Risky corporate borrowers shut out of bond market since Trump’s tariff blitz

Good morning and welcome again to FirstFT. If this e-mail was forwarded to you click on here to obtain it daily in your inbox. On as we speak’s agenda:

• The junk bond market freeze

• Why Wall Avenue obtained Trump so incorrect

• A warning for Europe from the FTC’s chair

• Israel’s new safety plan

• And the most effective locations to swim and snorkel in Florida

America’s dangerous company debtors have been shut out of the bond market since Donald Trump’s tariff blitz, in a freeze that’s reverberating throughout Wall Avenue and which threatens a tentative rebound in dealmaking.

Why has the junk bond market seized up? Extremely indebted firms with low credit score scores are seen as riskier for buyers to mortgage cash to and the rise in borrowing prices in different debt markets, such because the US authorities bond market, has pushed up borrowing prices for these firms. Lowly-rated firms have did not promote any debt within the $1.4tn US high-yield bond market since Trump’s so-called liberation day on April 2.

What has been the impact on firms? It threatens to hit non-public fairness companies that ceaselessly depend on the junk bond market to fund their takeovers, and dealmaking amid a looming risk of recession. Banks have additionally been redrawing mortgage phrases for his or her buyout shoppers in a bid to protect themselves from losses. The marketplace for new investment-grade bonds has additionally sputtered. “Every thing has been on maintain,” stated Bob Kricheff, the pinnacle of multi-asset credit score at funding agency Shenkman Capital Administration. “No person is attempting to cost a deal on this atmosphere.” Read the full story.

Be part of our live Q&A tomorrow on the altering commerce, financial and geopolitical relationship between the US and its allies. Pose your inquiries to FT journalists here and don’t overlook to submit your query for the particular version of FirstFT to mark the primary 100 days of Trump’s second time period within the White Home. Right here’s what else we’re preserving tabs on as we speak:

• Financial information: Month-to-month US import and export costs are launched in addition to Federal Reserve Financial institution of New York’s Empire State manufacturing index. Peru’s state statistics company releases month-to-month financial development information and Brazil updates its inflation index.

• Financial coverage: Federal Reserve Financial institution of Richmond President Thomas Barkin speaks at an occasion on the College of North Carolina in Pembroke. Individually, Fed Board Governor Lisa Cook dinner is predicted to attend an occasion on the Cal Alumni Membership of Washington DC.

• Outcomes: Financial institution of America, Citigroup, Johnson & Johnson, United Airways and Brazil’s Vale are among the many firms reporting. See our Week Ahead newsletter for the total record.

• Harvey Weinstein: The previous film mogul faces a brand new trial on sexual assault prices in New York for allegedly assaulting an unnamed lady at a decrease Manhattan lodge in 2006.

5 extra high tales

1. Unique: A high US official has warned European allies that they want to decide on between US and Chinese language know-how, as governments and corporations in Europe take into account whether or not Starlink — owned by Elon Musk’s SpaceX — is a dependable companion after Washington threatened to change off its providers in Ukraine. Read the full report.

2. LVMH shares tumbled as we speak in Paris, resulting in declines throughout the luxurious items sector after the proprietor of Louis Vuitton and Christian Dior reported a bigger-than-expected fall in gross sales owing to subdued demand in China and the US. LVMH is the primary of the massive luxurious items teams to report first-quarter earnings. Here’s more on what the company said.

3. Meta’s acquisitions of Instagram and WhatsApp helped give it “monopoly energy”, the US Federal Commerce Fee advised a courtroom yesterday firstly of a blockbuster trial that might power the $1.5tn tech big’s break-up. The case is predicted to present the clearest sign but concerning the Trump administration’s stance on antitrust coverage — and its appetite to take on Big Tech.

4. Donald Trump’s administration stated it might freeze greater than $2.2bn in funding for Harvard College, after it turned the primary main US greater training establishment to publicly resist strain from the federal government. The transfer by the Trump administration raises the stakes in a deepening confrontation between the White Home and elite establishments within the US.

As we speak’s large learn

The US and China are locked in a harmful commerce stand-off, with the world’s two largest economies buying and selling tit-for-tat blows as Donald Trump calls for Beijing search a deal from his administration. China depends on the US as an virtually irreplaceable marketplace for its manufactured items, however specialists warn that Washington mustn’t underestimate Beijing’s capability to withstand Trump’s coercive ways. How far can China use its leverage over the US without damaging itself even more?

We’re additionally studying . . . 

Map of the day

A hyper-aggressive Israeli army doctrine is reshaping the Center East after Hamas’s devastating October 7 2023 assault from Gaza. Not content material with border partitions and early warning programs, Israel is seizing territory from its neighbours, constructing buffer zones and bombing perceived threats as distant as Beirut and Damascus in large shows of power. Here’s a look inside the country’s new security plan.

Take a break from the information

FT Globetrotter has produced an insider’s guide to the most effective spots to sail, fish, kayak, snorkel and swim in and round Miami.