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FirstFT: Credit rises hit record speed as US economy recovers

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Credit rating agencies are raising hundreds of billions of dollars in U.S. corporate bonds, partially reversing downgrades at the beginning of the pandemic, reflecting the strong recovery in profitability across much of America.

According to data from Bank of America, around $ 361 billion in higher-rated investment-grade bonds have been upgraded in the past two months, including a record $ 184 billion in June.

The rapid turnaround shows that rating agencies such as S&P Global, Moody’s and Fitch believe that the economic recovery spurred by the introduction of vaccines has made corporate debt more manageable. It also reflects the abundant liquidity and low cost of borrowing available to many businesses, thanks in part to monetary stimulus from the Federal Reserve.

Rating agencies were reprimanded after the 2008 financial crisis for giving bonds that ultimately defaulted flawless grades. But during the pandemic, they quickly moved to downgrade their assessments of the debt swath.

Five more stories on the news

1. Morgan Stanley Trading Dip, balanced by deals and wealth unit Wall Street Bank became the youngest U.S. lender to report that higher fees from investment banking helped offset some of the slack from slowing trading as it saw revenue and profits spike in the second quarter.

2. More than 1,000 feared missing persons during floods in Germany The death toll from severe floods in western Germany has risen to 81, and more than 1,000 residents are missing. During one of the country’s most devastating natural disasters for years, torrential rains caused many rivers in North Rhine-Westphalia and Rhineland-Palatinate to be flooded and flooded.

3. “I’m not into coups” Donald Trump attacked General Mark Milley, the chairman of the joint chiefs of staff, after several new books told how the senior US military official feared a “Reichstag moment” in the White House and compared Trump to Adolf Hitler as the former president refused to give the results Recognize presidential elections in November.

4. China snubs high-ranking US officials Beijing has refused to allow Assistant Secretary of State Wendy Sherman to meet with her counterpart during a planned visit to China. It would be the first high-level conversation between the two countries since their first meeting in Alaska that broke out into a public dispute between US Secretary of State Antony Blinken and top Chinese foreign policy leader Yang Jiechi.

5. Olympic boss warns of “divisive” protests from athletes Thomas Bach, President of the International Olympic Committee, has warned athletes against political protests at the upcoming Games in Tokyo. “The podium and the awards ceremony will not be held. . . for a political or other demonstration, ”he said in an interview with the Financial Times ahead of the opening ceremony next Friday.

Coronavirus digestion

  • US President Joe Biden said he would be ready to say when the “within the next few days” US could lift his Covid-related travel ban for European countries after a meeting with Chancellor Angela Merkel.

  • Canada Prime Minister Justin Trudeau said fully vaccinated Americans could enter the country by mid-August and international visitors by September.

  • The angel reintroduces a mask requirement that obliges residents to wear face coverings indoors regardless of their vaccination status. The rule will take effect on Saturday at 11:59 p.m. local time.

  • Scientists are trying to find out what is causing long-term Covid-19. Doctors fear “tens of thousands” of people in the United Kingdom can be affected by several symptoms.

Sign up for our Coronavirus Business Update newsletter for more Covid-19 news and for the latest developments on our live blog.

The day ahead

Merits State Street, an innovator in the exchange-traded funds market, and rival Charles Schwab released their results today.

Retail sales data The U.S. Department of Commerce is expected to release data showing retail sales fell 0.4 percent in June.

Biden warns against doing business in China The State Department is expected to warn US companies of the increasing risks of operating in Hong Kong as China exercises more control over the financial center.

What else we read

A wild ride into the cryptosphere Frank Partnoy bought a virtual horse, made him (somehow) rich – and got a first glimpse into the joys and dangers of “non-fungible tokens”. His lesson? If you enjoy trading collectibles, you will almost certainly enjoy trading NFTs. But be careful. Racehorses can be addicting in any form.

  • Opinion: Crypto asset companies face a stark choice: learn to live with regulators or endure their wrath, writes Adam Samson.

Apple and Klarna cut up credit cards When Apple and Goldman Sachs explore a line of business, there is likely money in it. The news that Apple, with the support of Goldman, is planning to add a “buy now, pay later” function to Apple Pay shows that financial possibilities are knocking, writes John Gapper. Buy now, pay later can be a clever innovation if shoppers use it wisely.

Russia’s rail ambitions Russian State Railways are investing $ 17 billion over a decade as part of an ambitious plan that aims to not only carry passengers but also grab a larger portion of the billions of dollars worth of goods that travel from Asia to Europe each year become. But the country is facing tough competition: not least from China’s Belt and Road Initiative.

What do we mean when we talk about workplace culture? Workplace culture is a vague term that can most easily be described as the “DNA” of an organization. That’s what hires people for. That means they make the same jokes and share the same cultural references as the leaders. But that’s a “mirror-Tokratie”, argues Annie Auerbach, and creates an echo chamber that is bad for the company’s results.

Books

The we-cult Wall Street Journal’s Eliot Brown and Maureen Farrell tell the story of excess at office rental group WeWork and its charismatic co-founder Adam Neumann.

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