The IMF upgrades Britain and warns on bond yields

The IMF and the price of money

The International Monetary Fund set the tone overnight. According to CNBC, the Fund warned that bond yields could see a "disorderly" spike as risks from debt and inflation worsen. A separate CNBC report on its outlook carried a softer headline. The IMF sees a milder global slowdown, with the boom in artificial intelligence offsetting the hit from war. The same report added a caveat: the Fund warned that this resilience is nearing its limits.

Some buyers are already at the long end. The South China Morning Post reported that Hong Kong investors are warming to US Treasury bonds, with yields at a 20-year high. One story describes yields as a hazard. The other describes them as the reason buyers are arriving.

City A.M. carried the argument into politics, with a comment piece on central banks, bond markets and fiscal credibility, and why market stability had become political. In This is Money, Hamish McRae asked whether the great wealth transfer will save us from recession.

On jobs, CNBC reported that a World Bank jobs council is urging "crisis-era" employment support measures, while the IMF warned of an AI "tsunami". Fresh inflation data came from India. Retail inflation there jumped to 5.54% in September, above estimates.

Britain: more growth, dearer living

For Britain, the IMF's numbers came in two halves. Sky News reported that the economy is set to grow more than expected, but that households face a sharper rise in inflation. The BBC carried the same upgrade with a later cost attached: energy prices and interest rates are expected to bite in 2027. City A.M. supplied the comparison. On the Fund's figures, the UK faces the second-highest inflation in the G7.

The Bank of England had a mixed Monday. City A.M. reported that it was targeted in an inflation installation stunt. The same paper quoted a Bank of England deputy arguing that "we should be AI optimists".

Attention now turns to the Budget. This is Money described it as a "critical test" for John Healey, with the high street grappling with rising costs and what the piece called "fragile" confidence. Heathrow's boss also pressed for decisions. He warned that investors "cannot wait forever" and urged Burnham to back a third runway. City A.M.'s commentators were less patient with Burnham. One wrote that he speaks with all the confidence of a mayor but without the gravitas of a Prime Minister; another that he may have already missed his best chance to call an early election. A third column accepted a move closer to Europe, but asked that Britain not be aligned down.

Upgrades and squeezes arrived in the same set of forecasts, and the politics now has to carry both.

Oil, Tokyo and the appetite for deals

Oil set the direction on Monday. The Wall Street Journal reported that the S&P 500 and the Nasdaq slipped as crude rose on Russian strikes in Ukraine, with its live coverage describing fresh energy strikes. Tokyo followed overnight. The Nikkei fell 2.0%, which the Journal attributed to geopolitical tensions.

Private investors have not stepped back. Two further Journal pieces reported that individuals are trading at meme-stock levels, and that frenzied stock-options trading shows them still hungry for risk.

Deals supplied the sharpest move. The BBC reported that Bumble shares soared after a report that the dating firm is in $1bn takeover talks. In London, This is Money counted a £180bn takeover frenzy in less than three years, and reported that Healey is being urged to "turbocharge" the stock market. Ruth Sunderland, writing for the same title, argued that Britain must slam the door on a US hedge fund raider. Leicester City's struggling owners, according to Sky News, are seeking takeover bids this week.

Luxury was quieter. LVMH disappointed investors hoping for signs of a turnaround. In Hong Kong, King Fook expanded with a US$34 million lease in Admiralty despite slow luxury sales, according to analysts cited by the SCMP. The same paper reported that few Hong Kong investors took interest in the listing of Transsion, Africa's top phone maker, and that the HKEIA wants listing rules eased to attract more angel funds and start-ups. On the mainland, China is to tighten its leash on futures quant trading to contain risks amid a stock slump.