the bond markets, according to This is Money. The advice was blunt, and it arrived with the Budget still to come.

Across the Channel the worry was larger in scale. Alex Brummer warned in This is Money that France could spark the biggest bond market and euro crisis since Greece.

City A.M.'s morning live coverage expected the FTSE 100 to fall as the Strait of Hormuz came under threat. The same paper reported that emerging markets were bucking wider investor woes, at a time when equity funds were being shunned.

India supplied the morning's policy surprise. CNBC reported that the Reserve Bank of India had raised interest rates for the first time since 2023, as inflation risks build. A day earlier the BBC had set out five reasons why India's stock market is sinking even while its economy is growing.

A crowded week for deals

Paramount completed its takeover of Warner Bros on Tuesday. The price depended on whom one read. The BBC called it a $110bn Hollywood merger, Sky News put its takeover of Warner Bros Discovery at $81bn, and This is Money gave a sterling figure of £80bn. Euronews reported that the combination forms a Hollywood giant under the Skydance name. This is Money added that the deal had sparked fears of higher prices and job losses.

Closer to home, This is Money reported that Sainsbury's had held merger talks with its rival Morrisons. City A.M. went further, saying the talks mark the end of the supermarket big four.

The City had its own share of bids. This is Money described a takeover frenzy sweeping through London again, as a yacht show events giant struck a £2.2bn deal and a miner became a target for Abu Dhabi. In New York, the Journal reported that KKR had struck a deal to buy Gen II, an administrator of private-capital funds.

Hong Kong drew the listings. Euronews reported that Moonshot AI is eyeing a Hong Kong IPO after reaching a $50bn valuation, as DeepSeek raises capital. Transsion, Africa's top phone maker, is targeting a US$500m listing in the city, according to the South China Morning Post, which also reported a HK$4.3bn land bid, a five-year high for Kowloon. The Journal, by contrast, examined Oura's stalled IPO. In London, Asos shares tumbled after a cyber hack.